Simplified Consumption Tax Filing Available for Businesses Under ¥50M Revenue
Summary
The NTA has expanded eligibility for simplified consumption tax filing, raising the revenue threshold from ¥50 million to ¥80 million for FY2026. This allows more small businesses to use deemed purchase ratios instead of tracking actual input tax credits, reducing accounting burden significantly.
Why It Matters
- Simplified filing dramatically reduces bookkeeping requirements for qualifying businesses
- Deemed purchase ratios often result in lower net tax liability than actual calculations
- Frees up resources for business operations rather than complex tax accounting
What To Do
- Review FY2024 base period revenue to determine eligibility for simplified filing
- Compare actual input tax credits vs. deemed ratios to choose the optimal method
- Update accounting systems to support the chosen filing method
Japan's National Tax Agency has announced expanded eligibility for simplified consumption tax filing, providing relief to a broader range of small businesses.
New Thresholds
- Previous eligibility: Annual revenue under ¥50 million in base period
- New eligibility: Annual revenue under ¥80 million in base period
- Effective: Tax years starting April 2026
Deemed Purchase Ratios by Industry
The simplified system uses fixed ratios to calculate deductible input tax:
| Industry | Deemed Ratio |
|---|---|
| Wholesale | 90% |
| Retail | 80% |
| Manufacturing | 70% |
| Services | 50% |
| Real Estate | 40% |
Application Process
Businesses must file an election for simplified taxation before the start of the applicable tax year. Consult with a tax professional to determine the optimal approach for your situation.
Original Source: National Tax Agency
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