Law says that companies can elect to become a consumption tax filer in Japan, and representative offices of foreign company in Japan can receive refund of consumption tax in Japan.
Currently the consumption tax rate in Japan is 8%, and the rate is going to increase to 10% in the near future. However, most of representative offices of foreign company in Japan don’t notice that they can receive refund of consumption tax by filing consumption tax return. Though there is nearly no merit for a quite small size office to file the return, the merit becomes larger if the office has a certain size of operation.
For instance, in case that foreign company which opens a representative office in Japan to conduct market investigation, research and information collection, as the representative office is not permitted to do any business activity by laws, no sales is incurred. On the other hand, expenses such as monthly rental fee, outsourcing fee and marketing fee are incurred, and these expenses include input VAT.
If the office elects to become a consumption tax filer and files consumption tax return, it can receive refund of consumption tax.