Japan: Japanese Consumption Tax refund for non resident taxable persons
Save the non deductible input consumption tax related to one-off events in Japan in 2020 by filing an application to opt for JCT taxable persons
Input JCT in Japan due to the one-off events in 2020? With an application filed in advance, non-deductible input JCT on purchases in Japan could be avoided
- Save the non deductible input consumption tax
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Save the non deductible input consumption tax
With the one-off events fast approaching in July 2020, we expect to see many event sponsors procure goods and services in Japan in preparation for and during the events. Supplies of goods physically located in Japan as well as services fully consumed in Japan made for non-resident taxable persons are subject to Japanese Consumption Tax (“JCT”). Non-resident taxable persons, who intend to conduct one time transaction in Japan, usually qualify as tax exempt small-sized entrepreneur under certain conditions, including not having taxable sales in Japan in the base period of over 10 million JPY, among others.
On the other hand, JCT may be charged by the suppliers on the purchase of goods / services within Japan, and non residents consider if the input JCT could be refundable. Non resident taxable persons may also file an application to opt for becoming JCT taxable persons in Japan principally by the end of previous tax period (in case of newly established enterprises or enterprises that have never performed taxable transactions in Japan in the past by the end of the first tax period), they can deduct the incurred input JCT in JCT returns.
Non residents who opt for the filing of JCT return, need to tax also their output sales (i.e. need to collect JCT from the customers and might be in a tax payment position on its margin). However, as non resident event sponsors should have no or very small taxable sales in Japan, they are likely to be in the tax refund position. It is important to know that the option, once applied, shall be maintained at least for two years. They can cease to file JCT returns by submitting an application to cancel the option by the end of the taxable period prior to the taxable period from which it wishes to stop filing.
Indirect tax service group at Deloitte Japan advises non residents looking to procure goods or services in Japan for the one-off events on an analysis of costs and cash flow benefits resulting from the election of JCT taxable person status in view of the envisaged activities in Japan, and assist them with filing necessary applications and satisfying JCT compliance obligations during the election period.
We have bilingual experts and are able to assist in multiple languages such as English, Chinese, Korean and German. If you have any questions, please feel free to contact the below contact persons.
|Takashi Tezuka, Partner||Attorney-at-law||English
Senior Manager for Europe and US
|Steuerberater/German Tax Advisor||English
|Khushboo Behl for India||Chartered Accountant in India||English
|Hyangah Kim （김향아）for Korea||English
|Mao Wentong（毛文通）for China||Chinese