Summary
For the provision of telecommunications services targeting consumers within Japan, such as app distribution, regardless of whether the provider is domestic or foreign, the entity providing such services is required to report and pay Japanese consumption taxes (JCT). With amendments to certain parts of the Consumption Tax Law, from April 1, 2025, foreign businesses providing telecommunications services to consumers through digital platforms and receiving payment for such services via specific platform operators will be deemed to have provided such services by the specific platform operators for reporting and taxation purposes.
Definition
※１ Telecommunications services means the provision of services conducted through telecommunications (such as the internet) including app distribution, the distribution of electronic books and music.
※２ Business-oriented telecommunications services means those provided by foreign businesses where the recipients of the services are typically businesses, based on the nature of the services or transaction conditions related to the provision of such services.
※３ Foreign businesses means individual businesses defined as non-residents under the Income Tax Law, and foreign corporations defined under the Corporate Tax Law.
※４ Digital platforms include app stores and online malls.
※５ Specific platform operators means businesses designated by the Commissioner of the National Tax Agency as meeting certain requirements as platform operators.
Outline of platform taxation
The platform taxation targets the provision of telecommunications services to consumers through digital platforms by foreign businesses, where the consideration for such service provision is received via specific platform operators. Therefore, the following cases are not subject to platform taxation:
- When domestic businesses provide telecommunications services to consumers through digital platforms.
- When telecommunications services to consumers are provided without using digital platforms.
- When telecommunications services to consumers are provided through digital platforms, but the consideration for such service provision is received without using specific platform operators.
- Telecommunications services to consumers that are not subject to platform taxation will continue to be reported and taxed by the service provider by themselves as before.
- Business-oriented telecommunications services will continue to be reported and taxed by the recipient of the service (reverse charge method) as before
The platform taxation targets:
Provision of telecommunications services to consumers through digital platforms by foreign businesses.
And
Receipt of payment for such service provision via “specific platform operators.”
What is “A ‘specific platform operator’
“A ‘specific platform operator’ means a platform operator designated by the Commissioner of the National Tax Agency as meeting certain criteria. When the Commissioner designates specific platform operators, it will be publicly announced on the National Tax Agency’s website.
For specific platform operators that will be subject to platform taxation from April 1, 2025, the designation will be made by December 31, 2024, and publicly announced on the National Tax Agency’s website.
Furthermore, specific platform operators designated by the Commissioner are required to notify foreign businesses providing telecommunications services to consumers through their platforms, which are subject to platform taxation, of the fact that they are subject to platform taxation and the effective date (the date on which the designation of the specific platform operator takes effect).”
Platform Taxation
If the provision of telecommunications services to consumers by foreign businesses becomes subject to platform taxation, the specific platform operator will be responsible for filing and paying taxes for those telecommunications services provided to consumers. Therefore, foreign businesses are not required to file or pay consumption tax for these services. However, if there are transactions subject to consumption tax in addition to the provision of telecommunications services subject to platform taxation, filing and paying consumption tax may be required for those transactions.
Invoice system
The provision of telecommunications services to consumers subject to platform taxation is considered to have been carried out by the specific platform operator. Therefore, even if a foreign business is an eligible invoice issuer (invoice issuer), there is no obligation for the foreign business to issue invoices for the provision of telecommunications services to consumers subject to platform taxation.
