the effect of JCT duty free Japan

Do you know about consumption tax export duty free?

It is not exactly correct to say that it does not take. Originally, this means that it will be exempted.

Consumption tax means consumption by consumers within Japan. Assets and services exported overseas are not consumed within Japan, so they are exempted (that is, they are not subject to consumption tax).

How to understand the meaning requires an understanding of the basic mechanism of consumption tax.

Let’s explain the basic mechanism for calculating consumption tax. In this case, you need to think not from the perspective of a consumer who buys things at a store, but from the perspective of a business owner who purchases and sells products.

Consumption tax is calculated by subtracting the consumption tax you paid to other businesses from the consumption tax deposited by the customer, and then paying the difference to the tax office as consumption tax.

Suppose a store purchases product A, which costs 90 yen, for 99 yen, including consumption tax of 9 yen. Suppose you sell product A to a consumer for 110 yen (of which 10 yen is consumption tax). In this case, considering only the consumption tax, when purchasing product A, you pay 9 yen in consumption tax, and when you sell product A to a consumer, you receive 10 yen in consumption tax. In this case, the store keeps 10 yen of consumption tax and pays 9 yen of consumption tax. 10 yen – 9 yen = 1 yen consumption tax will be deposited, and the difference of 1 yen will be paid to the tax office as consumption tax.

Let’s start by explaining about export duty free.

As I said at the beginning, it does not mean that there is no tax, but that there is a 0% tax charge, also known as 0% tax.

For example, in the example above, if the person to whom you sell the 100 yen product is a company located overseas, let’s say you are exporting the 100 yen product. In this case, the conclusion is that it is possible to export 100 yen and the consumption tax is 0 yen (0%).

You will purchase a 90 yen product domestically for 99 yen and export (sell) it to a company overseas for 100 yen. The profit on sale will be 1 yen, the difference between 100 yen and 99 yen, if tax-included accounting is used. What do you think will happen to consumption tax?

In this case, what about consumption tax on sales?

What will happen to the consumption tax then?

If the amount is positive, it will be paid, and if it is negative, it will be refunded. In this case, you will receive a refund of 9 yen.

The effect of export tax duty free is that when exporting domestically purchased products overseas, the amount equivalent to the consumption tax paid domestically on the purchased products will be refunded (requirements and limits apply).

The system is such that the higher the consumption tax rate, the higher the refund amount. However, the prices of goods seem to be in equilibrium, and even if the tax rate increases, it does not necessarily mean that profits will increase.