Consumption Tax Act

Consumption tax is imposed under this Act on transfers, etc. of assets conducted by business operators in Japan (excluding those that fall under specified transfers, etc. of assets; the same applies in paragraph (3)) and on specified purchases (meaning specified transfers, etc. of assets received from another person as a business; the same applies hereafter in this Chapter).

Consumption tax is imposed under this Act on foreign goods taken out of a bonded area.

in the case of the transfer or lending of assets: the place where the assets were located at the time of that transfer or lending (where the assets are ships, aircraft, mining rights, patent rights, copyrights, government bond certificates, share certificates or other assets specified by Cabinet Order as those whose location is unclear, the place specified by Cabinet Order);

in the case of the provision of services (excluding the case set forth in the following item): the place where the services were provided (where the services are international transport, international communications or other provision of services specified by Cabinet Order as those for which the place where the services were provided is unclear, the place specified by Cabinet Order);

in the case of the supply of telecommunications services: the address or residence (meaning the place where the person has continuously resided for one year or more up to the present) of the person receiving that supply of telecommunications services, or the location of that person's head office or principal office.

Whether a specified purchase was conducted in Japan is to be determined by whether the place specified in item (ii) or (iii) of the preceding paragraph, with respect to the provision of services received from another person as that specified purchase, is in Japan, from the standpoint of the business operator that made that specified purchase; provided, however, that, of the specified purchases that a foreign business operator makes at a permanent establishment (meaning a permanent establishment prescribed in Article 2, paragraph (1), item (viii)-4 (Definitions) of the Income Tax Act or Article 2, item (xii)-19 (Definitions) of the Corporation Tax Act) (limited to those that fall under the provision of telecommunications services for businesses received from another person; the same applies in this paragraph), those required for transfers, etc. of assets conducted in Japan are deemed to have been conducted in Japan, and, of the specified purchases that a business operator (excluding a foreign business operator) makes at a foreign office or similar establishment (meaning a foreign office or similar establishment prescribed in Article 95, paragraph (4), item (i) (Foreign Tax Credit) of the Income Tax Act or Article 69, paragraph (4), item (i) (Foreign Tax Credit) of the Corporation Tax Act), those required only for transfers, etc. of assets conducted outside Japan are deemed to have been conducted outside Japan.

The following acts are deemed to be transfers of assets conducted for consideration as a business:

the consumption or use, in the case where an individual business operator has consumed or used for household purposes inventory or assets other than inventory that had been used for business;

the gift, in the case where a corporation has given assets to its officer (meaning an officer prescribed in Article 2, item (xv) of the Corporation Tax Act).

Where foreign goods have been consumed or used in a bonded area, the person who consumed or used them is deemed to take those foreign goods out of that bonded area at the time of that consumption or use; provided, however, that this does not apply where those foreign goods have been consumed or used as raw materials or materials for taxable goods, or in any other case specified by Cabinet Order.

In addition to what is provided for in paragraph (3) through the preceding paragraph, necessary matters concerning the details of the subject of taxation are specified by Cabinet Order.

A business operator has an obligation to pay consumption tax under this Act with respect to taxable transfers, etc. of assets conducted in Japan (excluding those that fall under specified transfers, etc. of assets; the same applies hereafter, except in Article 30, paragraph (2) and Article 32) and specified taxable purchases (meaning, of taxable purchases, those that fall under specified purchases; the same applies hereafter).

A person who takes foreign goods out of a bonded area has an obligation to pay consumption tax under this Act with respect to the taxable goods.

Consumption tax is not imposed on those transfers, etc. of assets conducted in Japan that are set forth in Appended Table 2.

Consumption tax is not imposed on those foreign goods taken out of a bonded area that are set forth in Appended Table 2-2.

Consumption tax is exempted for those, among taxable transfers, etc. of assets conducted in Japan by a business operator (excluding a business operator exempted from the obligation to pay consumption tax under the main clause of Article 9, paragraph (1)), that fall under any of the following:

the transfer or lending of assets conducted as an export from Japan;

the transfer or lending of foreign goods (excluding the transfer or lending of assets that falls under the preceding item, and the transfer of foreign goods that has come to fall under the cases listed in Article 8, paragraph (1), item (iii) (Collection of National Consumption Tax in the Case of Public Sale or Sale, etc.) of the Act on Collection, etc. of National Consumption Tax Imposed on Imported Goods (Act No. 37 of 1955));

the transport of passengers or cargo, or communications, conducted across Japan and areas outside Japan;

the transfer, lending or repair, as specified by Cabinet Order, of ships or aircraft used exclusively for the transport prescribed in the preceding item;

that which is specified by Cabinet Order as being similar to the transfers, etc. of assets set forth in the preceding items.

The provisions of the preceding paragraph do not apply unless it has been proved, as provided by Ministry of Finance Order, that the taxable transfer, etc. of assets falls under a transfer, etc. of assets set forth in the items of that paragraph.