Guide to JCT Taxability and Rates in Japan
Updated 2 months ago
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Understanding how JCT applies to your products and services is an important step in staying compliant. This article breaks down Japan's JCT rates and explains how they apply to common transaction types, including SaaS and digital services.
JCT Rate Overview
Rate | What It Applies To |
|---|---|
10% (Standard) | Professional services (legal, consulting, IT, accounting), SaaS and digital services consumed in Japan, consumer electronics, clothing, restaurant meals, catering, alcohol, and domestic shipping |
8% (Reduced) | Food and non-alcoholic beverages (excluding restaurant dining and alcohol), qualifying subscription newspapers published at least twice a week |
0% (Zero-Rated) | Exported goods, international passenger and freight transport, qualifying services supplied to overseas customers |
Exempt | Financial services (loans, insurance, securities), residential rent, land sales and leases, qualifying educational tuition, and healthcare services covered by social insurance |
Note: Zero-rated and exempt are not the same thing. For zero-rated supplies, you can still claim input JCT credits on your purchases. For exempt supplies, you generally cannot.
How JCT Applies to SaaS and Digital Services
Transaction Type | Taxable? | Rate | Who Collects and Remits? |
|---|---|---|---|
B2B SaaS — Resident Seller | Yes | 10% | Seller charges JCT on the invoice |
B2C SaaS — Resident Seller | Yes | 10% | Seller charges JCT on the invoice |
B2B SaaS — Non-Resident Seller | Yes (via reverse charge) | 10% | Japanese buyer self-assesses JCT |
B2C SaaS — Non-Resident Seller | Yes | 10% | Non-resident seller must register and collect JCT |
The Reverse Charge Rule (Non-Resident Sellers — B2B)
If your business is based outside Japan and you are selling SaaS or digital services to a registered Japanese business, you do not charge JCT on the invoice. Instead, the Japanese buyer self-assesses and pays JCT directly to the NTA. This is known as the reverse charge mechanism.
Important: If the buyer provides a JCT registration ID, the transaction is treated as B2B. If they do not, it is treated as B2C, and you are responsible for collecting JCT.
Digital Services Exemptions (Non-Resident Sellers Only)
If your digital services are sold through a designated platform operator (such as an app store), the platform may be responsible for collecting and remitting JCT on your behalf. As of April 1, 2025, platform taxation rules apply when facilitated B2C sales exceed JPY 5 billion per year through the platform.
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