Indirect Tax News - October 2020

A new system in Consumption Tax–filing extension rule

On 27 March 2020 the Diet passed and enacted a law related to tax reform. The law, which came into effect on 1 April 2020, was published in the official gazette on 31 March. This revision includes several items related to the consumption tax (Japan’s indirect tax) system, but in this article, we focus on just one of them: the tax filing extension rule.

As a result of the 2020 tax reform, the deadline for filing a final tax return for the consumption tax can be extended by one month. This brings the consumption tax treatment in line with the filing extension rule applicable to corporate tax.


In principle, under Japan’s self-assessment system, Japanese corporations must report their income to the tax authorities within two months of the end of the accounting period. For corporate income tax purposes, taxable income is calculated based on the financial figures that are finalized and approved by the shareholders/owners. The provisions of the Companies Act, however, require the shareholders/owners to approve the financial figures through resolution at a general meeting of shareholders that must be held within three months of the fiscal year end. Therefore, taking into consideration the terms prescribed in the Company Act, Japanese companies are basically permitted to apply for a one-month extension to complete their corporate tax filings.

On the other hand, there was no corporate law provision that would apply to consumption tax and so no extensions were allowed related to consumption tax filing. As a result, quite a few companies filed their consumption tax before their financial figures were finalised and they often had to amend their tax filing based on their finalised financials. Given this, the law has been amended to allow for granting of a one-month extension of the filing deadline for consumption tax.


  • Eligibility: To be eligible to file for the consumption tax extension, a company must have applied for the filing extension for corporate income tax.
  • Application requirement: The application for consumption tax extension must be submitted by the end of company’s financial year.
  • Effective: The ability to apply for an extension to file related to consumption tax is applicable for the tax years starting on or after 31 March 2020 for companies that do annual filings for consumption tax. The extension is not available for taxpayers’ monthly or quarterly filings related to consumption tax. (It’s only available for taxable periods for fiscal year end.) So, for example, for companies with a financial year end in December, the extension rule applies from the financial year ended December 2021.

It should be noted that this extension rule does not apply to interim tax payments that are based on the filed tax for the last financial year.

Kenichiro Kishi

Asami Niioka