VAT refund – 2020 Tokyo Olympic for non-resident businesses

If you do not take action in advance, Japanese Consumption Tax suffered by your business during sports and other major international events held in Japan in 2020 may be unclaimable as a refund. It is possible for non-resident businesses to claim back JCT on costs made in Japan, relating to the 2020 Olympic games.

According to a post on LinkedIn, the following is possible regarding JCT refunds in Japan (information from KPMG)

Who is eligible for the refund of JCT?

  • A JCT refund claim can only be obtained through the filing of a JCT return by an entity which has “JCT Taxpayer” status.
  • A JCT Taxpayer in this context specifically refers to company (or individual) who is required to file a JCT return.
  • JCT law provides various tests or thresholds which if met will result in deemed JCT Taxpayer Status. For example, a company which has had JCT Taxable output supplies (e.g., sales/services provisions in Japan) of over JPY 10 million in the fiscal year two years prior to the fiscal year being tested, will have JCT Taxpayer Status for the year tested. (Further, threshold tests that might result in deemed JCT Taxpayer Status would apply in cases of a “New Company” that has been in existence for less than two years, a company which has undergone merger, or a company that has employees on Japanese payroll).
  • Many companies coming to Japan for the major sporting and other short-term events will likely be in a net JCT refundable position (e.g., if they will be making minimal or not JCT Taxable Supplies while in Japan), but not meet the above mentioned deemed JCT Taxpayer Status tests and therefore would be unable to file a JCT return to obtain such JCT refund. Did you know?

The current JCT Tax Rate is 10% (8% on certain items).

Source KPMG (via LinkedIn)

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