New tax system “Platform taxation” will be introduced in FY2024 tax reform. The rough outline of the content is as follows:
Tax Reforms：1
Regarding the provision of ‘consumer telecommunications services by overseas operators through digital platforms,’ when the compensation for such services is received through a specified platform operator designated in 2 below (‘specific platform operator’), it will be deemed as provided by the specific platform operator.
Tax Reforms：2
If the total amount of compensation for telecommunications services subject to 1 during the tax period of the platform operator exceeds 5 billion yen, Japanese National Tax Agency will designate such platform operator as a specific platform operator.
Tax Reforms：3
Those meeting the criteria in 2 must report this to Japanese National Tax Agency by the deadline for filing the tax return for the relevant tax period.
Tax Reforms：4
Upon designating a specific platform operator, Japanese National Tax Agency will notify the operator accordingly and promptly publicize the name and other details of the digital platform operator through their public website. The designated specific platform operator is required to notify the relevant overseas operators mentioned in 1.
Tax Reforms：5
The specific platform operator must attach a detailed statement containing the amounts subject to 1 to their tax return.
Summary
As mentioned in 1, the scope covers digital services provided by overseas operators, hence there won’t be direct implications for domestic businesses as service providers.
Moreover, as stated in 2, the targeted platform operators are limited to those of a certain scale, likely considering the demanding tax compliance and administrative processing requirements.
These amendments are expected to apply to telecommunications services provided after April 1st, Reiwa 7 (2025).
