JAPAN Trends and Developments Contributed by: Yutaka Shimoo, Anderson Mōri & Tomotsune
Consumption tax: platform taxation for cross- border digital services and imports In Japanese practice, the importance of platform taxa - tion for Consumption Tax is increasing. Consumption Tax is Japan’s value-added tax (VAT). It is imposed on: • consideration for sales or leases of assets carried out in Japan, and consideration for services sup - Platform taxation is intended to shift certain Con - sumption Tax compliance obligations from foreign suppliers to platform operators. Platform taxation on digital services (first type of platform taxation) This regime applies where: • digital services are provided by foreign business operators through a “specified platform operator” designated by the National Tax Agency (NTA); and • the consideration for the digital services is col - lected by that specified platform operator. plied in Japan; and • imports of goods. As a general rule, consideration for digitally supplied services is subject to Consumption Tax if the service recipient is located in Japan. For cross-border digital services: • for B-to-C (business-to-consumer) services, for - eign suppliers are generally required to file and pay Consumption Tax themselves; and • for B-to-B (business-to-business) services, the Japanese recipient generally accounts for the tax under the reverse charge mechanism. In practice, because digital services can be provided without a physical presence in Japan, some foreign B-to-C suppliers have failed to register, report and pay Consumption Tax. To address this, platform taxation for B-to-C digital services was introduced from 1 April 2025. Under this regime, specified platform operators designated by the NTA must file and pay Consumption Tax in respect
of B-to-C digital services supplied by foreign opera - tors through the platform and collected by the plat - form operator. Economically, this typically shifts the tax collection burden onto the platform operator (and, in practice, the cost may be reflected in platform fees or contractual allocation). Platform taxation on low-value imports (second type of platform taxation) Under prior rules, goods dispatched to Japan from abroad via mail order could be exempt from import Consumption Tax where the value per parcel was JPY10,000 or less (referred to as “specified small- value transactions”). Under the 2026 tax reform, these small-value import transactions will become subject to import Consump - tion Tax (ie, they will be removed from the exemption). In addition, where the aggregate amount of taxable sales of goods by foreign business operators through a digital platform; and taxable sales of specified small-value import transactions through that plat - form, exceeds JPY5 billion (including Consumption Tax), then the platform provider managing that digital platform may become responsible for paying the Con - sumption Tax for those specified small-value import transactions under the second type of platform taxa - tion rules. These reforms are scheduled to take effect on 1 April 2028 and it is expected that they will have a significant impact on foreign business operators that sell goods into Japan via cross-border e-commerce channels. Trends in Cross-Border Succession: Inheritance Tax and Gift Tax Under Japanese tax law, an individual who receives assets by inheritance or bequest is generally subject to Japanese inheritance tax. Similarly, a recipient of assets by gift is generally subject to Japanese gift tax. Both inheritance tax and gift tax are asset-based taxes imposed on the net fair market value of assets transferred between individuals without consideration. The maximum tax rate is 55%.
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