What is Japan Consumption Tax (JCT)? Japan Consumption Tax (JCT) Review, Features

The Japanese Consumption Tax (JCT) is a tax paid by consumers when they buy goods, and for business purchases, it can be deducted from the tax payable to the tax office.

About Japan Consumption Tax (JCT)

• Effective October 1, 2023, the reform of the Japan Consumption Tax (“JCT”) “Compliant Invoice Retention System” initiated by the National Tax Agency of Japan will come into effect;
• From October 1, 2023, if the invoice obtained by the buyer does not have the seller's JCT registration number, the buyer will not be eligible for JCT input tax deduction. If the seller does not provide the JCT registration number, the buyer's tax amount will increase;
• Only sellers who have registered for Japan's consumption tax can issue invoices that meet the conditions for purchase tax credit. To become a qualified invoice issuer, sellers must apply to the tax bureau and register. Therefore, sellers on Amazon Japan must register for JCT if they need to issue invoices.

What is the compliance invoice retention system?

From October 1, 2023, a new JCT system, namely the compliant invoice retention system, will take effect. After the reform is implemented, buyers who need tax deductions will need to provide compliant invoices with the seller's JCT registration number in order to make JCT input deductions and view the amount of tax reduction.

Impact of the reform on Japanese sellers:

Buyers who need tax deductions may avoid purchasing goods from sellers who are not registered with JCT.

Sellers who meet any of the following conditions must register for Japan Consumption Tax (JCT):

Sellers whose sales have exceeded 10 million yen in the past, have exceeded 10 million yen this year, or are about to exceed 10 million yen should complete the registration as soon as possible;

Sellers who want to issue deductible VAT invoices need to register for a tax number;

Sellers who are not obliged to become a JCT taxable entity but wish to obtain a JCT registration number may register .

Note: The JCT registration number is a number issued by the Japanese tax agency to sellers with JCT taxable entities (sellers who pay JCT) .

Documents required for JCT registration

• Scanned copy of the front and back of the legal person's ID card (clear, complete, without cropping, watermark or obstruction);
• Scanned copy of the business license (clear, complete, without cropping, watermark or obstruction);
• Company name, company address, product sales platform name;
• Store link ( the store link must be able to display the store backend information ) or screenshot ;
• Application form ( with customer-related information, which will be synchronized later);
• Sign the authorization letter;
• Other relevant documents required to be provided during the application process ;

Note: If there is a subsidiary in Japan, please provide the detailed address, legal person information, shareholder information, etc. of the subsidiary.

Registration time: 2-3 months , mainly based on the current level of cases handled by the tax bureau

Reporting cycle: generally annual report

Deadline for declaration: Within 2 months from the day after the end of the taxable period