26. Cross-Border Services & Reverse Charge Mechanism in Japan 国境を越えた役務提供とリバースチャージ方式

Below is an overview of the liability of Japanese consumption tax on cross-border service supplies and the reverse charge mechanism in Japan. See this post for more about Japanese tax and accounting:

国境を越えた役務提供とリバースチャージ方式を英語でまとめてみました。
- 国境を越えた役務の提供に係る消費税の課税関係について（FAQ）
- 国境を越えた役務の提供に係る消費税の課税関係について（パンフレット）

The author of this website is not responsible for any damage or loss arising related to this website.

----------------------------------------

I. Liability of JCT on cross-border service supplies - General 

Type	Supplier	Recipient	Place of supply	Taxability	Reverse charge		Liability lies with:
T1	Japanese business	Foreign business	Foreign	Out of scope	N/A		N/A
T2	Foreign business	Japanese business	Japan	Taxable	B2C* digital service	N/A	Foreign business
					B2B* digital service	Applied	Japanese business
					Entertainment service
					Other service	N/A	Foreign business
T3	Japanese business	Foreign consumer	Foreign	Out of scope	N/A		N/A
T4	Foreign business	Japanese consumer	Japan	Taxable	N/A		Foreign business

II. Reverse charge mechanism 

      1. Covered transactions 

Of the above four types of cross-border transactions (i.e., T1 to T4), the reverse charge mechanism is applied to the following two types of services (in RED above): 

• B2B digital services: Digital services supplied by foreign businesses to Japanese businesses. 
* Note: For the purposes of T2, a digital service is B2B if the service is supplied to not actually but generally only to Japanese businesses due to its nature and terms and conditions. B2C digital services are digital services other than B2B digital services regardless of the actual recipient.
• Entertainment and sporting services supplied in Japan by foreign businesses

      2. Shifting of liability

Under the reverse charge mechanism, the service recipient (i.e., the Japanese service recipient) is liable to file JCT returns and pay JCT.

III. B2C digital services from foreign businesses to Japanese businesses (in GREEN; see the above note)

      1. JCT liability

The foreign supplier is liable to file JCT returns and pay JCT.  

      2. Non-availability of JCT credits

The foreign supplier, however, may not claim input JCT credits on cross-border B2C digital services. 

      3. Registration of foreign businesses to claim input JCT credits

Notwithstanding the preceding provision, however, foreign suppliers registered with the National Tax Agency may claim input JCT credits on cross-border B2C digital service supplies. 

See this post for an overview of Japanese consumption tax. 

------------------------------------------

会計税務についての他の記事にご興味ある方はこちらの目次をご覧ください♬

会計税務英語に関する記事です。質問、コメントお待ちしております！Google アカウントを持ってない方は、「Google アカウント」をクリックし、「匿名」か「名前/URL」を選択してからご記入ください！