Japan

2026 Tax Reform

On 31 March 2026, the 2026 Tax Reform Act was approved by the Diet and the 2026 Tax Reform Act, related Enforcement Orders, and Regulations were promulgated. In principle, these are effective for corporate tax years beginning on or after 1 April 2026.  

For multinational enterprises (MNEs), the areas of most interest are likely to be: significant changes to the salary increase tax credit system, with reduced application to larger taxpayers.

Consumption tax

Under the 2026 Tax Reform Act, the import of goods into Japan by mail order with a tax-exclusive price of JPY 10,000 or less per item will be subject to local supply consumption tax at the level of the seller. Concurrently, measures will be implemented whereby a seller may register as a seller of such low-value goods and assume the consumption tax liability, exempting the consumer (importer) from such liability.

A new platform taxation system (‘the platform taxation system‘) was introduced as part of Japan’s 2024 Tax Reform Act and is effective from 1 April 2025. Under the platform taxation system, platform operators, as designated by the Japanese National Tax Agency (NTA), will be obligated to report and remit consumption tax on the cross-border provision of digital services on behalf of foreign operators providing such services to Japanese customers (‘qualified platform operators‘).

Under the 2026 Tax Reform Act, platform taxation was also introduced for marketplaces that intermediate certain categories of physical goods supplies. Similar to platform taxation applied to operators intermediating the cross-order provision of digital services, platform operators intermediating the cross-border provision of certain physical goods transactions will be deemed to be the seller in such transactions and therefore will be obligated to report and remit consumption tax on those transactions.

Please see 'Consumption tax' in the Other taxes section for more details.