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Japan Consumption Tax hike at risk

  • May 25, 2019 | Richard Asquith

Japan’s struggling economy and political uncertainty is threatening to delay again the planned rise in Consumption Tax from 8% to 10% on 1 October 2019.

The rise has already been delayed twice since 2015. This followed an initial rise from 5% to 8% in 2014 which contributed to the economy tipping into recession. The two-stage rise is aimed at helping to fund the spiralling social costs of an ageing population and a national debt over 200% of GDP.

The shockwaves of the US – China trade disputes have been impacting the export-led Japanese economy. If this continues, and indeed escalated, there may have to be a rethink of the planned rise in the indirect tax. The government described the world’s third-largest economy as “recovering at a moderate pace, while weakness in exports and industrial production continues.”. A government index measuring current economic conditions showed Japan may already be in recession, while first-quarter gross domestic product (GDP) data showed weakness in consumption and capital expenditure. 

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VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.
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