2 December 2014

Japan has announced that the second VAT rate rise from 8% to 10%, originally planned for October 2015, will be delayed to April 2017. The rise from 5% to 8% in April appears to have tipped the country back into recession, with negative growth in GDP for the last two quarters being attributed mainly to the hike.

From 2015 it is likely there will be revised place of supply rules applying to the supply of digital services and services provided electronically. Like the EU, Japan is moving to a model in which the tax is based on the country of consumption. Therefore businesses providing such services to consumers will need to register and account for Japanese VAT. Those providing such services B2B may benefit from a reverse charge provision, but only if it is clear from the contract that the recipient is in business.