Decision on Japan’s Sales Tax By End of Year

July 22, 2013 Taxation in Japan

Japanese Prime Minister Shinzo AbeTOKYO – By the end of this year Japan intends to make a final decision on whether sales tax in the country will be hiked by 3 percent in April 2014, or whether the move will be delayed until the national economy improves further.

While speaking at a press conference on July 21st, the Prime Minister of Japan Shinzo Abe said that a decision on the fate of the country’s upcoming hike to sales tax will be reached by the end of November this year, after the government conducts a full review of the economic and fiscal situation of the country, with a particular emphasis on GDP growth and inflation levels.

The decision to raise sales taxes in Japan from 5 percent to 8 percent in April 2014 was already made earlier this year, but the government holds the power to postpone the move if it is deemed that the country’s economic conditions do not warrant the hike at that time.

Explaining the potential impact of the delay, Shinzo Abe said it will be a difficult decision, but “… economy is just starting to recover and now is the best chance for Japan to emerge from deflation.”

The Prime Minister’s statement came on the same day as the Liberal Democratic Party (LDP) won a majority of the seats in the country’s House of Councillors, giving the LDP control for the first time in six years.

Prior to the holding the controlling majority, the LDP has been forced to contend with oppositions parties set against the implementation of the tax.

Photo by G8 UK Presidency