Japan Consumption Tax rise implementation

The Japanese Consumption Tax authorities have issued initial procedures for managing the planned increase in tax.  The Consumption Tax will rise from 5% to 10% by 2015. in two steps.

The Japanese VAT tax will initially rise to 8% on 1 April 2014, and then to 10% on 1 October 2015.

During the transition period, the following treatment of certain transactions will apply:

• Interim payments due after 1 April 2014 based on contracts signed before this date will be payable at the 5% rate
• Lease payments for contracts entered into up to 30 September 2013 will be charged at 5%
• Short term contracts entered into up until 30 September 2013 will be charged at 5%
• Payments on the supplies of goods or services made prior to 1 April 2014 but consumed after that date will be charged at the 5% rate.
• Payments on long term contracts for work done up until 1 April 2014 will be at the 5% rate.

There are plans to issue further guidance for refundable tax credits and the tax identification number system.