Frequently Asked Questions

Does Japan Have VAT? Japan Consumption Tax Explained

Yes. Japan has a VAT-type tax called Consumption Tax.\n\nJapan does not use the term “VAT.” The equivalent tax is Consumption Tax.\n\nThe standard rate is 10%. A reduced rate of 8% applies mainly to certain food and beverage sales, excluding alcohol and restaurant dining, as well as certain newspaper subscriptions.\n\nIn practice, Consumption Tax becomes complicated when a business has exports, exempt transactions, or issues under the Qualified Invoice System.\n\nThe Qualified Invoice System started on October 1, 2023. To claim input tax credits, businesses generally need to keep qualified invoices and the required accounting records.\n\nThe Japanese government has also announced a proposal to temporarily reduce the Consumption Tax rate on certain food and beverage transactions for two years. The proposal has not yet been enacted, so the latest guidance should be checked when it becomes relevant.\n\nFor a more detailed explanation, please see:\n\nAn Easy Explanation of Consumption Tax for Doing Business in Japan