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Announcement of METI’s Efforts Regarding the Measures for Securing Smooth and Appropriate Transfer of Consumption Tax as of the End of March 2015

Following the rise in consumption tax rate to 8% in April 2014, the Ministry of Economy, Trade and Industry (METI) has been conducting a variety of measures for ensuring the smooth and appropriate transfer of consumption tax. METI hereby announces the compiled results of the specific measures undertaken for that purpose as of the end of March 2015.

  • Ÿ The Small and Medium Enterprise Agency (SMEA), in conjunction with the Japan Fair Trade Commission (JFTC), has conducted large-scale written surveys targeting SMEs and small enterprises. Based on the information obtained from such written surveys and other information, SMEA and JFTC have been conducting investigations including on-site inspections. As of the end of March 2015, SMEA and JFTC provided instruction to a total of 1,728 businesses, requested actions from three businesses, and sent recommendations to and disclosed the names of 19 businesses.
  • Ÿ In the monthly monitoring survey concerning smooth and appropriate transfer of consumption tax (survey in March 2015), 70% to 80% of the target businesses answered that all of the tax was transferred, while 3% to 4% answered that the tax was not transferred at all, which has not majorly changed from the results of the survey in the previous month. Compared to the results of the survey in April 2014, the percentage of the target businesses that answered that all of the tax was transferred for transactions between businesses has increased by 6.3% from 79.0% (survey in April 2014) to 85.3% (survey in March 2015) and the percentage for transactions between businesses and consumers has increased by 7.6% from 69.3% (survey in April 2014) to 76.9% (survey in March 2015), which shows that the percentage of businesses that answered that all of the tax was transferred has increased within one year after the rise in consumption tax rate to 8% in April 2014.

Outline of efforts

(1) Efforts to monitor and police violations

  • Inspectors to monitor buyers’ refusals to pay the additional tax have been dispatched.
    As of the end of March 2015, SMEA and JFTC provided instruction to a total of 1,728 businesses, requested actions from three businesses, and sent recommendations to and disclosed the names of 19 businesses. (The figures are for total cases SMEA and JFTC dealt with.) SMEA and JFTC will continue to strictly address such violations.
  • Ÿ In FY 2014, SMEA conducted large-scale written surveys targeting SMEs, small business operators and sole proprietors aiming to collect information concerning refusals to pass on the consumption tax. In addition, it is also distributing survey sheets to businesses through commerce and industry associations, chambers of commerce and industry, prefectural federations of small business associations, and other entities so as to broadly disseminate the sheets even to small enterprises in a vulnerable position, including sole proprietors.
  • Ÿ In April 2014, SMEA instituted a monthly questionnaire survey for businesses concerning the current situation of the consumption tax transfer, aiming to periodically ascertain the situation. In the written survey in March 2015, 85.3% of the target businesses answered that all of the tax was transferred for transactions between businesses, followed by 76.9% for transactions between businesses and consumers. Meanwhile, 3.2% of the target businesses answered that the tax was not transferred at all for transactions between businesses, and 4.2% answered the same for those between businesses and consumers.
  • Ÿ As an enhanced guidance measure targeting specified businesses (buyers), as of the end of March 2015, SMEA held 379 explanatory meetings so as to fully inform related industry associations and businesses about the guidelines for promoting fair subcontracting practices that were revised to stipulate the compliance of the smooth and appropriate transfer of consumption tax.

(2) Efforts to raise public awareness and provide consultation services

  • Ÿ Four SME associations opened 2,328 consultation counters to provide the public with face-to-face consultation services. As of the end of February 2015, about 1,320,000 cases were accepted.
  • Ÿ As of the end of February 2015, 16,871 seminars concerning the measures for securing smooth and appropriate tax transfer were held at SME associations and government-approved support organizations, with about 370,000 people attending.
  • Ÿ SMEA has prepared about 1.09 million copies of guides and manuals to help the public easily understand such measures and has distributed them to businesses across Japan through SME associations and government-approved support organizations.
  • Ÿ SMEA has opened an online consultation counter for receiving public petitions with full security considerations. Please take advantage of this website for consultation services concerning tax transfer. SMEA also provides telephone consultation services.

Consultation counter URL: https://www.shinkoku.go.jp/shinkoku/External Site Link (in Japanese)
Tel: 03-3501-1502

Future efforts

Pursuant to the provisions of the Act on the Partial Revision of the Income Tax Act and Other Acts (Act No. 9 of 2015), the rise in consumption tax rate to 10% has been postponed for one year and a half. But in light of the importance of the measures for securing smooth and appropriate transfer of consumption tax, SMEA will continue to take all possible measures to secure the smooth and appropriate transfer of consumption tax.

Therefore, in FY 2015, aiming to proactively collect information to monitor and police violations, SMEA will continue to conduct the large-scale written surveys to swiftly and strictly address refusals to pass on the consumption tax.

SMEA will continue to work on measures for securing smooth and appropriate transfer of consumption tax through monitoring and policing violations, raising public awareness, and providing the public with consultation services, including conducting activities to raise public awareness aimed at disseminating the understanding that refusal to pass on the consumption tax is illegal as well as preventing such refusals.

Release date

April 13, 2015

Division in charge

  • Fair Trade Division, Business Environment Department, Small and Medium Enterprise Agency
  • Competition Enhancement Office, Economic and Industrial Policy Bureau
Ministry of Economy, Trade and Industry
1-3-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-8901, Japan Tel: +81-(0)3-3501-1511
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