Consumption tax rate and exemption thresholds

Japan's consumption tax rate is 10% (for comparison, the equivalent tax in Taiwan is 20%). Companies and sole proprietors with taxable sales not exceeding 10 million yen in the base period (基準期間, usually the fiscal year before last) are exempt from filing and paying consumption tax; 10% tax can be listed on receipts without being remitted to the government as long as sales stay under 10 million yen. If sales in the first 6 months of the current period (January 1-June 30) exceed 10 million yen, the obligation to pay consumption tax starts as early as the following year (the "6-month rule"); otherwise the exemption typically ends about 2 years after the threshold is crossed — for example, crossing it in 2025 creates an obligation starting in 2027, not retroactively. The 10 million yen threshold applies not only to sales and revenue but also to total salaries paid — exceeding 10 million yen in salaries alone also creates an obligation to file consumption tax, even with zero company income. If a company's registered capital reaches 10 million yen or more, the exemption is lost regardless of sales — a separate criterion especially relevant to startups with foreign co-founders who need large capital for visa purposes; consumption tax liability activates automatically when capital (資本金) is raised to 10 million yen or more, taking effect a year later. Only domestic sales count toward the threshold; export sales (輸出売上) are not taxed and do not count as taxable. Finally, the first 2 years of a sole proprietorship's or new company's activity are usually exempt from mandatory consumption-tax registration and payment if turnover is under 10 million yen; the collected 10% tax can remain with the small business as part of its income up to that annual turnover threshold. A possible additional "business age" cap of 5 years was mentioned in the chat but is unconfirmed. Source: https://www.jetro.go.jp/en/invest/setting_up/section3/page6.html — JETRO's official description of the consumption tax turnover exemption threshold.. Source: https://toma.co.jp/en/blog/jtg/tax-ref-2024-cges-to-ct-exe-rules-for-fe/ — Breakdown of the rules for losing the consumption tax exemption when capital increases..