WHO IS REQUIRED TO REGISTER FOR VAT IN JAPAN?
In Japan, businesses must register for VAT if they meet certain criteria:
1. Domestic Businesses:
Japanese companies with taxable sales exceeding the specified threshold (typically 10 million yen in the base period) are required to register and collect VAT.
2. Non-Resident Businesses:
Foreign companies providing digital services to Japanese customers or conducting business that meets the turnover threshold must also register for VAT.
3. Import/Export Businesses:
Companies involved in importing goods into Japan or exporting goods from Japan need to comply with VAT requirements and may be required to register.
4. Voluntary Registration:
Businesses with lower turnover that expect to exceed the threshold in the near future, want to reclaim input VAT or are in the situation being required to issue the qualified VAT invoices can voluntarily register for VAT.
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.
Am I obliged to Japanese VAT if I have customers in Japan?
Indeed, if your business operations extend to Japan, you may be subject to Japanese VAT regulations. Engaging with customers in Japan introduces complexities related to local tax laws, thus it is prudent to consult with a tax professional who is well-versed in international tax policies to ensure compliance and to streamline your financial engagements effectively.
How long should businesses retain VAT records for audit purposes?
Businesses in Japan should retain VAT records for a specific period to comply with audit requirements:
- Retention Period:
- VAT records, including invoices, receipts, import/export documents, contracts, accounting records, and bank statements, should be retained for at least seven years from the end of the fiscal year to which they relate.
- Reason for Retention:
- These records serve as evidence to support the amounts reported in VAT returns and may be requested by the National Tax Agency (NTA) during audits or inspections.
- Penalties for Non-Compliance:
- Failure to retain records for the required period could result in penalties, fines, or adverse consequences during tax audits.
Maintaining organized and accurate records for the prescribed period is essential for demonstrating compliance with VAT regulations and ensuring a smooth audit process. A Japanese tax professional can provide guidance on record-keeping best practices and assist in establishing efficient record retention procedures.
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.
WHAT HAPPENS IF I’M AUDITED?
In the event of an audit, it is essential to approach the situation with calm and strategic forethought. Your initial action should be to contact me. Like handling a delicate piece of machinery, it’s best not to intervene without professional guidance. I will examine the inquiry, provide strategic advice on the next steps, and prepare a comprehensive plan should you require representation. Fees for my services will apply only if you decide to engage me for further assistance.
WHAT ARE YOUR FEES?
My fees are tailored to the specific needs of each client, reflecting the diversity of services offered and the complexity of individual cases. Rest assured, transparency is a cornerstone of my practice—I provide a clear outline of fees in every contract, with most charges agreed upon as a fixed sum in advance. This approach ensures there are no unexpected costs, allowing you to plan your finances with certainty.
WHAT IS A CERTIFIED PUBLIC TAX ACCOUNTANT (CPTA)?
A Certified Public Tax Accountant (CPTA) is akin to a Certified Public Accountant (CPA) but with a specialized focus on tax regulation and compliance. This designation is held by professionals adept at navigating the intricacies of tax legislation, dedicated to optimizing your tax position and ensuring stringent adherence to tax laws. Engaging a CPTA is particularly beneficial for intricate tax matters, providing peace of mind and strategic oversight.
WHAT IS A CERTIFIED PUBLIC ACCOUNTANT (CPA)?
A Certified Public Accountant (CPA) is a highly qualified finance professional, certified by the state to provide accounting services to the public. This title is granted only after completing rigorous educational and experiential requirements and a mandatory apprenticeship under a licensed CPA. Furthermore, CPAs must adhere to continuous professional education, completing at least 40 credit hours annually, to maintain their certification. CPAs are trusted for their expertise in audit, tax, financial analysis, and advisory services, making them indispensable in the strategic management of finances for individuals, businesses, and other organizations.