Japanese VAT is taxed uniformly 10% on all taxable sales and expenses since October 2019. There is no limit of deductible expenses by expense category or business category except for nontaxable business, such as universities or hospitals. All VAT-imposed business-related expenses consumed in Japan are in the scope of VAT reclaim. Companies don’t need to have sales in Japan. If they make activities trying to sell taxable goods or services in Japan or have sales out of Japan regarding the expenses spent in Japan, they are eligible to get the VAT back.
Registration must be done by the end of the fiscal year for the expenses during the next fiscal year. The fiscal year always means the company’s fiscal year, NOT the calendar year. If you start business in Japan or have expenses in Japan the first time, you register during the fiscal year and reclaim the expenses during that fiscal year.
VAT returns have to be filed within two months from the fiscal year-end. However, if you don’t mind the late claim, you don’t have to send us the invoices to meet the deadline. The company will still have a right to get the VAT back. The company can file the returns retrospectively for five years once it has registered. In this case, make sure that the company didn’t have sales in Japan.
If the amount of sales made or services performed in Japan during two fiscal years ago exceeded Y10M, including the sales or services to non- Japan residents, the company is obliged to file a consumption tax return for the current fiscal year. The sales amount during the current fiscal year, or whether the company charges Japanese VAT, doesn’t matter. Filing obligation is decided depending on the sales amount during two fiscal years ago, NOT on the sales amount during the current year. But, the calculation is made using the sales amount during the current fiscal year.
In Japan, non-VAT registered companies, too, can charge VAT.
If the company meets this requirement, it should register as soon as possible.
For more information about our Japanese Consumption Tax reclaim service, please email us at info@globaltaxreclaim.com or call our team at 00 353 1 4587460.
