Consumption Tax in Japan
The Consumption Tax Law was enacted on 30 December 1988. The rate of consumption tax was initially 3 % from 1989 to 1997. In 1997, the original rate was raised to 5% (4% national tax and 1% Local Consumption Tax). In August 2012, legislation was enacted which included a two-stage increase in the Consumption Tax. This was a part of a comprehensive plan to strengthen the stability of the social security system. The first-stage increase to an 8% rate (inclusive of a local consumption tax rate of 1.7%) was formally adopted on 1 October 2013, effective 1 April 2014. Implementation of the second-stage increase to a 10% rate (inclusive of a local consumption tax rate of 2.2%) had been initially set for October 2015, however, it was delayed to 1 April 2017. Furthermore, Legislation to postpone the implementation of the 10% rate was passed by the Diet in November 2016 and the rate increase to 10% is now scheduled to take effect on 1 October 2019. At this second-stage increase, the reduced tax rate of 8% will also be introduced and it will be applied to certain food and drink and to subscriptions to newspapers published more than twice a week.