Revised act concerning the consumption tax return filing

Thursday, August 4, 2011. 11:10

The taxable sales of the business year proceeding last business year (hereafter as two-prior-year taxable sales) is the amount by which whether a company is subject to file consumption tax return is determined. Basically, if the two-prior-year taxable sales amount is over JPY10, 000,000, then the company is obliged to file a consumption tax return for the current business year. Otherwise, the company can choose whether to file or not to file the consumption tax return. A company whose two-prior-year taxable sales equal to and below JPY10,000,000 choosing not to file consumption tax return is called consumption-tax-exempt company.

This, in fact, is a tax loophole which allows company not to have to file consumption tax for the current business year even though its current taxable sales is over JPY10,000,000 because its two-prior-year taxable sales is under JPY10,000,000 and vice versa.

To close such tax loophole, the requirement of filing consumption tax return is no longer determined by the taxable sales of two business year ago. It is determined by the taxable sales of the first six months of the last business year. In other words, if the taxable sales amount of the first six months of the last business year is greater than JPY10,000,000, then the company must file consumption tax return for the current business year. This act will be applied to company with business year starting on or after January 1, 2013.

Source: Guidelines of Tax reforms of Year 2011（平成23年度版）改正税法の手引き

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