1. Country-Specific Features
  2. Japan Help Topics
  3. Japan Tax Topics
  4. Deductible Purchase Tax for Japan

Deductible Purchase Tax for Japan

Important:

Starting April 1, 2012, Japanese companies can deduct all purchase tax amounts only if their taxable sales are more than 95% and their annual sales are less than 500M JPY.

The Japan Localization SuiteApp supports deductible purchase tax for Japan subsidiaries and their purchase transactions and records.

The following can be subject to deductible purchase tax:

For deductible purchase tax to work, you must enable the following required features:

Before you can subject transactions or records to deductible purchase tax, you should first apply purchase tax rates to corresponding tax codes.

To set purchase tax rates to tax codes:

  1. Go to Setup > Accounting > Tax Codes.

  2. Edit a Japan tax code for standard rate and reduced rate.

  3. In the Tax Deductible field, select either 100%, 80% or 50%.

    The purchase tax rate selected is the percent that will be deducted from the transaction tax amount.

  4. Click Save.

Next, you should apply the tax code, with deductible purchase tax rate, to purchase transactions or records.

To apply a tax code with purchase tax rate to transactions or records:

  1. Create or edit supported purchase transaction or record that you want to subject to deductible purchase tax.

  2. Do any of the following:

    • For a purchase transaction or a journal entry, ensure that a Japan subsidiary is selected.

    • For an expense report, ensure that an employee from a Japan subsidiary is selected.

  3. Select a tax code with purchase tax rate you want in the Tax Code field in any of the following:

    • a line item on the Expenses and Items subtab of a purchase transaction

    • a line item on the Expenses subtab of an expense report

    • a debit or credit line on the Lines subtab of a journal entry

    • an item or expense on the Lines subtab or Expense subtab of a purchase order, if the preference Allow Expenses on Purchases is enabled for purchase orders

  4. Click Save.

You can use CSV import to input or update deductible purchase tax values for Account, Tax Codes and Amount fields on purchase orders, vendor bills, vendor returns, vendor credit, journal entry, and expense report. This is applicable to the item and expense sublists of supported purchase transactions.

Note:

In CSV import, if you want to input or update and already explicitly set the Amount, Tax and Gross Amount in the CSV file of journal entries and expense reports, you must disable or clear Run Server SuiteScript and Trigger Workflows in Advanced Options. For more information, see Server Scripting and Workflow Execution.

Deductible purchase tax is automatically calculated by NetSuite, and then applies it on the transaction tax amount, which is indicated on relevant tax reports.

Note:

Consider the following:

  • If the preference, Allow Expenses on Purchases, is enabled for purchase orders, then expenses or items on the Expense subtab of purchase orders (aside from items on the Lines subtab) can be subject to deductible purchase tax.

  • The tax agency accepts only rounding down or rounding off the tax amount for transactions with deductible purchase tax rates. Use Round Down or Round Off only for purchase tax. Do not use Round Up. For more information, see Setting Tax Rounding Methods - Japan.

  • Do not use Tax Group for your transactions, use Tax Codes instead. Deductible purchase tax is not available on tax groups.

  • Deductible purchase tax calculation is not yet included in the appendices of the Japan Consumption Tax Form.

Related Topics

General Notices