Starting April 1, 2021, it will be mandatory for all stores and businesses in Japan to show the tax-inclusive price of products. Many people are curious about the reason for this sudden change and how these prices will be displayed.
In Japan, the initial taxing of consumer products started in 1989. Since then, there have been periods of time where the prices of products have been displayed with and without sales tax. When the government decided to steadily increase this tax throughout two phases in 2013, it implemented the Act on Special Measures Concerning Taxation.
To make the transition into increased sales tax go smoothly, this act gave businesses a choice to display prices either including or excluding sales tax. March 31, 2021, is when it was originally scheduled to be annulled, therefore making all prices once again tax-inclusive.
As the date for tax-inclusive pricing approaches, there has been some confusion as to who must follow this new system and how prices should be displayed.
According to the National Tax Agency, any taxable business or product must display the tax-inclusive sales price to all of its consumers starting from April 1.
Examples of this include the prices shown on price tags, price stickers leaflets, posters, newspaper ads, online shopping adverts, as well as products advertised on TV.
The new act applies to businesses that previously have and will continue to display the prices of their products. If a business has never advertised or displayed the price of their products or services, they are exempt from this policy.
Below is an example of what tax-inclusive pricing will look like.
Although the change to tax-inclusive pricing has businesses scrambling to change their menus, price tags, catalogs, etc., it is very convenient for consumers.
From now on, consumers can look at a price tag and know that the price shown is exactly what they’ll be paying for. With all businesses following one system, it will make it easier to know how much you’ll pay at the checkout!
Written by Mika Inoue
*Reference 1: 消費税における「総額表示方式」の概要とその特例 : 財務省 (mof.go.jp)
*Reference 2: No.6902 「総額表示」の義務付け｜国税庁 (nta.go.jp)
*Prices and options mentioned are subject to change.
*Unless stated otherwise, all prices include tax.
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