Global

Details

  • Service: Tax, Global Indirect Tax, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 8/10/2012

Japan - Legislation to increase rate of consumption tax passes  

August 10: The Diet on 10 August 2012 passed a bill that includes measures to increase the rate of the consumption tax. 

The increase of the rate of the consumption tax will be phased in:


  • The current 5% rate of consumption tax will apply until 31 March 2014.
  • The rate will increase to 8% beginning 1 April 2014 through 30 September 2015.
  • The rate will then increase to 10% beginning 1 October 2015.

The new consumption tax rates will apply to (1) taxable transactions conducted by business operators in Japan, and (2) receipts of taxable goods from bonded areas.


Details for implementing the rate changes will be provided in future cabinet orders and ministerial ordinances. The legislation provides that a rate increase may be suspended if warranted, following comprehensive consideration of the economic environment prior to the next scheduled rate increase taking effect.


There are transition measures that will apply—for instance, even after the consumption tax rate of 8% goes into effect, the 5% rate will continue to apply to certain transactions. [A table listing some of these transactions is provided in the report referenced below.]


Also, a newly established company having paid-in capital of less than JPY 10 million (approximately U.S. $127,000) generally will not be treated as a “consumption taxpayer” for certain periods.


Read an August 2012 report [PDF 138 KB] prepared by the KPMG member firm in Japan: Bill to Increase Consumption Tax Rate - Passed



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For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

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1801 K Street NW
Washington, DC 20006.
 

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