On 2 February 2024, Japan’s Cabinet presented tax reform bills for the year 2024 to the National Diet. Among the proposed changes is the taxation of platform operators, wherein specific operators would be subject to Japanese consumption tax (JCT) as if they were the actual providers of digital services originating from outside Japan through their operated platforms. Key points of new rules are as follows:

• Platform Operators Responsible for JCT: Online platforms exceeding 5 billion yen in facilitated sales (foreign supplier sales) in the past year will be designated as “specified platform operators.” These operators will be responsible for collecting and remitting JCT on behalf of the foreign suppliers.
• Foreign Suppliers Not Affected: Foreign suppliers generally won’t need to register for JCT in Japan. However, the platform operator will need to share their information with the tax authorities.
• Only B2C Services Affected: This new system applies only to business-to-consumer (B2C) digital services. Business-to-business (B2B) transactions will continue under the existing reverse charge mechanism.
• Platform Operators Need to Act: Platforms exceeding the threshold (5 billion yen) by 31 July 2024, must notify the tax authorities by September 30, 2024. Subsequent designations will follow specific deadlines based on tax periods.

This change aims to create a fairer system for JCT collection on digital services in Japan. If the 2024 tax reform bills are approved by the Japanese National Diet, platform operators may incur JCT liabilities under the revised taxation starting 1 April 2025.