Japan consumption tax calculator

How consumption tax in Japan is calculated

The National Tax Agency publishes two rates, in force since 1 October 2019: 10% standard and 8% reduced. The reduced rate covers *"(1) Food and drink excluding alcoholic drink and dining out (2) Newspapers issued twice a week or more (restricted to those by subscription)"*.

**The eat-in boundary is where this gets expensive.** The same bento box is 8% to take away and 10% to eat in, because dining out is excluded from the reduced rate — the same trap Sweden has with restaurant meals, arrived at from the opposite direction. Alcohol is excluded too, so a convenience-store basket can legitimately carry both rates.

Both rates are **composites**: the 10% is a 7.8% national consumption tax plus a 2.2% local one, and the 8% is 6.24% plus 1.76%. That is why the 8% band appears unchanged by the 2019 reform while its internal split did change — the old 8% was 6.3% + 1.7%. The headline figure is what you charge; the split is what gets apportioned.

The exemption threshold is unusual and worth reading twice: a business is exempt if taxable sales **in the Base Period** are 10 million yen or less, and the base period is generally the fiscal year **two years before** the one being taxed. So liability now follows from sales the year before last, not from current trading — a business that has shrunk can still be liable, and a fast-growing one can trade untaxed for two years. A second test uses the first six months of the preceding year.