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Eat-in or take-out? Be aware of consumption tax evasion in Japan

In many countries there is a difference between the VAT rate that is applied to buying foodstuffs in a shop, or being served food in a restaurant or ‘catering services’. The former is often subject to a reduced VAT rate, and the latter often to the standard VAT rate.

In Japan this difference also exists. The standard rate is 10%, but the rate for take-out food has been reduced to 8%. This resulted in consumers ‘avoiding’ the higher consumer tax rate by ordering more often take-out food.

Which was actually the intention of the Japanese government. The reduced rate for take-out food was introduced to changing customers’ lifestyles and the growing demand for take-outs.

The problem, however, was that customers did in fact not take-out their order, but they consumed it at the place where they bought it. Although suppliers cannot avoid that their customers are lying about where they consume their order, the social controls in Japan work hard, and in fact businesses who are not charging the correct rate are ‘reported’ on social media.