Understanding JCT Registration Triggers and Thresholds in Japan
Updated 2 months ago
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Knowing when you are required to register for JCT is one of the most important steps in managing your Japan tax obligations. This article explains the registration thresholds and how they apply to both resident and non-resident businesses.
The Registration Threshold
The JCT registration threshold is JPY 10 million in taxable sales. This threshold applies to both Japan-based businesses and foreign businesses selling into Japan.
How the Threshold Is Measured
Japan uses two measurement periods to determine whether you have exceeded the threshold:
Period | Definition |
|---|---|
Base Period | The full fiscal year two years prior to the current taxable period |
Specified Period | The first six months of the immediately preceding fiscal year |
If your taxable sales exceed JPY 10 million in either period, you are required to register for JCT.
Example: If your taxable sales exceeded JPY 10 million in FY2023 (your base period), your JCT obligation begins in FY2025.
What Counts Toward the Threshold?
Included | Excluded |
|---|---|
B2C electronic service revenue (for non-resident sellers) | Exempt (non-taxable) supplies |
Zero-rated sales, such as exports | B2B electronic service revenue (for non-resident sellers, as reverse charge applies) |
B2B and B2C domestic taxable supplies (for resident businesses) | Sales deemed made by a designated platform operator |
Inter-company revenue | — |
Note: Refunded or credited sales are deducted from the threshold count as of the date the refund is issued.
Special Rule: New Companies
If your business was newly incorporated with capital of JPY 10 million or more, you are required to register for JCT immediately, regardless of your actual sales volume.
Voluntary Registration
Even if your sales are below the JPY 10 million threshold, you can choose to register voluntarily. This is useful if you want your B2B customers to claim full input JCT credits using your Qualified Invoice Issuer (QII) registration number.
When Tax Applies After Registration
JCT must be charged from the effective date stated in your JCT registration notification. For most businesses, this is the first day of the taxable period that falls two years after the base period in which the threshold was exceeded.
Exception: Businesses that register as a Qualified Invoice Issuer (QII) become taxable immediately upon registration, regardless of their current sales level.
Marketplace Sales
If you sell through a designated platform operator and the platform collects and remits JCT on your behalf, those sales do not count toward your JPY 10 million threshold.
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