consumption tax

2017 Tax Reform outline

April 1 is the start of the new fiscal year in Japan and also marks the start of changes in the Japanese tax system that will be relevant for both domestic and foreign businesses operating in Japan.  Our outline presented here is primarily focusing on changes with impact for EU SMEs with business activities in Japan.

 

Main points of 2017 tax reform

Postponement consumption tax increase leads to rescheduling of other fiscal measures

The government has formally decided to postpone a number of fiscal measures,  as the planned Consumption Tax increase to 10% was delayed to 2019 earlier this year.  Fiscal benefits when buying a house and the new taxation system for cars, which were scheduled for introduction next year, have been rescheduled to be implemented in April 2019.

In introduction of a new invoice system necessary for the introduction of the diversified tax consumption tax rates, will be postpone from 2021 to 2023.

 

Postponement of VAT increase impacts other fiscal reform

Nikkei Online reports on June 2 that the second postponement of the VAT increase to October 2019 is likely to have an impact on other planned fiscal reforms as well.

Japan postpones VAT increase for second time

On Wednesday June 1st PM Abe announced that he would again delay the increase in consumption tax. The increase of the VAT rate to 10% was scheduled for April 2017.  The hike has been delayed for anouther two-and-a-half years until October 2019.  Abe stated that the hike at this point in time would "create a risk of the country falling back into deflation" hurting the chances that the Japanese economy would regain a sustainable growth track. 

New tax policy in force on April 1st

April 1st is traditionally the start of the new business year in Japan. In 2015, this also means a number of significant changes in taxation in Japan, as the new tax policy of the Abe government comes into force.  Below we list the main changes.

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