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Japan Sales Tax Increase Scheduled for 2019

A long-delayed increase in Japan’s consumption tax will now go into effect in October 2019, as affirmed by Japanese Prime Minister Shinzo Abe to parliament on March 28, 2018. Abe remarked that the planned increase — from 8% to 10% — would not be affected by economic conditions between now and October of next year. 

Economists have long told Japan that consumption taxes must rise in order to help bring down the country’s very large public sector debt. An initial increase from 5% to 8% went into effect in April 2014 and was blamed for an immediate decline in Japan’s economy. The next increase, from 8% to 10%, was originally scheduled for October 2015, but concern about possible economic impacts forced the government to impose a delay until April of 2017. Abe then delayed that increase by another 30 months in June 2016, citing increasing uncertainty in the global economy.  

Despite Abe’s remarks, it is of course possible that the increase will again be delayed at some point between now and October 2019, however, Worldwide ERC® members doing business in Japan should begin to plan for increased costs on the assumption that the increase will in fact go into effect. The change would also increase expatriate costs, which are already high in Japan.

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