Consumption tax and invoicing in Japan (2026): JCT guide

Japan’s consumption tax (消費税, often called JCT) is a value added tax: you charge it on your sales, deduct the tax on your business purchases and pay the difference. It is administered by the National Tax Agency (国税庁, NTA) through local tax offices, and a local consumption tax is collected with it. Since the Qualified Invoice System (適格請求書等保存方式, the “invoice system”) started on 1 October 2023, whether you are registered as an invoice issuer matters as much as the rate. This guide covers what a small business in Japan needs to know in 2026, including the changes from 1 October 2026 and the food rate cut planned for 2027. Figures are as of October 2026.

Consumption tax at a glance

The line between 8% and 10% is about how food is supplied: a takeaway lunch is 8%, the same lunch eaten in the restaurant is 10%, and beer is always 10%.

Announced: a two-year cut on food from April 2027

A Cabinet decision of 15 September 2026 proposes lowering the rate on food and beverages to 1% (national and local combined) from 1 April 2027 to 31 March 2029. Newspaper subscriptions would stay at 8% and everything else at 10%. The NTA and the Ministry of Finance have opened a special website with draft return forms, transitional rules for some subscription and mail-order contracts, and price display relief. This is a bill, not yet law: the rate only changes if the Diet passes it.

Who must register and when

The ¥10 million test. You are exempt from consumption tax for a year when your taxable sales in the base period were ¥10 million or less. The base period is the year before last for a sole proprietor and, for a company with one-year accounting periods, the accounting period before last. You still become taxable if your sales in the specified period passed ¥10 million: the first six months of the previous year (sole proprietors) or of the previous accounting period (companies). For the specified period you may use salaries paid instead of sales. A new company with capital of ¥10 million or more is taxable from its first period.

Qualified invoice issuers. Only a business registered as a qualified invoice issuer (適格請求書発行事業者) can issue qualified invoices, and a registered business is always taxable, whatever its sales. You apply to your tax office, most easily through e-Tax, and once registered:

• your registration number is “T” plus your 13-digit corporate number for a company, or “T” plus 13 digits for others,
• your name and number appear on the NTA’s public search site, so customers can check them,
• an exempt business that registers during a period running up to 30 September 2029 becomes an issuer from its registration date.

Many small businesses below ¥10 million register anyway, because their business customers can only deduct the full tax with a qualified invoice.

Returns and payment

• Annual return: file and pay within two months after the end of the tax period; sole proprietors by 31 March of the following year.
• Interim returns, based on last year’s national consumption tax:

Each interim return is due within two months after its period ends, and the local consumption tax is paid with it.

Simplified methods for small businesses:

• Simplified taxation (簡易課税): if your base-period taxable sales were ¥50 million or less, you can elect to compute input tax with a deemed purchase ratio for your type of business instead of from invoices.
• The 20% special rule (2割特例): a formerly exempt business that became taxable by registering as an invoice issuer can pay 20% of its output tax, for tax periods that include a day from 1 October 2023 to 30 September 2026. For sole proprietors that means up to the 2026 return.
• The 30% special rule (3割特例): added by the 2026 tax reform for sole proprietors in that situation, for the 2027 and 2028 tax years. Companies cannot use it.

Qualified invoices: what they must show

A qualified invoice (適格請求書) can be an invoice, a delivery note or another document, on paper or electronic. It must show:

• Rounding: the tax is rounded once per invoice for each rate, not line by line.
• Simplified qualified invoice (適格簡易請求書): retailers, restaurants, taxis and other businesses selling to the general public may leave out the customer’s name and show either the rate or the tax amount.
• Invoice numbers are not on the legal list, but a unique, sequential number makes corrections and matching far easier.
• Corrections: if an invoice you issued is wrong, you must give the customer a corrected qualified invoice (修正した適格請求書). Alternatively, the customer may prepare a corrected purchase statement that you confirm.
• Returns and discounts: you issue a qualified return invoice (適格返還請求書) showing the refund and the tax on it. It is not required when the refund is under ¥10,000 including tax.
• Foreign currency: you may invoice in a foreign currency and language, but the consumption tax for each rate must be shown in yen.
• Keeping records: you keep copies of the invoices you issue. Invoices and books that support a deduction are kept for 7 years from the day two months after the end of the tax period.

Buying from businesses that are not registered

Without a qualified invoice you cannot deduct the tax in full, but a transitional measure lets you deduct part of it:

For tax periods starting on or after 1 October 2026, the part of your purchases from any single unregistered supplier above ¥100 million a year (including tax) no longer qualifies for this measure; the limit was ¥1 billion.

The small-amount rule (少額特例): a business with base-period sales of ¥100 million or less, or specified-period sales of ¥50 million or less, can deduct purchases under ¥10,000 including tax with its books alone, without keeping the qualified invoice, until 30 September 2029.

E-invoicing: Peppol JP PINT, no mandate

Japan has no e-invoicing mandate and no real-time invoice reporting to the NTA. Qualified invoices can be paper, PDF or structured data. The Digital Agency (デジタル庁), Japan’s Peppol Authority since September 2021, manages JP PINT, the Japanese standard for digital invoices on the Peppol network, which businesses can adopt voluntarily to exchange invoices with customers and suppliers.

Worked example in yen

A design studio, registered as an invoice issuer, has this year:

Tax payable: ¥1,200,000 − (¥500,000 + ¥35,000) = ¥665,000, of which part is the local consumption tax, less any interim payments already made. The clients paid ¥13,200,000 in total.

Paying late: delinquency tax and subcontracting rules

• Late consumption tax: delinquency tax (延滞税) runs from the day after the statutory deadline until you pay, on both interim and annual returns.
• Late payment by larger customers: since 1 January 2026, the former Subcontract Act has been amended and renamed the Act on Ensuring Proper Transactions for Small and Medium-sized Contractors (中小受託取引適正化法, 取適法). For covered transactions, set by the size of both businesses (capital or number of employees) and the type of work, such as manufacturing, repairs, information products, services and specified transport, the payment date must fall within 60 days of receiving your goods or services. A customer that pays late owes late payment interest at the rate set by the Japan Fair Trade Commission, and handing over a promissory note does not count as paying.

Common mistakes

1. 1Leaving out the registration number, or showing the wrong one, which turns the document into an ordinary invoice for your customer.
2. 2Rounding tax on every line instead of once per invoice for each rate.
3. 3Still deducting 80% of the tax on purchases from unregistered suppliers after 1 October 2026; the rate is now 70%.
4. 4Not checking a supplier’s T-number on the NTA’s public site before deducting the tax.
5. 5Forgetting interim payments once last year’s tax passed ¥480,000.
6. 6Mixing up 8% and 10% on food that can be eaten in or taken away, and preparing for the 1% food rate before the bill has passed.

How Clientlly helps

Clientlly numbers your invoices sequentially per series and puts Japan’s 10% and 8% rates on every invoice, with credit notes linked to the original invoice for returns and discounts. You can invoice in multiple currencies, send the PDF in your client’s language with a card payment link, see when the client opened it and let automatic reminders go out 3, 14 and 30 days after the due date. Scanned receipts have the tax read automatically, sales and purchase tax books are kept per rate, including exports, and tax reports with Excel and PDF exports are ready for you and your accountant. See invoicing and accounting.

Clientlly is not a Peppol service provider and is not connected to JP PINT. If a customer asks for invoices over Peppol, you need a Peppol-certified service.