Tag: registration

2. Registration for VAT ⑤ Does a foreign company need a local tax representative to register for VAT in Japan?

Posted on by KAZUHISA MOCHIZUKI

Yes, a foreign company typically needs a local tax representative to register for VAT in Japan. Here’s why:

  1. Legal Requirement:
    The Japanese tax authorities require non-resident businesses to appoint a local representative, often called a “tax agent,” who is responsible for managing VAT matters on behalf of the foreign company.
  2. Compliance:
    The local representative ensures that the business meets all VAT compliance requirements, such as filing returns and making tax payments.
  3. Communication with Authorities:
    The representative acts as the primary point of contact between the tax authorities and the foreign company, handling inquiries, notifications, and any issues that arise.
  4. Efficiency and Expertise:
    A local representative with knowledge of Japanese tax laws can help navigate the regulatory landscape, simplifying VAT management for foreign businesses.

Engaging a Japanese tax professional as your local representative will help ensure smooth registration and ongoing compliance with VAT requirements.
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. 

2. Registration for VAT ④ What documents or information are needed to complete VAT registration?

Posted on by KAZUHISA MOCHIZUKI

To register for VAT in Japan, businesses need to provide certain documents and information to the National Tax Agency (NTA). Here are the key requirements:

  1. Basic Business Information:
    ・Company name, address, and contact information
    ・Business type and industry
    ・ax identification numbers or equivalents from the company’s home country
  2. Business Activity Details:
    ・Description of goods or services being sold in Japan
    ・Expected annual sales and taxable turnover
  3. Representative Details:
    ・Contact details of the company representative managing VAT matters in Japan
    ・If appointing a tax agent, provide the agent’s contact details and relevant authorization
  4. Supporting Documents:
    ・Business registration or incorporation certificate
    ・Financial statements demonstrating annual sales (if applicable)
    ・Power of attorney (if a tax agent will file returns on behalf of the business)
     

VAT registration essentially means obtaining a VAT registration number, which includes a capital “T” in front of the corporate number. Foreign businesses, without their own Japanese corporate number, must first apply for the equivalent of this corporate number. This step is frequently overlooked, not only by businesses but also by tax officers, and often leads to additional time needed to complete the registration process.
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. 

2. Registration for VAT ③ Is it possible for a non-Japanese company to register for VAT voluntarily?

Posted on by KAZUHISA MOCHIZUKI

Yes, non-Japanese companies can voluntarily register for VAT in Japan even if they don’t meet the mandatory registration thresholds. Here’s why this might be beneficial:

  1. Reclaim Input VAT:
    Voluntary registration allows a business to reclaim VAT paid on its own purchases of goods and services in Japan, reducing overall tax liability.
  2. Compliance and Transparency:
    Voluntarily registering demonstrates a commitment to compliance and can strengthen business relationships by ensuring that customers receive proper tax invoices.
  3. Future Growth Planning:
    If a business anticipates reaching the mandatory registration threshold soon, voluntary registration can streamline the transition and ensure readiness.

Consulting a Japanese tax professional will help assess the benefits of voluntary VAT registration and guide non-Japanese companies through the application process.
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. 

2. Registration for VAT ② What are the annual sales thresholds for mandatory VAT registration?

Posted on by KAZUHISA MOCHIZUKI

In Japan, businesses are generally required to register for VAT if their annual taxable sales exceed the following thresholds:

  1. Standard Threshold:
    If a business’s taxable sales exceed 10 million yen during the base period (typically the fiscal year two years before the current fiscal year), VAT registration is mandatory.
  2. Special Circumstances:
    Even if the base period threshold is not met, a business may still be required to register if it anticipates taxable sales exceeding 10 million yen within the first six months of the current fiscal year.
  3. Non-Resident Digital Service Providers:
    While foreign businesses providing digital services to Japanese consumers also apply to the above rules, Japanese Ministry of Finance is recently considering the change of the relevant regulations toward those foreign businesses in B to C digital services must register regardless of their annual sales, ensuring proper collection and remittance of VAT.

Understanding these thresholds and determining whether your business needs to register through the required steps is crucial for compliance. 
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. 

2. Registration for VAT ① Who is required to register for VAT in Japan?

Posted on by KAZUHISA MOCHIZUKI

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. 

1. Introduction to Japanese VAT ⑦ Do I need to worry about VAT if I’m not a Japanese company?

Posted on by KAZUHISA MOCHIZUKI

Yes, even if your company isn’t based in Japan, VAT could still apply to your business activities if you are selling goods or services to Japanese customers or have a significant business presence in the country.

  1. Registration: 
    If your business meets the required turnover threshold or provides digital services to Japanese consumers, you may need to register for VAT with the Japanese tax authorities.
  2. Collection: 
    Once registered, you must charge VAT on applicable sales and services to your Japanese customers.
  3. Reporting: 
    Your business needs to file regular VAT returns to declare the VAT collected from customers and remit the appropriate amount to the authorities.
  4. Input VAT Reclamation: 
    You can usually reclaim VAT paid on your own business purchases in Japan, reducing your overall tax burden.
  5. Special Rules for Digital Services: 
    Digital service providers may need to follow specific rules, such as applying the “reverse charge” mechanism or simplified VAT registration.

A Japanese tax professional can help identify whether your business has VAT obligations and assist with the registration, compliance, and reporting processes to ensure you meet all regulatory requirements.
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.

1. Introduction to Japanese VAT ⑤ How does Japanese VAT affect my business?

Posted on by KAZUHISA MOCHIZUKI

Japanese VAT, also known as Consumption Tax, can significantly impact your business operations if you’re a non-Japanese enterprise selling goods or services in Japan.

  1. Pricing Adjustments: 
    Your pricing strategy needs to incorporate VAT to remain competitive while covering the tax liability.
  2. Registration Requirement: 
    Non-Japanese companies meeting the turnover threshold or those selling digital services to Japanese customers must register for VAT in Japan.
  3. Compliance Costs: 
    You’ll need to implement VAT collection, accounting, and reporting practices that align with Japanese regulations, potentially requiring changes to your internal processes.
  4. Reclaiming Input VAT: 
    If you’re paying VAT on your own purchases for goods and services in Japan, you can often reclaim it, helping reduce your overall tax liability.
  5. Cross-Border Complexity: 
    Importing or exporting goods and services may trigger special VAT rules, such as reverse charges or zero-rating.

Consulting a Japanese tax professional can provide clarity on registration requirements, pricing strategies, and compliance procedures, ultimately reducing your tax risks and helping your business operate smoothly in the Japanese market.
The tax 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.