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