Japan to increase Consumption Tax and introduce other reduced rates

The Japanese government has recently announced an increase of Consumption Tax from 8% to 10%, along with the introduction of a reduced rate of 8% that will be levied on basic foodstuffs and beverages.

This is currently due to take effect on the 1st of April 2017, however this rise has already been delayed once in 2015 and because of the current lack luster economy there is potential for it to be delayed yet again.

The decision to bring in a reduced rate on basic foodstuffs and beverages is being considered to ease the burden on consumers after recent similar rate increases pushed the economy back into a recession. This was the case in 2014 when Consumption Tax was increased from 5% to 8%, raising indirect tax from Yen 8 trillion to Yen trillion in just two years.

Nevertheless, this time it appears that they will still go ahead as Mr Aso, the Finance Minister, told parliament “Without attaching conditions about the state of the economy, we will certainly raise consumption tax to 10 per cent in April 2017”. So companies should start preparing for this as soon as they can to be ready for the tax rate increase and the introduction of a reduced rate early next year.

Andrew Bohnet
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Andrew Bohnet

Managing Director and Oracle Fusion Tax / eBTax expert at eBiz Answers Ltd
Andrew Bohnet is the current chair for the Oracle Tax Management SIG. He founded eBiz Answers to offer clients complete tax solutions making the most of the rich functionality of the R12 and Fusion tax modules. Whether it is analysis, design, configuration or support, eBiz Answers provide an unparalleled service when it comes to a complete tax solution. Having worked on one of the first Oracle R12 implementations in Europe, Andrew was exposed to the tax module early on and worked closely with Oracle to fix bugs, enhance functionality and present on numerous occasions on the subject of tax and Oracle. When it comes to presenting on eBTax, you wont find a more experienced consultant outside of Oracle.
Andrew Bohnet
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