This is an English translation. Consumption tax elections change yearly; the Japanese version and National Tax Agency materials are authoritative.
Japan Consumption Tax Method Simulator: Standard, Simplified or Special
Japan’s 20% special rule ends with the tax period covering 30 September 2026. Next comes the standard method, simplified taxation, or the new 30% rule for sole proprietors. The answer flips with your business category and actual cost ratio.
Calculated on your device only. Figures are estimates.
The four methods
| Method | Tax due | Election |
|---|---|---|
| Standard | Tax on sales − tax on purchases | None |
| Simplified | Tax on sales × (1 − deemed rate) | Before the period starts |
| 20% rule | Tax on sales × 20% (through Sep 2026) | None |
| 30% rule | Tax on sales × 30% (sole proprietors, 2027–28) | None |
The special rules need no election, but simplified taxation must be elected in advance — the most common mistake in practice.
The deemed purchase rate decides it
| Type | Business | Deemed rate | You pay |
|---|---|---|---|
| 1 | Wholesale | 90% | 10% |
| 2 | Retail | 80% | 20% |
| 3 | Manufacturing, construction | 70% | 30% |
| 4 | Restaurants, other | 60% | 40% |
| 5 | Services | 50% | 50% |
| 6 | Real estate | 40% | 60% |
The key point. Type 5 (services) has a 50% deemed rate, so simplified taxation costs 50% of the sales tax while the 30% rule costs 30%. Service-sector sole proprietors are generally better off on the 30% rule in 2027–2028. Type 1 (wholesale) is the opposite: a 90% deemed rate means you pay only 10%.
FAQ
How long can I use the 20% special rule?
Through the tax period that includes 30 September 2026. Sole proprietors use the calendar year, so 2026 is the final year.
Can corporations use the 30% rule?
No. It is for sole proprietors only, covering the 2027 and 2028 tax years.
When is the simplified taxation election due?
By the day before the tax period begins. A sole proprietor wanting it from 2027 must file by 31 December 2026.
Standard or simplified — which is better?
It depends on whether your actual cost ratio exceeds the deemed purchase rate. In a year with capital investment the standard method often wins and may produce a refund.
How long must I stay on simplified taxation?
Generally two years. If you plan capital investment, note that you lose the ability to claim a refund.
Sources
General information only. Confirm with a tax office or licensed tax accountant.