Recent changes to the consumption tax rules affecting foreign companies

As part of Japan’s 2024 tax reform, several measures were introduced to the Japanese consumption tax (JCT) regime that are designed to tighten the rules around the prescribed tests to determine whether an entity is a JCT payer or a JCT exempt enterprise. In addition, changes were made that require certain foreign companies without a permanent establishment in Japan to calculate their JCT liability based on actual input and output tax amounts, rather than on the simplified taxation system or small to medium-sized business exemption. The new measures apply to tax periods beginning on or after 1 October 2024. In this episode of The Japan Perspective, Nicole Baxter, a director in the indirect tax group at Deloitte Japan, discusses these recent changes to the JCT rules and how they affect foreign companies doing business in Japan. The Japan Perspective is a podcast series committed to communicating the latest Japanese tax developments and their potential impact on foreign multinational companies operating in Japan. If you've recently listened to our podcast and would like to share your thoughts or feedback, we would greatly appreciate it. Your feedback helps us improve and tailor our content to our listeners. Please share your feedback via this link: https://forms.office.com/e/BnjLKLWpZb