In a recent development, the Japanese Finance Ministry, as reported by Richard Asquith on November 21, 2023, has officially announced its intention to extend Value Added Tax (VAT) collections to app stores starting January 2025. Notably, major platforms such as Google and Apple will be tasked with collecting a 10% Consumption Tax from third-party providers selling to Japanese consumers through their platforms.
This initiative aligns with the global shift of indirect tax responsibilities onto digital platforms. To streamline this process, the Finance Ministry plans to establish a threshold for app stores, exempting those with taxable supplies below Yen 10 million for two consecutive years from registering for Consumption Tax. The challenge of app providers ‘splitting’ income between entities to evade registration thresholds is also addressed.
Effective date: January 2025.