The consumption tax applies to most goods and services sold in Japan. For eCommerce brands, this means that all products sold to Japanese consumers are generally subject to this tax. The tax is typically included in the retail price displayed to customers, in line with Japanese consumer protection regulations.

Foreign brands selling directly to Japanese consumers must understand how to comply with tax regulations. Since October 2019, overseas businesses with taxable sales in Japan exceeding 10 million yen in the past year are required to register for a Japanese consumption tax number and remit the tax accordingly.

This rule affects both domestic and foreign sellers who meet the threshold, encouraging proper tax reporting and collection. For brands operating through third-party marketplaces like Rakuten or Amazon Japan, platforms often handle tax collection and remittance, simplifying compliance.

Because consumption tax is included in displayed prices, customers expect transparency and clarity. Brands should factor the tax into their pricing strategy to avoid surprises or perceptions of hidden fees. Additionally, clear invoicing that shows tax-inclusive pricing is considered best practice.

For foreign brands unfamiliar with Japan’s tax system, the registration and reporting process can be complex. It often requires collaboration with Japanese tax professionals or agencies specializing in compliance. Moreover, changes in tax rates or rules can occur, requiring ongoing attention.

Understanding and complying with Japan’s consumption tax system is essential for eCommerce brands wishing to establish themselves in the market. Transparent pricing, timely registration (when required), and collaboration with local experts can help ensure smooth operations and maintain consumer trust.