The rate
The standard rate in Japan is 10%. Some goods and services carry reduced or zero rates and others are exempt. The difference matters: zero-rated sales still let you reclaim the tax on your purchases, exempt sales do not.
Who must register
Consumption tax is due once base-period taxable sales exceed ¥10 million — the year before last for a sole proprietor, the financial year before last for a company. A second test catches fast growth: if both taxable sales and total payroll in the 特定期間, January to June of the previous year for an individual, exceed ¥10 million, you are taxable. A new company has no base period and is exempt for two years unless its paid-in capital is ¥10 million or more. Registering for a T-number overrides all of it. Businesses with base-period taxable sales of ¥50 million or less can elect 簡易課税 and compute input tax as a deemed percentage of output tax by sector, from 90% wholesale down to 40% real estate; the election binds for two years. The 2割特例, which let a business pushed into taxable status by registering pay 20% of its output tax, ends with the taxable period containing 30 September 2026. A 3割特例 replaces it for 2027 and 2028 — but the NTA states 法人は対象外, sole proprietors only, so a company using the 2割特例 has nothing left but ordinary or simplified accounting.
Filing and paying
Registered and filed with National Tax Agency.
Filed to the tax office, normally through e-Tax. A sole proprietor files one annual return for the calendar year by 31 March of the following year, a fortnight after the income tax deadline. A company files within two months of the end of its taxable period, or three with the 期限の延長特例. Interim returns follow the previous period's tax: none at or below ¥480,000, once a year to ¥4 million, three times to ¥48 million, eleven times above. e-Filing is compulsory for companies with stated capital above ¥100 million.
Penalties for getting it wrong
Late payment carries 延滞税 at 2.8% a year for the first two months and 9.1% thereafter. These are the 2026 rates, reset each January, and they rose this year from the 2.4% and 8.7% that held from 2022 to 2025. Filing late adds 無申告加算税: 5% if you come forward before the tax office notifies you of an audit; 10% on the first ¥500,000 of tax, 15% to ¥3 million and 25% above if you file after being notified; 15%, 20% and 30% across the same bands if you file only after the audit. Add ten points if you were penalised for non-filing in either of the two preceding years. Nothing is charged if you file within a month of the deadline, pay in full on time and have a clean five-year record.