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> Historically, businesses with annual sales of under ¥10 million ($67,500) have been exempt from the consumption tax. This isn’t going away. Tax-exempt busines

> Historically, businesses with annual sales of under ¥10 million ($67,500) have been exempt from the consumption tax. This isn’t going away. Tax-exempt businesses technically can continue as they were. > Small businesses that were previously tax-exempt may need to register or risk losing clients — but if they do register, they will have to pay an additional 10% in taxes. Not sure what is going on. Either nothing changes and things are seriously misrepresented, either, more likely, a major tax evasion loophole is being closed off. > they will have to pay an additional 10% in taxes. Sounds more like large corporations can not deduct taxes any more that never were paid. I have the feeling the government is closing a tax loophole for big corporations, and those now 1) try to push that cost towards their freelancers/suppliers and 2) in order to justify this practice, started a marketing campaign that the "poor freelancers" are being targeted by the government. Business as usual imho.

numpad0 3y ago
It seems there are two major talking point: one is that it’s simple 10% cost penalty for previously exempted small businesses, that isn’t necessarily easy to reflect on prices. Another is that the requisite bureaucratic processing is apparently cumbersome. So “everyone” is trying to get registered, push 10% price hike, and prepare all the forms, all at once, and realizing that it’s a bit complicated to do right now, just now. And are complaining just now.
rtpg 3y ago
Big business sells stuff to consumers. They collect consumption tax from consumers. That consumption tax gets sent to the gov't. This is the same as its always been. Big business buys stuff from other businesses. When buying things, they are paying 10% in consumption tax. With this change, the consumption tax they pay to other businesses can be deducted from the consumption tax they send to the gov't from their sales to consumers (making consumption tax be a value added tax, and avoiding deeper value chains from being "consumption taxed" over and and over and over again). In order to support this, invoices have extra details (notably a tax number), to avoid VAT fraud. However, businesses also sometimes bought things from freelancers and the like, who mostly did not charge consumption tax. A freelancer with an existing business relation might send a 100k JPY invoice to a business, and the business pays it. But with this change, the business might say "hey, you're supposed to charge consumption tax right?" And would pressure a freelancer to charge 100k JPY (tax inclusive), effectively reducing the amount the freelancer get (since the consumption tax would need to be sent), _but also reducing the cost to the business_ since the 10% of paid tax reduces the amount of collected tax sent to the government, and they only really are paying like 91k JPY. Now really really, freelancers should be like "We are going to charge consumption tax so are increasing the tax inclusive amount by 10%. Please deduct things correctly" to businesses. B2B interactions are already basically marketed at tax exclusive rates. And hey, the business can deduct. But freelancers are bad at negotiating, and "please pay me more" is an argument that many freelancers are bad at doing this. On the business side, many businesses use freelancers specifically for cynical reasons and are very comfortable pushing for freelancers to offer to take the tax hit. I think it's important that in this model, the amount of consumption tax given to the gov't doesn't actually increase. The amount of consumption tax collected by the freelancer is deducted by the business from its collections. This is totally advantageous to "real businesses". I don't want to comment too much on the ethical/moral nature of it, because I'm fortunate enough to be exempt from this stuff for "clients being abroad" reasons. But it's a bit of a mess. EDIT: also, if you register into the tax system you gotta do a lot of paperwork. People not in the consumption tax system were basically just having to report their income on a single line, and paying income tax. There's a lot of good software to track this stuff, but taxes in Japan for a freelancer was basically easy enough to entirely do on paper by just adding up invoices and dividing, up until now.

numpad0 3y ago

It seems there are two major talking point: one is that it’s simple 10% cost penalty for previously exempted small businesses, that isn’t necessarily easy to reflect on prices. Another is that the requisite bureaucratic processing is apparently cumbersome. So “everyone” is trying to get registered, push 10% price hike, and prepare all the forms, all at once, and realizing that it’s a bit complicated to do right now, just now. And are complaining just now.

rtpg 3y ago

Big business sells stuff to consumers. They collect consumption tax from consumers. That consumption tax gets sent to the gov't. This is the same as its always been. Big business buys stuff from other businesses. When buying things, they are paying 10% in consumption tax. With this change, the consumption tax they pay to other businesses can be deducted from the consumption tax they send to the gov't from their sales to consumers (making consumption tax be a value added tax, and avoiding deeper value chains from being "consumption taxed" over and and over and over again). In order to support this, invoices have extra details (notably a tax number), to avoid VAT fraud. However, businesses also sometimes bought things from freelancers and the like, who mostly did not charge consumption tax. A freelancer with an existing business relation might send a 100k JPY invoice to a business, and the business pays it. But with this change, the business might say "hey, you're supposed to charge consumption tax right?" And would pressure a freelancer to charge 100k JPY (tax inclusive), effectively reducing the amount the freelancer get (since the consumption tax would need to be sent), _but also reducing the cost to the business_ since the 10% of paid tax reduces the amount of collected tax sent to the government, and they only really are paying like 91k JPY. Now really really, freelancers should be like "We are going to charge consumption tax so are increasing the tax inclusive amount by 10%. Please deduct things correctly" to businesses. B2B interactions are already basically marketed at tax exclusive rates. And hey, the business can deduct. But freelancers are bad at negotiating, and "please pay me more" is an argument that many freelancers are bad at doing this. On the business side, many businesses use freelancers specifically for cynical reasons and are very comfortable pushing for freelancers to offer to take the tax hit. I think it's important that in this model, the amount of consumption tax given to the gov't doesn't actually increase. The amount of consumption tax collected by the freelancer is deducted by the business from its collections. This is totally advantageous to "real businesses". I don't want to comment too much on the ethical/moral nature of it, because I'm fortunate enough to be exempt from this stuff for "clients being abroad" reasons. But it's a bit of a mess. EDIT: also, if you register into the tax system you gotta do a lot of paperwork. People not in the consumption tax system were basically just having to report their income on a single line, and paying income tax. There's a lot of good software to track this stuff, but taxes in Japan for a freelancer was basically easy enough to entirely do on paper by just adding up invoices and dividing, up until now.