When you pay something to Japanese by business, and you’re an employee of a big company with a Japanese branch that can pay there, your company’s accounting division will require you to take a Japanese VAT ID from your business partner.And you may search tax payer ID from here > Consumption Tax Payer Eligible ID.
Website is easy to read with machine translation, you understand it’s same with Europian Union’s Check VAT number site. Sometimes, you can’t find your Japanese business partners’ ID, but no wonder. Japanese writers, painters, voice actors and other artists are not selling enough to eligible consumption taxpayers.
Since October 2023, Japan has started a Consumption Tax Payer ID and the regulation of invoices for bills. Consumption tax and VAT are not very different from VAT in the EU and UK. It’s also the same that the consumer pays tax for the shop that has a VAT ID, and the shop taxes the government, excluding VAT on purchases and expenses, and also the same that the small business companies who don’t sell rather than ten million yen don’t have VAT IDs. Consumption Tax Payer ID brings Japan one step closer European system.
Companies can no longer deduct sales tax from payments to companies that do not provide an invoice number, but all Japanese businesses, even those that don’t have Consumption Tax Payer IDs, can claim consumption tax.
At first glance, this may seem unfair. In fact, every time we discuss a consumption tax, many citizens are dissatisfied that tax-exempt companies collect consumption tax without paying it.
However, this is not the fault of tax-exempt businesses. It is a drawback caused by the historical background of the system. Consumption tax started in 1989 in Japan. The first tax-rate was only 3% and Japanese financial situation was very good. 3% was lower than the annual growth rate(in that year, Japanese GDP growth rate was 4.9%!). The Ministry of Finance introduced a consumption tax, which had been resisted for many years, in a simplified manner. There were no reduced tax rates, no invoice was required on receipt, and no tax payer IDs. The government did not changed the system, and kept growing the rates. The consumption tax rate was raised to 5 percent in 1994, 8 percent in 2014, and 10 percent in 2019. Reduced tax rates were introduced on food and newspapers in 2019, but the rest of the system remained unchanged. We have lived for 30 years under the assumption that consumption tax would be added to all our purchases.
Although the system has been publicized and deferrals for deductions are available, small and medium-sized enterprises and individuals who have been hit hard by the coronavirus pandemic and the recession caused by the weak yen will not be able to respond immediately.
Consumption Tax Payer ID and the regulation changes all. Due to this change in the system, companies are beginning to refrain from placing orders with small businesses that do not have tax-payer IDs. This doesn’t happen in the publishing industry, which is full of small businesses, but when we deal with people in other industries, they are often surprised and ask us, “Don’t you have a number?”
It seems I should earn more.
