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Japan proposes 8% reduced Consumption Tax rate 2017


Japan proposes 8% reduced Consumption Tax rate 2017

Japan is to hold Consumption Tax at 8% on foodstuffs, non-alcoholic drinks, books and other essentials when it raises the rate on all other goods and services to 10% in April 2017. The new rate will apply to fresh and processed food.

The measure will cost an estimated Yen1 trillion per annum.

The measure is designed to soften the impact of the VAT-like tax which has been planned since 2012. The rise to 10% was originally scheduled for October 2015, but was delayed following the impact of the last Consumption Tax rise to 8% in 2014. The two rises are intended to help fund the spiraling social care costs for a fast ageing country.

A reduced rate on essentials is intended to aid the poorest in society. However, it also grants a tax subsidy to all consumers. A tax-break for the less well off may be better achieved through changes in the welfare system. Reduced rates also add to the complexity of the VAT regime.


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 this year won International Tax Review's Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.