New "30% special rule" for sole proprietors, covering returns for 2027 and 2028A new rule for people running a shop on their own: pay only "30%" of the consumption tax
Under the FY2026 (Reiwa 8) tax reform, a special rule was created for sole proprietors who became taxable business operators from tax-exempt status by registering as qualified invoice issuers. In consumption tax returns for 2027 (Reiwa 9) and 2028 (Reiwa 10), the tax payable can be set at 30% of the tax on sales. Corporations are not covered.
- ○Applies: You are a sole proprietor
- ○Applies: You are registered as a qualified invoice issuer
- ○Applies: Taxable sales in the base period are JPY 10 million or less
- ×Does not apply: You are a corporation
- ×Does not apply: Taxable sales exceed JPY 10 million
Key points
- Covers sole proprietors who became taxable business operators from tax-exempt status through registration
- The tax payable can be set at 30% of the tax on sales (the input tax credit is equivalent to 70% of the tax on sales)
- Taxable sales in the base period must be JPY 10 million or less (the base period is 2025 (Reiwa 7) for the 2027 return and 2026 (Reiwa 8) for the 2028 return)
- The person must be registered as a qualified invoice issuer
What to do in practice
- Check whether you qualify using the NTA's applicability flowchart
- Ahead of returns for 2027 (Reiwa 9) onward, estimate the pros and cons against the general method and the simplified method
The old "20%" rule is ending, and in its place a "30%" rule is being created that only individuals can use. You can use it for just two years: 2027 (Reiwa 9) and 2028 (Reiwa 10).
Points
- You pay just 30% of the consumption tax you collected from customers
- Only people who work on their own as individuals can use it
- It is only for the two years 2027 and 2028
What the words mean
- Sole proprietor
- A person who works under their own name without setting up a company
- National Tax Agency (NTA): NTA: Special feature on the FY2026 (Reiwa 8) tax reform (invoice system)
- National Tax Agency (NTA): NTA: Tax Answer No. 6498 Qualified invoice system
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.