6. International Transactions ① Are exported goods subject to VAT in Japan?


No, exported goods are not subject to VAT in Japan. Exports are generally zero-rated, which means that while VAT is technically applicable, it is levied at a rate of 0%. Here’s how it works:

  1. Zero-Rated VAT:
    When goods are exported from Japan, they are treated as zero-rated for VAT purposes. This means that exporters do not charge VAT on these sales.
  2. Input VAT Reclamation:
    Although no VAT is charged on exports, businesses can still reclaim any input VAT paid on purchases related to the production of these exported goods. This is intended to ensure that goods exported from Japan are competitively priced in international markets, free of tax cost.
  3. Documentation Requirements:
    To qualify for zero-rating, businesses must provide appropriate documentation proving that the goods have been exported. This includes customs declarations, shipping documents, and other relevant export evidence.
  4. Compliance and Reporting:
    Businesses must still report these zero-rated sales in their regular VAT returns. Detailed records of exports and related input VAT credits should be meticulously maintained to support these filings.
  5. Risk of Audit:
    Export transactions are often scrutinized by tax authorities to ensure compliance with zero-rating requirements. Businesses must ensure that all necessary documentation is accurate and readily available in case of an audit.

By effectively managing these aspects, businesses can ensure compliance with Japanese VAT laws while optimizing their VAT position in relation to exports. Consulting a tax professional experienced in international trade and VAT can help navigate these rules and ensure that all necessary documentation and reporting are correctly handled.
The information provided here is based on legislation as it stands on the date of publication and may not reflect subsequent changes. We advise clients to seek tailored professional advice before making any decisions based on this information. 

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