Japan’s National Tax Agency has released English-language information, forms, and instructions to be used by foreign businesses subject to a new law that imposes consumption tax on the overseas supply of digital services.
Under the law, applicable from October 1, consumption tax is imposed on cross-border provision of electronic services, such as the provision of books, music, or advertisements via the internet, if the service recipient is located in Japan. Previously, these supplies were tax-free.
The new law deems a supply of services as supplied to businesses or not based on the nature of the services or terms and conditions of contracts.
Japanese businesses receiving services deemed to be business-to-consumer electronic services are not eligible for a purchase tax credit unless the foreign service provider becomes a registered foreign business. The form to be used by overseas businesses applying for such registration is included among the forms released by the tax agency.
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