The National Tax Agency of Japan have advised of a revision effective from 1st October 2015 to the regulations regarding Consumption Taxation on Cross-border Supplies of Services. In accordance with this revision the criteria for determining either domestic or foreign transactions with regard to provision of electronic services has been altered from the location of the office of the service provider associated with providing such services to the “address of the service recipients”.
Based on the revision, Site License and Advertisement contracts of electronic services provided by Macmillan Publishers group will be classified as “provision of B2B (business-to-business) electronic services” and the full contract value is liable for Consumption tax.
Customers receiving Site License or Advertisement services must use the “Reverse Charge mechanism” to file and pay the applicable Consumption Tax, except for businesses that file their returns through a general taxation system with a taxable sales ratio less than 95%. The sales ratio of your business should be confirmed in your organization.
As a transitional measure, when a foreign business provides electronic services commencing before October 1, 2015 and continuing through October 1, 2015 based on a contract concluded by March 31, 2015, the regulations regarding Consumption Tax before this reform will apply.
Further information regarding the revision can be located on the National Tax Agency website. If you require clarification regarding any of the above information, please check with your local tax authorities.