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  • Service: Tax, Global Indirect Tax
  • Type: Regulatory update
  • Date: 12/12/2013

Japan - No new proposed changes to consumption tax in government’s 2013 Tax Reform 

GITB Japan
On 24 January 2013, the Japanese government unveiled its proposal for the 2013 Tax reform. There are no proposed changes to Japanese consumption tax, which under legislation passed on 10 August 2012 is scheduled to increase from 5 percent to 8 percent on 1 April 2014, and then to 10 percent on 1 October 2015. The rate increase proposed for April 2014 has been formally confirmed by the Government on 1 October 2013 while the increase to 10 percent scheduled for 2015 will be reviewed again in advance of this date.

Transitional measures


Some transitional measures have been introduced as part of the reform program to address the treatment of the consumption tax rate increases in relation to certain types of transactions, both for the increase from 5 to 8 percent and from 8 to 10 percent.


Transitional measures are applicable for the rate increase from 5 to 8 percent for the following types of supplies:


  • supply of services to multiple and unspecified persons (e.g. passenger fares, admission fees for movies/theatres)
  •  supply of electricity, gas, water and telecommunications services, etc.
  • construction works
  •  supply of certain services (for certain contracts)
  •  leasing of assets
  •  long-term installment sales (where taxable sales are recognized based on a deferred payment basis)
  •  long-term large scale construction works (where taxable sales are recognized on a percentage of completion basis)
  •  subscription sales, e.g. books/ magazines/mail order sales etc.

Transitional measures for the increase in the consumption tax rate from 8 percent to 10 percent will be applied to the same transactions as above, except for the measure on subscription sales, e.g. books/ magazines/mail order sales which has not been introduced.


KPMG in Japan comment


 KPMG welcomes the guidance from the Authorities on these supplies which may span the change in rate. The rules regarding the transitional measures can be complex to apply, therefore we recommend businesses analyze whether these rules are likely to impact their transactions. Similarly businesses may wish to consider if there are any opportunities for consumption tax planning regarding the rate change, or in relation to the increased burden of the higher consumption tax rate in general.

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Global Indirect Tax Brief - December 2013

GITB - December 2013
Global indirect tax brief brings together articles on international VAT developments, written by KPMG member firms'.