Japan recently raised sales tax (consumption tax), and it’s now 10% (it used to be 8% before September 30th 2019). However, the new Japan sales tax rate is confusing and there are some exceptions.
Eating inside: 10%, taking out: 8% by VAT relief
When you buy some food at convenient stores or fast food stores and take out the food, the sales tax rate will be 8% instead of 10% by VAT relief. But the rules are complicated and everyone (even store clerks) is confused, so I’m going to give some examples here. I think the government is generous for foreign tourists, but remembering the rules wouldn’t hurt.
Japan sales tax rate examples
Buy food at convenient store and eat it in the eating area inside the store: 10%
Some convenient stores have an eating area. The sales tax rate didn’t change no matter where you ate the food until September, but it now does. If you eat the food you bought at a convenient store in the eating area of the same store, you now have to pay 10% starting October 2019.
Buy McDonald’s and eat inside the store:10%
This is just the same as buying food at a convenient store and eat in its eating area. If you buy a hamburger and eat it inside the store, the tax rate will be 10%. If you take out, it’s 8%.
Buy food at convenient store and eat it at home: 8%
I think this is the simplest example. If you buy food to eat somewhere else (home), the tax rate will be 8% because the VAT relief will apply.
Buy food at a convenient store and eat it in the parking area outside the store: 8%
If you buy food at a convenient store to take out and eat it in the parking area of the same store, the tax is still 8% even though you will still be on the premise. This is because you don’t use the eating area of the store. The same applies when you eat in your car in the parking area.
Have meal at standing restaurant: 10%
There are so many standing fast noodle restaurants in Japan, especially at train stations. Those restaurants don’t have any seats and some of them are not even located in a building. Regardless of their locations, however, eating at the table of such restaurants requires 10% sales tax.
Buy food at a food stall and eat it on the street: 8%
If there is a food stall on the street and you buy food to eat while walking, the tax will be 8% because you don’t eat at the stall. This is simple.
Buy food at a food stall and eat it on the bench besides the stall: 10%
OK, I’m going to give a little bit confusing example. Assume that there is a food stall on the street and there is a bench besides it. Now, if you buy food at the stall to eat on the bench, the tax will be 10%. Even if the stall isn’t inside a building and sells food on the street, as long as it has an eating area attached to it (a bench), it’ considered as eating inside.
Buy food at convenient store and eat it on a bench outside the store: ?%
This is a bit controversial and there is no definite answer to this. Some experts say that the sales tax rate should be 10% because a bench on the premise of a store is considered to be an eating area no matter how it’s located outside the store. Others say that it should be 8% as long as the eating area is outside the store. The judgment is left to each store, so if you are not sure, just let the store know that you are eating in the eating area (bench) outside the store and let them apply the appropriate tax rate.
OK, and when and how is the tax rate decided then?
Just like at McDonald’s, whenever you buy food at a convenient store with an eating area, the clerk will ask you if you are eating inside or take out. If you say eat here, the clerk will type 10%. If you say to go, the rate will be 8%. This is when the sales tax rate is decided. The important thing is that you have to be honest. If you feel like eating inside but tell the clerk to take out, that will be bad because it’s evasion of tax. There is no punishment for this, but try telling the truth and pay 10% when necessary.
Don’t blame if store clerks don’t know if it’s 10% or 8%; everyone is still confused
But as I mentioned at the beginning, everybody is still confused about this new tax relief and even store clerks sometimes don’t know if it’s 8% or 10%. If a clerk can’t answer your question (provided that there is no language barrier) about the sales tax rate in Japan, don’t blame him. They will learn over time, but as of now it’s been only a few days since the new rate came into practice and nobody fully understands how it works.
As of now, I don’t think there are so many English articles that explain the new Japan sales tax rates, so I hope my post was helpful. Once you are in Japan and not sure what the tax rate would be for your purchase, remember that it’s whether or not you eat the food in the eating area attached to the store. Doesn’t matter if the eating area is just a bench, located outdoors or you eat standing in the area.
For more details, see the Japanese government’s document:
Read more about Japan:
- Driving rules in Japan
- Bicycle rules in Japan
- Unwritten Japanese private lodging rules and etiquette
- Japanese table etiquette
- Western don’ts that are widely accepted in Japan