Japanese Consumption Tax (JCT) and VAT Refunds

Operations at SANSEI Trust Tax and Accounting revolve on tax report preparation and tax consultation for foreign capital-affiliated companies operating in Japan.

Water’s Edge Transactions Consultation · Other Overseas Transactions Consultation · Japan

In recent years, we are seeing a marked increase in inquiries from foreign corporations regarding the Japanese Consumption Tax (JCT), which is Japan’s equivalent to the value-added-tax (VAT). In fact, practices under the consumption tax have become increasingly complicated in recent years. And this is because international transactions have become more complex in response to a fast-changing global business environment—one of intensifying competition and proliferating trade liberalization agreements.

Serving as SANSEI’s senior advisor is Mr. Hidefumi Uesugi. Mr. Uesugi is a veteran Japan National Tax Agency administrator (or NTA, the Japan equivalent to US Internal Revenue Service) who helped formulate the original legislation for JCT, and who has published several books about the tax. Now in partnership with Mr. Uesugi, SANSEI’s primary business is advising for and compiling reports on JCT regulations for overseas corporations, Japan branch offices and subsidiaries, clients involved in international transactions with Japan domestic corporations, and non-residents.

We provide consultation on JCT law and point-of-entry transactions for global airlines, maritime transport companies, international telecommunications companies, and others. We also act as agent for JCT refund applications in service to foreign corporations.

SANSEI provides consultation on JCT for the following types of overseas transactions, for example:

• JCT related to overseas airline general sales agent (GSA) activities in Japan
• JCT paid by overseas private jet rental companies
• JCT paid by international telecommunications companies and seabed cable companies
• JCT paid when shipping products and passing through Japanese territorial waters
• JCT issues connected to natural gas extraction on the East China Sea continental shelf
• JCT related to transfer and relocation fees for overseas athletes affiliated with foreign sports clubs
• Other JCT

JCT Refund Application · JCT Agency Services · Japan

JCT expenditures in Japan are very often refundable, even though this remains a little known fact. SANSEI JCT Agency Services are provided to assist in obtaining JCT refunds for global clients. Following are two examples of refundable JCT circumstances:

First, consider the example of foreign capital-affiliated airline companies. Flying aircraft into Japan, they have the right under consumption tax law to declare for JCT and apply for a refund. Since many if not most such airlines are unaware that JCT is levied, they are therefore not aware of the necessity for JCT refund application. Still the tax is levied for: aircraft engine repair when engines are removed from aircraft; security fees for aircraft parking; costs for advertising videos and onboard newspapers (other than those brought into Japan); and domestic lodging, meals, and transportation expenses for flight crews. All of these tax outlays can be recovered—as well as any such heretofore undeclared JCT outlays in the past (to a term limit).

Then, consider the example of non-resident foreign corporations in general (having no branch office) in Japan. Non-resident corporations involving inside Japan have the obligation to pay consumption tax when they conduct transactions taxable under the law. Yet, they also have the right to request for refund of those paid taxes. In cases where non-resident corporations request for refund of JCT, they designate a tax agent residing in Japan who conducts the procedures for declaration.

These are merely two examples as they serve to introduce SANSEI JCT agency services, which are routinely called upon by global industry specialists. Companies around the world rely on SANSEI for ultimate financial success in Japan operations and projects.

So why had not more companies been submitting applications for JCT refunds before now? One reason is that for many industrial sectors, there are applicable tax codes that must be observed. Until now, such codes had remained mostly unknown or uninterpreted. Other reasons include that airline companies, for example, had up to the present been hesitant to file as they perceived the procedures to be complicated, and while the head office was left the duties. SANSEI has helped put behind all of these concerns with its offering of JCT Agency Services—which make filing for JCT refunds easier, more practical, and more lucrative.

As for ongoing reclaim conditions, very substantial JCT outlays continue to go unclaimed by overseas industry. Calling on SANSEI to oversee your JCT reclaims can be your first, most important step in recovering extensive JCT expenditures. (Please see case reviews · JCT services.)

VAT Refund Application: Europe, South Korea and Asia, Other Regions · Japan originated

SANSEI also assists in obtaining refunds of value-added taxes (VAT) paid by Japanese companies overseas. We provide support for the recovery of VAT by coordinating with the most skilled VAT specialists in Europe, Asia, USA, and other regions.