Consumption tax rate cut for food and beverages: simplified tax calculation and interim return special rulesSpecial rules planned for the simple consumption tax method used by food sellers
According to the National Tax Agency leaflet, the proposal provides a special calculation method for simplified-taxation business operators that sell food and beverages, and a special rule that lets businesses selling food and beverages reduce their interim return tax amount. Under simplified taxation, the tax on purchases is to be recorded as the same amount as the tax on food and beverage sales, regardless of the business category. This describes the content if the bill is enacted.
- Tax on sales (food and beverages JPY 200,000 + other JPY 300,000)
- JPY 500,000
- Minus: tax on purchases for food and beverages (same as tax on sales)
- JPY 200,000
- Minus: tax on other purchases (JPY 300,000 x 80%)
- JPY 240,000
- Tax payable
- JPY 60,000
Key points
- In a simplified-taxation return, the tax on purchases is recorded as the same amount as the tax on sales of food and beverages subject to the 1% rate, regardless of the business category.
- The total of that amount and the tax on other sales multiplied by the deemed purchase rate is deducted as input tax.
- The same is said to apply when the 20% special rule or the 30% special rule is used.
- For interim return periods beginning on or after April 1, 2027 (Reiwa 9), a business can file a provisional-settlement interim return based on the tax amount calculated as if the 1% rate had applied to the food and beverage sales and purchases of the immediately preceding taxable period.
- A special rule is also to be provided so that, when the reduction ends, the interim return tax amount can be calculated as if the 8% rate had applied in the immediately preceding taxable period.
What to do in practice
- Check whether you can separate your sales into food and beverages (subject to 1%) and everything else.
- If you are required to file an interim return, consider whether to file based on a provisional settlement.
For shops that use a simple way to calculate consumption tax, the proposal adds a special rule for the food they sell. There is also a plan for a rule that lets shops pay less of their tax in advance during the year.
Points
- The tax on food sales is also subtracted as the tax on purchases, in the same amount.
- The National Tax Agency leaflet gives an example of a shop like a supermarket that sells both food and daily goods.
- A rule is planned that lets shops pay less when they pay part of their tax in advance during the year.
What the words mean
- Interim return
- A filing used to pay part of the tax in advance, before the year ends
- Tax on purchases
- The consumption tax a shop paid when it bought goods
- National Tax Agency: National Tax Agency: Leaflet on the consumption tax rate reduction for food and beverages
- National Tax Agency: National Tax Agency: Special website on the consumption tax rate reduction
This article summarizes and explains materials published by government agencies and is not advice on any individual case. Rules can change, so for actual procedures and decisions always check the latest original materials and consult professionals such as tax accountants or labor and social security attorneys. English, Simplified Chinese and Traditional Chinese versions are translations prepared from the Japanese articles for convenience. If anything differs, the Japanese text and the original source take precedence.