Consumption Tax Act

Where a business operator (excluding a business operator exempted from the obligation to pay consumption tax under the main clause of Article 9, paragraph (1)) has, by reason of having accepted a returned item or granted a price reduction or rebate with respect to a taxable transfer, etc. of assets conducted in Japan (excluding one for which consumption tax is exempted under the provisions of Article 7, paragraph (1), Article 8, paragraph (1), or any other Act or treaty), refunded all or part of the total of the amount of consideration for the taxable transfer, etc. of assets (meaning the amount of consideration prescribed in Article 28, paragraph (1)) and the amount calculated by multiplying that amount of consideration by 10 percent (or, where the taxable transfer, etc. of assets is a taxable transfer, etc. of assets subject to the reduced rate, 8 percent) (hereinafter in this paragraph and Article 39 referred to as the "tax-inclusive price"), or has reduced all or part of the amount of accounts receivable or other claims relating to the tax-inclusive price of the taxable transfer, etc. of assets (hereinafter in this paragraph through paragraph (4) referred to as a "refund, etc. of consideration for sales"), the total amount of consumption tax relating to the amount of the refund, etc. of consideration for sales made in the taxable period (meaning the amount calculated by multiplying the tax-inclusive price refunded or the amount of the claim reduced by 7.8/110 (or, where the refund, etc. of consideration for sales relates to a taxable transfer, etc. of assets subject to the reduced rate, 6.24/108); the same applies in the following paragraph) is deducted from the consumption tax on the tax base amount for the taxable period that includes the day on which the refund, etc. of consideration for sales was made.

The provisions of the preceding paragraph do not apply to the amount of consumption tax relating to a refund, etc. of consideration for sales for which a business operator does not preserve books recording the details of the amount of that refund, etc. of consideration for sales; provided, however, that this does not apply where the business operator proves that it was unable to preserve them due to a disaster or other unavoidable circumstances.

Where an heir who has succeeded to the business of a decedent through inheritance makes a refund, etc. of consideration for sales with respect to a taxable transfer, etc. of assets conducted by the decedent, the provisions of the preceding two paragraphs apply as if the heir had made a refund, etc. of consideration for sales with respect to a taxable transfer, etc. of assets conducted by the heir.

The provisions of the preceding paragraph apply mutatis mutandis to the case where a merging corporation that has succeeded to a business through a merger makes a refund, etc. of consideration for sales with respect to a taxable transfer, etc. of assets conducted by the merged corporation, or the case where a successor corporation in a company split that has succeeded to a business through a company split makes a refund, etc. of consideration for sales with respect to a taxable transfer, etc. of assets conducted by the splitting corporation.

In addition to what is provided for in the preceding two paragraphs, matters concerning the recording and preservation of the books prescribed in paragraph (2) and other matters necessary for the application of the provisions of paragraph (1) are specified by Cabinet Order.

Where a business operator (excluding a business operator exempted from the obligation to pay consumption tax under the main clause of Article 9, paragraph (1)) has, by reason of having received a price reduction or rebate with respect to a specified taxable purchase made in Japan, received a refund of all or part of the amount of consideration paid for the specified taxable purchase (meaning the amount of consideration paid prescribed in Article 28, paragraph (2)), or a reduction of all or part of the amount of accounts payable or other debts relating to the amount of consideration paid for the specified taxable purchase (hereinafter in this paragraph through paragraph (4) referred to as a "refund, etc. of consideration for specified taxable purchases"), the total amount of consumption tax relating to the amount for which a refund, etc. of consideration for specified taxable purchases was received in the taxable period (meaning the amount calculated by multiplying the amount refunded or the amount of the debt reduced by 7.8 percent; the same applies in the following paragraph) is deducted from the consumption tax on the tax base amount for the taxable period that includes the day on which the refund, etc. of consideration for specified taxable purchases was received.

The provisions of the preceding paragraph do not apply to the amount of consumption tax relating to the amount for which a refund, etc. of consideration for specified taxable purchases was received, where a business operator does not preserve books recording the details of the amount for which that refund, etc. of consideration for specified taxable purchases was received; provided, however, that this does not apply where the business operator proves that it was unable to preserve them due to a disaster or other unavoidable circumstances.

Where an heir who has succeeded to the business of a decedent through inheritance receives a refund, etc. of consideration for specified taxable purchases with respect to a specified taxable purchase made by the decedent, the provisions of the preceding two paragraphs apply as if the heir had received a refund, etc. of consideration for specified taxable purchases with respect to a specified taxable purchase made by the heir.

The provisions of the preceding paragraph apply mutatis mutandis to the case where a merging corporation that has succeeded to a business through a merger receives a refund, etc. of consideration for specified taxable purchases with respect to a specified taxable purchase made by the merged corporation, or the case where a successor corporation in a company split that has succeeded to a business through a company split receives a refund, etc. of consideration for specified taxable purchases with respect to a specified taxable purchase made by the splitting corporation.

In addition to what is provided for in the preceding two paragraphs, matters concerning the recording and preservation of the books prescribed in paragraph (2) and other matters necessary for the application of the provisions of paragraph (1) are specified by Cabinet Order.

Where a business operator (excluding a business operator exempted from the obligation to pay consumption tax under the main clause of Article 9, paragraph (1)) has conducted a taxable transfer, etc. of assets in Japan (excluding one for which consumption tax is exempted under the provisions of Article 7, paragraph (1), Article 8, paragraph (1), or any other Act or treaty), and, because a fact specified by Cabinet Order, such as the write-off of claims by a decision approving a reorganization plan or a fact equivalent thereto, has occurred with respect to accounts receivable or other claims against the counterparty to the taxable transfer, etc. of assets, it has become unable to collect all or part of the tax-inclusive price of the taxable transfer, etc. of assets, the total amount of consumption tax relating to the tax-inclusive price of the taxable transfer, etc. of assets that has become uncollectible (meaning the amount calculated by multiplying that tax-inclusive price by 7.8/110 (or, where that tax-inclusive price relates to a taxable transfer, etc. of assets subject to the reduced rate, 6.24/108); the same applies in paragraph (3)) is deducted from the consumption tax on the tax base amount for the taxable period that includes the day on which it became unable to collect it.

The provisions of the preceding paragraph do not apply where a business operator does not preserve, as provided by Ministry of Finance Order, documents certifying that the fact prescribed in that paragraph has occurred with respect to the claims prescribed in that paragraph; provided, however, that this does not apply where the business operator proves that it was unable to preserve them due to a disaster or other unavoidable circumstances.

Where a business operator prescribed in paragraph (1) to which the provisions of that paragraph have been applied has collected all or part of the tax-inclusive price of a taxable transfer, etc. of assets to which the provisions of that paragraph were applied, the amount of consumption tax relating to the tax-inclusive price so collected is deemed to be consumption tax on a taxable transfer, etc. of assets and is added to the consumption tax on the tax base amount for the taxable period of that business operator that includes the day on which it was collected.

Where there is an heir who has succeeded through inheritance to the business of the decedent relating to that inheritance, and, with respect to accounts receivable or other claims against the counterparty to a taxable transfer, etc. of assets conducted by that decedent, a fact to which the provisions of paragraph (1) apply has occurred on or after the day of that inheritance, the provisions of that paragraph and paragraph (2) apply as if the heir had conducted that taxable transfer, etc. of assets.

Where an heir who has succeeded through inheritance to the business of the decedent relating to that inheritance has collected all or part of the tax-inclusive price of a taxable transfer, etc. of assets to which the provisions of paragraph (1) were applied with respect to that decedent, the provisions of paragraph (3) apply as if the heir had been subject to the application of the provisions of paragraph (1).

The provisions of the preceding two paragraphs apply mutatis mutandis to a merging corporation that has succeeded through a merger to the business of the merged corporation relating to that merger, or a successor corporation in a company split that has succeeded through a company split to the business of the splitting corporation relating to that company split.

Matters necessary for the details of the calculation of the amount of consumption tax relating to the tax-inclusive price prescribed in paragraph (1) are specified by Cabinet Order.

In addition to what is provided for in this Chapter, matters necessary for the details of the calculation of tax deductions are specified by Cabinet Order.