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> If you’re a small business, you don’t pay VAT Under the new Japanese system, if you're a small business but register to the tax office to get a number, you b

> If you’re a small business, you don’t pay VAT Under the new Japanese system, if you're a small business but register to the tax office to get a number, you become taxable. If instead you do nothing and don't register, you keep being exempt of taxation, except big clients will ask you for a registration number to get their rebates on their side, so you might lose them to other businesses that registered.

konschubert 3y ago
Yes, you can also choose in Germany. Of course, it you don’t pay VAT, your big clients cannot get a rebate, because no VAT was paid! It seems like in Japan, small businesses could avoid paying VAT, and their clients would STILL get a VAT rebate! I can see why the Japanese Gov is trying to change that.
- makeitdouble 3y ago
  I'm not versed in corporate taxes, but you're probably referring to a flat rate rebate on the client's taxes in case they don't bother declaring and proving all their expenses. The new system opens more doors for deduction, but they can still continue the way they did before. And flat rate deductions have always been accepted to cover cases where there was few or no expense in the first place, it's not an unintended effect nor a surprise, and it makes everyone's life easier overall. Edit: BTW in the new system there's still additional flat rate mechanisms at different levels. They really love it at the tax office.
- notpushkin 3y ago
  Yeah, it's pretty much the same everywhere I did the research (Estonia, Russia, Belarus). What you could do is offer a discount to the business the minute they ask for a VAT receipt. (Of course, you bake the VAT amount in right from the start.) Alternatively, you could explain that you aren't paying VAT because you want to keep prices low – I've seen a couple design studios use this argument successfully many times.
peoplefromibiza 3y ago
it's the same in Italy: you either don't pay VAT but clients cannot claim a rebate or you pay it so your clients can ask for a rebate. Depending on the kind of clients you have (end users or commercial entities), one is preferable to the the other.
- konschubert 3y ago
  It also depends on if you, the small business, have significant expenses for which you pay VAT.

konschubert 3y ago

Yes, you can also choose in Germany. Of course, it you don’t pay VAT, your big clients cannot get a rebate, because no VAT was paid! It seems like in Japan, small businesses could avoid paying VAT, and their clients would STILL get a VAT rebate! I can see why the Japanese Gov is trying to change that.

makeitdouble 3y ago
I'm not versed in corporate taxes, but you're probably referring to a flat rate rebate on the client's taxes in case they don't bother declaring and proving all their expenses. The new system opens more doors for deduction, but they can still continue the way they did before. And flat rate deductions have always been accepted to cover cases where there was few or no expense in the first place, it's not an unintended effect nor a surprise, and it makes everyone's life easier overall. Edit: BTW in the new system there's still additional flat rate mechanisms at different levels. They really love it at the tax office.
notpushkin 3y ago
Yeah, it's pretty much the same everywhere I did the research (Estonia, Russia, Belarus). What you could do is offer a discount to the business the minute they ask for a VAT receipt. (Of course, you bake the VAT amount in right from the start.) Alternatively, you could explain that you aren't paying VAT because you want to keep prices low – I've seen a couple design studios use this argument successfully many times.

peoplefromibiza 3y ago

it's the same in Italy: you either don't pay VAT but clients cannot claim a rebate or you pay it so your clients can ask for a rebate. Depending on the kind of clients you have (end users or commercial entities), one is preferable to the the other.

konschubert 3y ago
It also depends on if you, the small business, have significant expenses for which you pay VAT.