Asked about Japanese Consumption Tax (消費税 / JCT) for self-employed individuals.
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Standard rate — National Consumption Tax
7.8%Consumption Tax Act (消費税法), Art. 29
Standard rate — Local Consumption Tax
2.2%Consumption Tax Act (消費税法), Art. 29
Standard rate — Combined
10%Consumption Tax Act (消費税法), Art. 29
Reduced rate (軽減税率) — National Consumption Tax
6.24%Consumption Tax Act (消費税法), Art. 29
Reduced rate (軽減税率) — Local Consumption Tax
1.76%Consumption Tax Act (消費税法), Art. 29
Reduced rate (軽減税率) — Combined
8%Consumption Tax Act (消費税法), Art. 29
Reduced rate applies to — Food and beverages
8% (excluding alcohol and dining-in)Consumption Tax Act (消費税法), Art. 29; Act on Special Measures Concerning Taxation (租税特別措置法)
Reduced rate applies to — Newspapers
8% (delivered by subscription, published at least twice weekly)Consumption Tax Act (消費税法), Art. 29; Act on Special Measures Concerning Taxation (租税特別措置法)
Tax-exempt threshold — Base period taxable sales (基準期間)
JPY 10,000,000Consumption Tax Act (消費税法), Art. 9
Tax-exempt threshold — Specified period taxable sales (特定期間)
JPY 10,000,000 (AND wages > JPY 10,000,000)Consumption Tax Act (消費税法), Art. 9
Specified period — definition (sole proprietors)
January 1 to June 30 of prior yearConsumption Tax Act (消費税法), Art. 9
Base period — 2025 filing year (sole proprietors)
Calendar year 2023Consumption Tax Act (消費税法), Art. 9
Base period — 2026 filing year (sole proprietors)
Calendar year 2024Consumption Tax Act (消費税法), Art. 9
Effective date of Qualified Invoice System
October 1, 2023Consumption Tax Act (消費税法), Art. 57-2 to 57-6
T-number format on qualified invoice
T + 13-digit numberConsumption Tax Act (消費税法), Art. 57-2 to 57-6
Once registered — mandatory taxable status even if sales fall below JPY 10M
Must remain taxable (no exemption threshold applies post-registration)Consumption Tax Act (消費税法), Art. 57-2 to 57-6
Input tax credit from non-registered suppliers — Oct 2023 to Sep 2026
80% of input tax creditableConsumption Tax Act (消費税法); Act on Special Measures Concerning Taxation (租税特別措置法)
Input tax credit from non-registered suppliers — Oct 2026 to Sep 2029
50% of input tax creditableConsumption Tax Act (消費税法); Act on Special Measures Concerning Taxation (租税特別措置法)
Input tax credit from non-registered suppliers — Oct 2029 onward
0% (no credit without qualified invoice)Consumption Tax Act (消費税法); Act on Special Measures Concerning Taxation (租税特別措置法)
Deemed input tax ratio under 2割特例
80% (tax payable = output tax × 20%)Act on Special Measures Concerning Taxation (租税特別措置法)
2割特例 — availability duration
Available through returns for periods ending by September 30, 2026Act on Special Measures Concerning Taxation (租税特別措置法)
2割特例 — eligibility condition
Businesses that became taxable solely due to invoice registration (previously tax-exempt)Act on Special Measures Concerning Taxation (租税特別措置法)
Full input tax credit — taxable sales ratio threshold
>= 95% AND taxable sales <= JPY 500,000,000Consumption Tax Act (消費税法), Art. 30
Proportional/individual method required when taxable sales ratio < 95% or taxable sales > JPY 500M
Taxable sales ratio < 95% OR taxable sales > JPY 500,000,000Consumption Tax Act (消費税法), Art. 30
Simplified taxation — maximum base period taxable sales threshold
JPY 50,000,000Consumption Tax Act (消費税法), Art. 37
Simplified taxation election deadline
Day BEFORE the start of the taxable periodConsumption Tax Act (消費税法), Art. 37
Type 1 (Wholesale) — Deemed purchase ratio
90%Consumption Tax Act (消費税法), Art. 37
Type 2 (Retail) — Deemed purchase ratio
80%Consumption Tax Act (消費税法), Art. 37
Type 3 (Manufacturing, mining, construction, agriculture) — Deemed purchase ratio
70%Consumption Tax Act (消費税法), Art. 37
Type 4 (Other — restaurants, etc.) — Deemed purchase ratio
60%Consumption Tax Act (消費税法), Art. 37
Type 5 (Services, transport) — Deemed purchase ratio
50%Consumption Tax Act (消費税法), Art. 37
Type 6 (Real estate) — Deemed purchase ratio
40%Consumption Tax Act (消費税法), Art. 37
Single-type ratio applies to all sales if one type exceeds this share of total taxable sales
75%Consumption Tax Act (消費税法), Art. 37
Consumption tax return filing deadline — sole proprietors
March 31 of the following yearConsumption Tax Act (消費税法), Art. 45
Consumption tax payment deadline — sole proprietors
Same as filing deadline (March 31 of the following year)Consumption Tax Act (消費税法), Art. 49
Interim filing required — prior-year annual tax minimum threshold
JPY 480,000Consumption Tax Act (消費税法), Art. 42
Interim frequency — prior-year tax < JPY 480,000
None (no interim required)Consumption Tax Act (消費税法), Art. 42
Interim frequency — prior-year tax JPY 480,000 to JPY 4,000,000
1 interim (mid-year)Consumption Tax Act (消費税法), Art. 42
Interim frequency — prior-year tax JPY 4,000,001 to JPY 48,000,000
3 interim (quarterly)Consumption Tax Act (消費税法), Art. 42
Interim frequency — prior-year tax > JPY 48,000,000
11 interim (monthly)Consumption Tax Act (消費税法), Art. 42
Output tax extraction factor — standard rate (10% inclusive)
10/110Consumption Tax Act (消費税法), Art. 29
Output tax extraction factor — reduced rate (8% inclusive)
8/108Consumption Tax Act (消費税法), Art. 29
Skill Metadata
| Field | Value |
|---|---|
| Jurisdiction | Japan |
| Jurisdiction Code | JP |
| Primary Legislation | Consumption Tax Act (消費税法) |
| Supporting Legislation | Act on Special Measures Concerning Taxation (租税特別措置法); Qualified Invoice Preservation Method (適格請求書等保存方式) |
| Tax Authority | National Tax Agency (国税庁 / NTA) |
| Filing Portal | e-Tax (etax.nta.go.jp) |
| Contributor | Open Accountants Community |
| Validated By | Pending -- requires sign-off by a Japanese tax accountant (税理士) |
| Validation Date | Pending |
| Skill Version | 1.0 |
| Tax Year | 2025 |
| Confidence Coverage | Tier 1: rate application, threshold determination, simplified taxation calculation. Tier 2: mixed-supply classification, partial exemption, transitional measures. Tier 3: cross-border digital services, customs duties, group taxation. |
Before computing any consumption tax figure, you MUST know:
If taxable sales in the base period are <= JPY 10,000,000 AND the client is not a qualified invoice registrant, the client is a tax-exempt business (免税事業者). STOP -- no consumption tax filing required unless voluntarily registered.
Legislation: Consumption Tax Act, Art. 29
Tax Rates (Consumption Tax Act, Art. 29)
| Category | National CT Rate | Local CT Rate | Combined Rate |
|---|---|---|---|
| Standard rate | 7.8% | 2.2% | 10% |
| Reduced rate (軽減税率) | 6.24% | 1.76% | 8% |
Reduced Rate Items (8%)
| Item | Detail |
|---|---|
| Food and beverages | Excluding alcohol and dining-in (外食) |
| Newspapers | Delivered by subscription, published at least twice weekly |
Non-Taxable Transactions
| Category | Examples |
|---|---|
| Exempt (非課税) | Land sales/leases, securities, medical services under insurance, educational tuition, funeral/burial services |
| Out of scope (不課税) | Gifts, donations, government subsidies, insurance proceeds |
| Export exempt (免税) | Exports of goods, international transport, services to non-residents consumed outside Japan |
Legislation: Consumption Tax Act, Art. 9
Filing Threshold Determination (Consumption Tax Act, Art. 9)
| Test | Threshold | Period |
|---|---|---|
| Base period test (基準期間) | Taxable sales > JPY 10,000,000 | 2 calendar years prior |
| Specified period test (特定期間) | Taxable sales > JPY 10,000,000 (AND wages > JPY 10,000,000) | Jan 1 - Jun 30 of prior year |
| Qualified invoice registration | Voluntarily becomes taxable regardless of sales | From registration date |
Base Period for Sole Proprietors
| Filing Year | Base Period |
|---|---|
| 2025 | Calendar year 2023 |
| 2026 | Calendar year 2024 |
Legislation: Consumption Tax Act, Art. 57-2 to 57-6 (effective October 1, 2023)
Required Elements on a Qualified Invoice (Consumption Tax Act, Art. 57-2 to 57-6)
| Element | Detail |
|---|---|
| 1. Issuer name and T-number | T + 13-digit number (e.g., T1234567890123) |
| 2. Transaction date | Date of supply |
| 3. Description of goods/services | Sufficient detail to identify the supply |
| 4. Tax-rate-separated amounts | Separate totals for 10% and 8% items |
| 5. Consumption tax amount by rate | Tax amount for each rate category |
| 6. Recipient name | Name of the purchaser |
Registration
| Detail | Value |
|---|---|
| Application form | 適格請求書発行事業者の登録申請書 |
| Filing | Via e-Tax or paper to tax office |
| Effect | Once registered, MUST remain taxable even if sales fall below JPY 10M |
| Cancellation | Must submit cancellation notice; effective from following fiscal year |
Transitional Measures for Purchasers (2023-2029)
| Period | Input Tax Credit from Non-Registered Suppliers |
|---|---|
| Oct 2023 -- Sep 2026 | 80% of input tax creditable |
| Oct 2026 -- Sep 2029 | 50% of input tax creditable |
| Oct 2029 onward | 0% -- no credit without qualified invoice |
Small Business Special Measure (2割特例)
| Detail | Value |
|---|---|
| Eligibility | Businesses that became taxable solely due to invoice registration |
| Tax calculation | Tax payable = Output tax x 20% (i.e., deemed input tax = 80%) |
| Duration | Available through returns for periods ending by September 30, 2026 |
| Election | No prior filing needed; elect on the return |
Legislation: Consumption Tax Act, Art. 30
Computation Steps -- General Method (Consumption Tax Act, Art. 30)
| Step | Action |
|---|---|
| 4.1 | Calculate total output tax: sum of (taxable sales x applicable rate) |
| 4.2 | Separate output tax by rate: 7.8% national + 2.2% local (standard); 6.24% + 1.76% (reduced) |
| 4.3 | Calculate total input tax: sum of (taxable purchases x applicable rate) from qualified invoices |
| 4.4 | If taxable sales ratio (課税売上割合) >= 95% AND taxable sales <= JPY 500M: full input tax credit |
| 4.5 | If taxable sales ratio < 95% or taxable sales > JPY 500M: apply proportional method or individual method [T2] |
| 4.6 | Tax payable = Output tax - Input tax credit |
Legislation: Consumption Tax Act, Art. 37
Eligibility (Consumption Tax Act, Art. 37)
| Requirement | Detail |
|---|---|
| Base period taxable sales | <= JPY 50,000,000 |
| Election | Must submit 消費税簡易課税制度選択届出書 by the day BEFORE the start of the taxable period |
Deemed Purchase Ratios by Business Type
| Type | Business Category | Deemed Purchase Ratio |
|---|---|---|
| Type 1 | Wholesale | 90% |
| Type 2 | Retail | 80% |
| Type 3 | Manufacturing, mining, construction, agriculture | 70% |
| Type 4 | Other (restaurants, etc.) | 60% |
| Type 5 | Services, transport | 50% |
| Type 6 | Real estate | 40% |
Computation -- Simplified Taxation
| Step | Action |
|---|---|
| 5.1 | Calculate output tax on all taxable sales |
| 5.2 | Deemed input tax = Output tax x deemed purchase ratio |
| 5.3 | Tax payable = Output tax - Deemed input tax |
Legislation: Consumption Tax Act, Art. 45, 49
Filing and Payment (Consumption Tax Act, Art. 45, 49)
| Item | Detail |
|---|---|
| Filing deadline | March 31 of the following year (sole proprietors) |
| Payment deadline | Same as filing deadline |
| Interim filing | Required if prior-year tax >= JPY 480,000 (quarterly/monthly instalments) |
| Filing method | e-Tax (mandatory for certain businesses) or paper |
| Form | 消費税及び地方消費税の確定申告書 |
Interim Filing Thresholds
| Prior-Year Annual Tax | Interim Frequency |
|---|---|
| < JPY 480,000 | None |
| JPY 480,000 -- JPY 4,000,000 | 1 interim (mid-year) |
| JPY 4,000,001 -- JPY 48,000,000 | 3 interim (quarterly) |
| > JPY 48,000,000 | 11 interim (monthly) |
Situation: Freelancer with JPY 5M sales registers as qualified invoice issuer starting October 2023. Previously tax-exempt. Resolution: Becomes taxable from registration date. May use the 2割特例 (20% special measure) through periods ending September 2026, paying only 20% of output tax as consumption tax. No need to track actual input tax.
Situation: Catering business sells takeout food (8%) and dine-in meals (10%). Resolution: Must separately track and invoice 8% and 10% items. Takeout food = 8%. Dine-in = 10%. Customer's stated intention at time of purchase determines rate.
Situation: Client operates a retail shop (Type 2, 80%) and a consulting practice (Type 5, 50%). Resolution: If one type exceeds 75% of total taxable sales, apply that ratio to all sales. Otherwise, apply each ratio to its respective sales, or use the weighted average. [T2] Flag for reviewer to confirm classification.
Situation: Client wanted simplified taxation for 2025 but did not submit election form by December 31, 2024. Resolution: Cannot use simplified taxation for 2025. Must use general method. Election takes effect from the FOLLOWING taxable period.
Situation: Freelance designer sells services to a US client. Resolution: Services provided to non-residents and consumed outside Japan are export-exempt (0%). No output tax, but input tax on related purchases is still creditable. Must retain proof of export (contracts, payment records).
Situation: Base period sales were JPY 9,800,000 but specified period sales were JPY 11,000,000. Resolution: Check specified period wages. If wages also exceed JPY 10M, becomes taxable. If wages <= JPY 10M, may remain tax-exempt despite sales exceeding threshold. [T2] Flag for reviewer.
Input: Software developer, taxable sales JPY 15,000,000 (all 10%), taxable purchases JPY 3,000,000 (all 10%), qualified invoices retained. Expected output:
Input: Consultant, taxable sales JPY 8,000,000 (all 10%), elected simplified taxation. Expected output:
Input: Freelancer registered for invoice system, previously tax-exempt. Sales JPY 6,000,000 (all 10%). Expected output:
Input: Food producer: JPY 5,000,000 retail food sales (8%) + JPY 2,000,000 catering/dine-in (10%). Expected output:
Input: Freelancer, base period sales JPY 8,000,000, not registered as invoice issuer. Expected output: Tax-exempt business (免税事業者). No consumption tax filing required.
This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, or financial advice. Open Accountants and its contributors accept no liability for any errors, omissions, or outcomes arising from the use of this skill. All outputs must be reviewed and signed off by a qualified professional (such as a 税理士 or equivalent licensed practitioner in Japan) before filing or acting upon.
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