VATupdate

VAT Rates in Japan

Quick overview

Standard Rate Reduced Rate Other Rates
10% 8%

The local name for VAT in Japan is Shouhizei.

There are basically 2 VAT rates in Japan:

  • Standard VAT rate is 10% (7.8% national tax and 2.2% local tax)
  • Reduced VAT rate is 8% (6.24% national tax and 1.76% local tax)

Recent developments

For more information about (recent) rate change developments in Japan, please click HERE.

Standard rate: 10%

This rate applies for all transactions that take place in Japan, unless an exception applies (such as a reduced rate, the zero rate or an exemption, or a reason to treat the transaction as outside scope of VAT).

Reduced rate: 8%

  • Supplies of food and drinks, excluding alcoholic beverages and dining out
  • Subscriptions to newspapers (limited to newspapers that are issued at least twice a week and feature information on general topics such as politics, economics, society and culture)
  • The previous standard rate of 8% continues to apply to certain supplies such as construction contracts and property leases, based on engagements that were enacted before the tax rate change.

Zero rate (0%)

Examples of exempt-with-credit supplies of goods and services

  • Exports of goods
  • Exports of services
  • International transportation of passengers and cargo
  • Sales in export shops
  • Supplies to foreign embassies and legations situated in Japan

The term “exempt supplies” refers to supplies of goods and services that are not taxed and that do not give rise to a right of input tax deduction.

Examples of exempt supplies of goods and services

  • Bank interest
  • Insurance
  • Educational services
  • Sales and leases of land
  • Social welfare services

A global VAT/GST rate overview can be found here (note this is a work in progress).

This post was last updated on August 11, 2021.

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