Transitional measure for purchases from exempt businesses: deductible share becomes 70% from October 2026Buying from shops without an invoice: the share you can subtract is changing
For taxable purchases from persons other than qualified invoice issuers, the transitional measure that allows part of the input tax amount to be deducted has been extended by 2 years and the percentages revised. It is 70% for 2 years from October 1, 2026 (Reiwa 8), then falls step by step, and is 0% from October 1, 2031 (Reiwa 13).
- From Oct. 1, 20233 years, 80%
- From Oct. 1, 20262 years, 70%
- From Oct. 1, 20282 years, 50%
- From Oct. 1, 20301 year, 30%
- From Oct. 1, 2031No deduction (0%)
Key points
- 70% for 2 years from October 1, 2026, 50% for 2 years from October 1, 2028, and 30% for 1 year from October 1, 2030
- From October 1, 2031, no deduction is allowed (0%)
- Before the revision, it was 50% for 3 years from October 2026 and then 0%
- 80% for 3 years from October 1, 2023 (the previous percentage)
What to do in practice
- Check whether each supplier is invoice-registered, and separate purchases covered by the transitional measure in your books
- Review the tax category settings in your accounting software so that calculations use the percentage matching the timing of the taxable purchase
There is a special rule that lets you subtract only part of the consumption tax you paid when you bought from someone who does not issue an invoice, a bill with a registration number. From October 2026, this share becomes 70%, and then it shrinks little by little.
Points
- For 2 years from October 2026, you can subtract 70%
- After that it falls to 50% and 30%
- From October 2031, the amount you can subtract is zero
What the words mean
- Invoice
- An official bill that includes a registration number and other details
- Purchasing
- When a shop or company buys goods or services in order to sell
- National Tax Agency (NTA): NTA: Special Feature on the Fiscal 2026 (Reiwa 8) Tax Reform (Invoice System)
- National Tax Agency (NTA): NTA: No.6498 Qualified Invoice Retention Method (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.