Calculation method for the 10 million yen standard for determining consumption tax liability

If your taxable sales for the fiscal year two years prior exceed 10 million yen,

you will become a taxable business and be required to pay consumption tax.

This 10 million yen.

• Including tax
• Excluding tax

Which method should be used to calculate this?

Taxable businesses are calculated excluding tax, while tax-exempt businesses are calculated including tax

• If you are a taxable business, your taxable sales amount is calculated excluding tax.
• If you are a tax-exempt business, your taxable sales amount is calculated including tax.

For taxable businesses, taxable sales amount is calculated excluding tax.
(The equivalent of consumption tax is paid separately.)

Conversely, for tax-exempt businesses, even if you charge 10% consumption tax,

this amount is included in your taxable sales amount as pure sales, not consumption tax.

For example, your taxable sales including tax for the current year are the same 10.3 million yen,

• If you are a taxable business in the current year, you will be a tax-exempt business two years from now.
  (10.3 million yen ÷ 1.1 = 9,363,636 ≦ 10 million yen)
• If you are a tax-exempt business in the current year, you will be a taxable business two years from now.
  (10.3 million yen > 10 million yen)

Also, your taxable sales (including tax) two years ago were the same (10.3 million yen),

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都築太郎税理士事務所/Tsuzuki Taro Tax Accountant Office

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