Reform on Japan consumption tax return.

 

Below the  facts towards reform on Japan consumption tax return.

·         Currently consumption tax is being computed purely based on accounting transaction

Eg: If vendor has not charged consumption tax, but the item qualifies to be consumption tax then we can go ahead and claim consumption tax (That was how accounting system was done) . Even though there was no consumption tax in the invoice, just by seeing accounting entries input was being claimed.

·         Now invoice shall be the onus w.e.f Oct 2023

·         Require to register under qualified invoice system and then we will get consumption tax number. As of now there was no consumption tax number which was given, its going to be new one .

·         Require to show this number on all the sales invoices . Along with few other information in invoices, then it becomes qualified invoice. Only then our customer can claim input tax credit.

·         All the vendors need to give us qualified invoices, so we need to discuss with our vendor on their adoption to new system.

·         if we receive any invoices which are not qualified invoice, then we may not claim input tax credit.

·         However tax authorities are not stringent and gave relaxation

Until Sep 2026 only 80% of the consumption tax can be claimed as credit (20% cost to Sasken)

Until 2029 only 50% claimed as credit (50% cost to Sasken)

 

·         Until now there is no consumption tax number at all, this is going to be new number . Require  to file Single annual return and from accounting side nothing changes

·         This is not mandatory, however if don’t  adopt this then the  customer may not be happy to deal further.