Revised Article 30 of the Consumption Tax Law of JAPAN

Tentative translation of the Revised Article 30 of the Consumption Tax Law of JAPAN (scheduled to implement on October 1, 2023).
The Article 30 is the basic clause to deduct the consumption tax on the taxable purchase from the consumption tax on the taxable sale.

Revised Article 30
Paragraph 1
With respect to the taxable purchase or the specific taxable purchase within the country, or the taxable goods imported from the bonded area, the total amount of such consumption tax on the taxable purchase within the country, such consumption tax on the specific taxable purchase within the country, and such consumption tax levied on or due to pay for importation of the taxable goods is to be deducted from the amount of consumption tax on the tax base listed in Article 45, Paragraph 1(2) during the tax period ascribable to the date in reference to the categories of the cases listed in the following items;

Item 1
In the case of the taxable purchase within the country: the date on the said taxable purchase made in return for consideration.

Item 2
In the case of the specific taxable purchase within the country: the date on the said specific taxable purchase made in return for consideration.

Item 3
In the case of submitting the import declaration for the taxable goods to take delivery from the bonded area according to the provisions of Article 47, Paragraph 1 or 2: the date on which the delivery of the said taxable goods on import declaration made.

Item 4
In the case of submitting the special import declaration for the taxable goods to take delivery from the bonded area: the date on which the special import declaration filed with, or its decision on clearance for the special import declaration notified.

Paragraph 2
With respect to the case prescribed in the preceding Paragraph, in the case of such amount of taxable sale over 500,000,000 during the tax period prescribed in the preceding paragraph or the case of such taxable sales ratio less than 95% during the said tax period, the total amount of such consumption tax on the taxable purchase, such consumption tax on the specific taxable purchase, and such consumption tax levied on or due to pay for importation of the taxable goods on delivery from the bonded area, of which is to be deducted by the provisions in the preceding Paragraph, is calculated following the computation method, outstanding the provisions in the preceding paragraph, which is prescribed in each Item corresponding to the category listed in the following items:

Item 1
With respect to the taxable purchase and the specific taxable purchase within the country during the said tax period, and the taxable goods on delivery from the bonded area during the said tax period in reference to the preceding paragraph, in the case where those are recorded specifically by the category only for sale of the taxable goods, by the category only for sale of goods other than the taxable goods, and by the category in common for sale of the taxable goods and sale of goods other than the taxable goods:
the computation method of adding the amount listed in (a) to the amount listed in (b).
(a) the total amount of consumption tax on such taxable purchase, such specific taxable purchase, and such importation of the taxable goods, as those of which is assigned only to sale of the taxable goods.
(b) the amount multiplied by the taxable sales ratio the total amount of consumption tax on such taxable purchase, such specific taxable purchase, and such importation of the taxable goods, as those of which is assigned in common to sale of the taxable goods and goods other than the taxable goods.

Item 2
In the case other than the case listed in the preceding Item: the computation method to multiply by the taxable sales ratio the total amount of consumption tax on the taxable purchase during the said tax period.

Paragraph 3
With respect to the case listed in paragraph 2, item 1, in the case of which the equivalent ratio to the taxable sales ratio listed in paragraph 2, item 1(b) to compute the basis amount listed in paragraph 2, item 1(b), if such equivalent ratio falls under all of conditions in the following items, the amount listed in item 1(b) shall be represented as the amount to be computed by multiplying the said ratio in lieu of the said taxable sales ratio, notwithstanding provisions in paragraph 2, item 1, during the tax period on and after ascribable to the date of approval pursuant to the provisions in item 2 ;provided, however, that this does not apply during the tax period on and after ascribable to the date to submit a notification to cease the computation by applying the said approved ratio.

Item 1
The said ratio is subject to be computed reasonably according to a kind of the business operated by the said business entity or to a kind of attributed expenses for sale, administration and any other for the said business.

Item 2
With respect to the computation of the amount prescribed in Paragraph 2, Item 1(b) applying the said ratio, the said ratio is subject to approval by the director of the tax office in competent authority in place for tax payment.

Paragraph 4
With respect to the taxable purchase and the specific taxable purchase within the country, and the taxable goods for importation on delivery from the bonded area prescribed in Paragraph 1 during the said tax period, the business entity which falls under Paragraph 2, Item 1, notwithstanding the computation method prescribed in the said Paragraph 2, Item 1, may compute the total amount of consumption tax to be deducted by the provision of Paragraph 1 applying the computation method prescribed in Paragraph 2, Item 2, instead of the computation method prescribed in Item 1.

Paragraph 5
In the case prescribed in Paragraph 2 or the preceding Paragraph, the business entity who has applied the computation method prescribed in Paragraph 2, Item 2, may not compute during the succeeding tax period applying the method prescribed in the provision of Paragraph 2, Item 1, until afterward elapse of the second consecutive tax period having run through to the end from the start date when the said computation method applying.

Paragraph 6
The amount of the purchase price for the specific taxable purchase prescribed in Paragraph 1 means the consideration to be paid in return for the specific taxable purchase. The taxable goods on importation to take delivery from the bonded area prescribed in Paragraph 1 means the taxable goods imported from the bonded area furnished with the general custom clearance or the decision on the special custom clearance. The amount of the taxable sale during the tax period prescribed in Paragraph 2 means the balance remaining after deduction of the total amount of sales returns (excluded consumption tax) during the tax period from the total amount of the selling price (excluded consumption tax) for the taxable sale made during the tax period. The taxable sales ratio prescribed in Paragraph 2 means the proportion of the total amount of the selling price for sale of the taxable goods within the country in the total amount of the selling price for sale of goods within the country during the said tax period, which is computed applying the method prescribed in the cabinet order.

Paragraph 7
In the case of the business entity preserving not any books and invoices for deductible consumption tax on the taxable purchase during the said tax period, the provision of Paragraph 1 is not applied for consumption tax on the taxable purchase, the specific taxable purchase, or importation of the taxable goods accompanied without such preservation
;provided, however, that this does not apply in case where the said business entity has proven that such preservation could not be carried out for the reasons of disaster, or any other unavoidable reasons.

Paragraph 8
The books prescribed in the preceding Paragraph means the books as follows:

Item 1
In the case of consumption tax on the taxable purchase, the books in which records are kept of the following entries:
(a) the name or the business name of another party (note: assigning party) to the taxable purchase.
(b) the date on the taxable purchase made in return for consideration.
(c) the details about goods or services for the taxable purchase.
(d) the amount of the purchase price for the taxable purchase.

Item 2
In the case of consumption tax on the specific taxable purchase, the books in which records are kept of the following entries:
(a) the name or the business name of another party (note: assigning party) to the specific taxable purchase.
(b) the date on the specific taxable purchase made in return for consideration.
(c) the details about goods or services for the specific taxable purchase.
(d) the amount of the purchase price for the specific taxable purchase prescribed in the Paragraph 1.
(e) the specification for the specific taxable purchase.

Item 3
In the case of consumption tax on the taxable purchase by importation of the taxable goods from the bonded area prescribed in Paragraph 1, the books in which records are kept of the following entries:
(a) the date on which the delivery of the taxable goods on importation made from the bonded area.
(b) the details of the taxable goods.
(c) the amount of the consumption tax levied on importation of the taxable goods to take delivery.

Paragraph 9
The “invoice ” prescribed in Paragraph 7 means the document and the digital record (meaning the digital record prescribed in Article 2, Paragraph 3 of the “Act on Special Provisions concerning Preservation Methods for Books and Documents Related to National Tax Prepared by Means of Computers”; the same applies in Item 2) listed in the following items:

Item 1
The qualified invoice in writing or the qualified simple invoice in writing for sale of the taxable goods which must be sent to the business entity by another (note: assigning party) business entity (limited to the registered business entity entitled to make the qualified invoice) in the course of its sale of the taxable goods.

Item 2
The digital record to be processed by another business entity (note: assigning party), in lieu of the qualified invoice in writing or the qualified simple invoice in writing, those of which must be sent to the business entity (note: receiving party) in the course of its sale of the taxable goods according to the provision of Article 57-4, Paragraph 5.

Item 3
The self billings, the purchase calculation statement or any other similar document in which records are kept of the name of another party (note: assigning party) and any other items prescribed in the cabinet order, those of which are made by the business entity for its own taxable purchase.

Item 4
The invoice , the delivery slip or any other similar document in which records are kept of the entries according to the cabinet order, those of which is sent to the business entity (note: receiving party) by the agency or the intermediary in the course of the taxable purchase.

Item 5
The certification, which the custom director clears the taxable goods to take delivery from the bonded area for import by the business entity, or any other similar document prescribed in the cabinet order in which records are kept of the following entries:
(a) The custom director in competent authority for the place of tax payment.
(b) The date on which the taxable goods for importation to take delivery from the bonded area.
(c) The details of importation of the taxable goods.
(d) The tax base amount of consumption tax on importation of the taxable goods and the amount of the consumption tax levied on importation of the taxable goods.
(e) The name of the business entity who receives such document.

Paragraph 10
The provision prescribed in Paragraph 1 is not applied to any other building than the building as being used not for the personal residential rent listed in Item 13 of the Appendix table No. 2.

Paragraph 11
In the case of the business entity not preserving the verification documents to identify another party (note: assigning party) to the taxable purchase, the provision prescribed in Paragraph 1 is not applied to consumption tax on the taxable purchase accompanied without such preservation.

Paragraph 12
In the case of importation of the taxable goods without payment of consumption tax due to pay on delivery from the bonded area for the taxable purchase, the provision prescribed in Paragraph 1 is not applied to the consumption tax on the taxable purchase.

Paragraph 13
The special provisions for entries recorded in books prescribed in Paragraph 7, the provisions for preservation of the said books and invoices prescribed in Paragraph 7, and any other necessary provisions for implementation of each Paragraph are to be governed by the cabinet order.

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