Japan Consumption Tax: When Foreign Sellers Must Register

Consumption tax is the part of Japan market entry that foreign brands most reliably underestimate — not because it is expensive, but because it behaves differently from the sales-tax and VAT systems they already know. It is a 10% tax that funds nobody's growth and appears on no one's pitch deck, and precisely because it is boring, brands defer it until a filing deadline, a marketplace onboarding form, or a customs notice forces the issue. By then the cheap option — registering on time, in the right structure — is off the table.

This is a decision guide, not a filing manual. The goal is to give you enough to answer four questions before you commit: Do I have to register? When? What does registration actually require of a foreign company? And is anything about to change that should affect how I set up now? The mechanics below are accurate as of mid-2026, but consumption tax is exactly the area where you confirm the specifics of your situation with a licensed tax professional before acting — this article tells you what to ask about, not what to file.

The One Number: ¥10 Million

Japan's Consumption Tax (消費税, shōhizei) works on a threshold, not a universal obligation. A business becomes a taxable person — required to register, charge the tax, and file — when its taxable sales exceed ¥10 million in the base period (National Tax Agency, Consumption Tax guidance; see Sources below). The base period is, as a general rule, the calendar year or fiscal year two years before the current one. For a business assessing its 2026 obligation, the base period is 2024.

Below ¥10 million, a business is generally a tax-exempt enterprise and is not obligated to charge or remit consumption tax. This is why a foreign brand running a small test on a Japanese marketplace often has no immediate consumption-tax filing obligation — the volume simply is not there yet. The obligation is a function of scale, and it arrives on a two-year delay.

That two-year lag is the first thing that catches people out. A brand that scales fast in 2026 does not owe consumption tax on 2026 sales because it crossed the line — it owes it because its 2024 sales were already over ¥10 million, or it does not owe it in 2026 at all and only becomes liable in 2028 once 2026 becomes the base period. The obligation and the sales that create it are separated in time, which makes it easy to either register too late or assume you are exempt when the clock has already started.

There is a fast-growth exception that closes part of that gap, and a scaling seller should know it exists. Under the specified period (特定期間) rule, even if your base period was under ¥10 million, you become a taxable person in the current year if both your taxable sales and your payroll in the first six months of the prior year exceeded ¥10 million. In plain terms: a brand that takes off cannot always count on the two-year buffer, because a strong first half in the prior year can pull the obligation forward. If you are growing quickly, do not assume the base-period math gives you a free year — check the specified period too.

The second trap is the one that catches the more sophisticated entrants. A newly established company with paid-in capital of ¥10 million or more is a taxable person from its first fiscal year, with no base-period grace period at all. If your Japan entry plan involved incorporating a properly capitalized Japanese subsidiary — the kind of ¥10-million-plus capitalization that looks credible to banks, landlords, and partners — you may have created a consumption-tax obligation on day one, before your first sale settles. That is not a reason to under-capitalize; it is a reason to know the tax status of the entity you are about to create before you create it.

10% or 8%: What Rate Applies to You

Japan runs a two-rate system. The standard rate is 10%. A reduced rate of 8% applies to a narrow set of categories: food and non-alcoholic beverages (excluding alcohol and dining out) and certain newspaper subscriptions.

For the categories most foreign ecommerce brands actually sell — cosmetics, skincare, apparel, accessories, household and lifestyle goods, electronics, and supplements marketed as general merchandise rather than food — the rate is 10%. The 8% reduced rate is genuinely relevant only if you sell food or beverages, and there it comes with edge cases (a product that is food but sold with a non-food premium, for instance) that are worth a professional's attention. For everyone else, the practical rule is simple: assume 10%, build it into your Japanese pricing, and do not let the existence of a reduced rate convince you it applies to your catalogue.

The Part Foreign Companies Get Wrong: Tax Agent and Invoices

Two Japan-specific mechanics generate more foreign-seller mistakes than the threshold itself, because neither has a clean equivalent in most home markets.

You need a tax agent (納税管理人)

A foreign business without a permanent establishment in Japan cannot simply file consumption tax remotely. It must appoint a Japanese tax agent (納税管理人, nōzei kanrinin) and submit a Tax Agent Notification Form (納税管理人の届出書) to the competent tax office. The tax agent is the designated intermediary between your business and the National Tax Agency — the party who receives correspondence, handles the filing, and manages payment on your behalf.

This is a statutory role, not a courtesy. You cannot register or file consumption tax as a non-resident business until a tax agent is in place, which means the appointment is on the critical path of your entire tax setup, not a step you handle after registration. It is also a role with real substance — the tax agent is answerable to the NTA — so it is not something to hand to whoever is cheapest or most convenient. Foreign brands routinely discover this requirement at the worst possible moment: when a filing is already due and there is no agent appointed to make it.

The Qualified Invoice System decides whether your buyers can claim credits

Since October 1, 2023, Japan has operated under the Qualified Invoice System (適格請求書等保存方式), commonly called the "invoice system." Under it, a Japanese business buyer can only take an input tax credit on its purchases if it holds a qualified invoice issued by a registered qualified invoice issuer (適格請求書発行事業者).

The practical consequence for a foreign seller is sharp, and it is a business decision disguised as a compliance one. If any meaningful share of your sales is B2B — selling to Japanese retailers, wholesalers, salons, clinics, or corporate buyers — and you are not registered as a qualified invoice issuer, then your customers cannot claim input credit on what they buy from you. In effect, your product costs them more than an identical product from a registered competitor, and sophisticated Japanese buyers know to check. For a B2B-heavy brand, registering as a qualified invoice issuer can be commercially necessary even at sales volumes where the ¥10 million threshold would otherwise let you stay exempt — because voluntary registration is the price of being a creditable supplier.

For a purely B2C brand selling to individual consumers, this pressure is far weaker: consumers do not claim input credits, so the qualified-invoice question is largely moot and the ¥10 million threshold is the real trigger. Knowing which side of the B2B/B2C line your revenue sits on is therefore not a bookkeeping detail — it changes whether you should register early and voluntarily or wait for the threshold to force it.

The Import Question: Who Pays at the Border

Everything above concerns domestic consumption tax — the tax you charge and remit on taxable sales made in Japan. There is a separate mechanism for goods physically crossing the border, and this is where cross-border sellers who ship directly to Japanese consumers need to pay attention.

When goods are imported into Japan, import consumption tax is assessed at customs. Under the current system, imported goods with a customs value of ¥10,000 or less are, in principle, exempt from that import consumption tax. This de minimis exemption is the invisible scaffolding under a large amount of low-ticket cross-border ecommerce: brands shipping individual parcels of cosmetics, accessories, or small-basket orders directly from an overseas warehouse to Japanese buyers have, in practice, been operating below the tax line at the border.

If your model depends on that — if your landed-cost math and your competitiveness against domestic sellers quietly assume the sub-¥10,000 parcel arrives tax-free — you are relying on a rule with a scheduled expiry.

The 2028 Change You Should Plan For Now

Japan's FY2026 tax reform, enacted in March 2026, phases out the low-value import exemption. Import consumption tax applies fully from April 1, 2028: imported goods with a customs value of ¥10,000 or less will no longer be exempt — they become taxable, closing what the government treats as a competitive imbalance between overseas sellers and domestic businesses that have always charged the tax.

Two features of the reform matter for how you set up today:

• The liability moves to the seller — or the platform. Rather than collecting the tax from the Japanese recipient at customs, the reform places the consumption tax liability on the overseas seller of the low-value goods, who will need to consider registering as a specified low-value goods seller. Where the sale is facilitated through a large digital platform, the liability shifts to the platform operator. Platform operators facilitating relevant transactions above a ¥5 billion threshold are designated to carry the obligation.
• The timeline has staged milestones before it bites. This is not live yet. The registration system for specified low-value goods sellers opens around October 1, 2027, with notification and designation processes for platforms beginning earlier in 2027, ahead of the April 1, 2028 effective date. The lead time is deliberate — and it is also your planning window.

One caveat on all of the above: this reflects the FY2026 tax reform as currently legislated. The staged dates — seller registration opening around October 2027, the April 2028 effective date — are the announced plan, and the fine detail of the seller and platform registration mechanics may still be refined before it enters into force. Treat the direction and the timeline as reliable planning inputs, and confirm the operational specifics closer to the date.

The decision-relevant takeaway is not "panic about 2028." It is this: if you are choosing a fulfillment model in 2026 — direct cross-border parcels versus bulk import into a Japanese warehouse versus a marketplace's own logistics — do not let a temporary tax advantage that expires in 2028 be the deciding factor. A model that only works because of the low-value exemption is a model with a countdown on it. The route comparison itself — landed cost, delivery speed, channel access, and a break-even you can run on your own order volume — is worth doing on its own terms rather than on the tax calendar. Our cross-border ecommerce service exists partly to keep this kind of structural, forward-dated change on the table when brands are making fulfillment and entity decisions that are expensive to reverse.

What About Platform Taxation?

You may have heard that Japan now makes platforms collect consumption tax. That is true, but narrower than it sounds, and conflating it with physical-goods marketplaces is a common error.

Since April 1, 2025, Japan applies "platform taxation" under which designated digital platforms act as the deemed supplier for certain electronically supplied services — digital content, apps, and similar — sold to Japanese consumers by non-resident providers. A platform crosses into this obligation when the services it facilitates exceed a ¥5 billion threshold, and the NTA has publicly designated operators including major app stores and digital marketplaces. For a non-resident developer selling a digital product through one of those platforms, the platform now handles the consumption tax.

The critical distinction for a physical-goods brand: this regime targets digital services, not physical products. Selling cosmetics on Rakuten or apparel on Amazon Japan does not hand your consumption-tax obligation to the marketplace under the 2025 platform-taxation rules. You remain responsible for your own registration and filing once you cross the threshold. The 2028 low-value import reform does extend a platform-liability concept to physical goods, but only for low-value imports and only above its own thresholds. Until then, do not assume the marketplace is quietly taking care of your consumption tax — for physical goods, it is not.

A Practical Sequence for Foreign Sellers

Consolidating the above into the order you actually need to think about it:

1. Determine your entity and its capital. If you incorporate a Japanese company with ¥10 million or more in paid-in capital, you are likely a taxable person from year one. Decide this consciously, not as a side effect of a capitalization chosen for other reasons.
2. Project your taxable sales against the ¥10 million threshold — on the two-year lag. Know which year is your base period and whether you have already crossed the line in it.
3. Classify your revenue as B2B or B2C. B2B weight pushes you toward voluntary qualified-invoice-issuer registration regardless of the threshold, because your buyers' input credits depend on it.
4. Appoint a tax agent before you need to file. If you have no permanent establishment in Japan, the 納税管理人 appointment is a prerequisite, not a formality, and it sits on the critical path.
5. Stress-test your fulfillment model against the 2028 import change. If direct low-value cross-border shipping is central to your economics, confirm the model still works when the sub-¥10,000 exemption disappears.

None of these steps is exotic. The failures we see are failures of sequencing and timing — a tax agent appointed a month too late, an entity capitalized without checking its year-one status, a fulfillment model built on a rule with an expiry date. The tax itself is straightforward; the trap is treating it as an afterthought in a market that treats it as a prerequisite.

How LAUNOVA Helps

LAUNOVA works exclusively with foreign brands entering the Japanese ecommerce market, and consumption tax is one of the structural questions we make sure is answered before it becomes a deadline. We are not a tax firm — filings, registrations, and formal tax advice belong with a licensed Japanese tax professional, and we will tell you plainly when a question needs one and help you get the right specialist in the loop. What we do is keep consumption tax, entity structure, invoicing status, and the 2028 import change on the table while you are making the platform, fulfillment, and setup decisions they interact with, so you do not optimize one and quietly break another. Our market entry partner service is structured around your entry stage rather than a fixed package, and pricing is quoted per brand based on scope. If tax status is one of the open questions blocking your Japan decision, tell us where you're stuck → and we'll help you sequence it.

FAQ

Q: When does a foreign ecommerce seller have to register for Japan Consumption Tax?
The trigger is ¥10 million in taxable sales in your base period — the calendar year (or fiscal year) two years before the current one. Cross that line and you become a taxable person obligated to register, collect the 10% tax, and file. There is a second trap most foreign sellers miss: a newly established company with paid-in capital of ¥10 million or more is a taxable person from its first year, with no base-period grace at all. If you incorporated a well-capitalized Japanese entity to enter the market, you may already be liable before you make a single sale.

Q: Do I need a tax agent in Japan to handle consumption tax?
If your business has no permanent establishment in Japan, yes. A foreign business without a PE must appoint a Japanese tax agent (納税管理人, nōzei kanrinin) and file a Tax Agent Notification Form with the relevant tax office before it can file and pay. The tax agent is your point of contact with the National Tax Agency and handles the filing and payment mechanics. This is not the same as a lawyer or a general accountant — it is a specific statutory role, and you cannot register or file without one in place.

Q: What is the ¥10,000 low-value import rule changing in 2028?
Today, goods imported into Japan with a customs value of ¥10,000 or less are, in principle, exempt from import consumption tax — which is why many cross-border sellers ship directly to Japanese consumers below that line without tax friction. Japan's FY2026 tax reform, enacted in March 2026, phases out that exemption, with import consumption tax applying fully from April 1, 2028. From that date, those low-value goods become taxable, and the liability moves to the overseas seller — or, where the sale runs through a large marketplace, to the platform operator. It is now enacted law but not yet in effect, so if your unit economics quietly depend on the sub-¥10,000 exemption, you are building on a floor with a known removal date.

Q: What is the difference between the 10% and 8% consumption tax rates?
Japan has a standard rate of 10% and a reduced rate of 8%. The 8% reduced rate applies to food and non-alcoholic beverages (excluding dining out and alcohol) and to certain newspaper subscriptions. For the overwhelming majority of foreign ecommerce categories — cosmetics, skincare, apparel, household goods, supplements sold as general merchandise, electronics — the rate is 10%. If you sell food or beverages, the 8% rate and its edge cases matter to your pricing and invoicing; for most other brands, assume 10% and move on.

Q: Does the platform (Rakuten, Amazon) collect consumption tax for me?
Not in the way it works for US sales tax. Since April 1, 2025, Japan applies "platform taxation" that makes designated digital platforms the deemed supplier for certain electronically supplied services above a ¥5 billion facilitation threshold — but that regime targets digital services (app stores, digital content), not physical-goods marketplaces. For physical products on Rakuten or Amazon Japan today, you are responsible for your own consumption tax registration and filing once you cross the threshold. The 2028 reform extends a platform-liability model to low-value physical imports, but that is a future change with its own thresholds, not a current free pass.