Japan is one of the world’s largest exporting countries, with its strong manufacturing and high-tech industries making exports a key factor in driving economic growth. To support domestic companies in participating in international trade, the Japanese government has implemented an export tax refund policy aimed at reducing the tax burden on businesses and enhancing their competitiveness in international markets. Export tax refunds are a policy that allows exporters to apply for refunds of consumption tax paid during domestic procurement and production processes from the Japanese tax authorities. This article will provide a detailed demonstration of how to apply for Japanese export tax refunds, including required documents, process timelines, points to note, and explanations of relevant laws and regulations.

Overview of Japan’s Export Tax Refund Policy

1.1 Scope of Export Tax Refunds

The core basis of Japan’s export tax refund policy is the “Consumption Tax Law,” which stipulates the principle of “tax-free supply.” According to this law, any goods or services exported outside of Japan are considered tax-free supplies, meaning that these goods or services are not subject to consumption tax in the exporting country. However, during the production and procurement process of goods, companies usually have already paid consumption tax, and the purpose of export tax refunds is to return these paid input taxes to the companies.

According to Article 66 of the Consumption Tax Law, the scope of export tax refunds covers not only the export of physical products but also specific services such as international transportation, logistics services, and consulting services provided to foreign clients. The export tax refund policy is beneficial not only to manufacturing export companies but also applies equally to companies providing cross-border services.

It is worth noting that a key condition for tax refund applications is that exported goods must truly leave Japan, and valid export proof documents must be submitted, such as export declarations, bills of lading, or air waybills. These documents are used to confirm that the goods have been legally exported. If a company cannot provide these supporting documents, it may face the risk of having its tax refund application rejected.

1.2 Applicable Types of Goods and Services

According to the Consumption Tax Law, export tax refunds apply to various types of goods and services, covering a wide range of industries. These mainly include:

Physical products: Such as electronic products, machinery and equipment, food, and textiles. When exporting these products, companies can apply for refunds of consumption tax paid during the production and sales process.

Service industry: Such as international transportation, warehousing services, legal consulting for foreign clients, engineering services, etc. As long as the final beneficiary of these services is outside Japan, companies can apply for tax refunds.

Digital products and software: Cross-border e-commerce providing online services and digital products can also be eligible for export tax refunds, provided that these services are targeted at non-Japanese customers.

1.3 Calculation of Refund Amount

According to Article 62 of the Consumption Tax Law, the formula for calculating the refund amount is: Refund Amount = Input Tax – Output Tax

Where input tax is the consumption tax paid by companies for raw materials, equipment, etc. during the domestic procurement and production process in Japan, and output tax is the consumption tax collected by companies from consumers when selling goods or services domestically. Since exported goods are considered tax-free supplies, companies usually do not have output tax in export business.

The specific calculation of the refund amount can be illustrated through the following case. Suppose a manufacturing company produces a batch of export goods and pays input consumption tax when purchasing raw materials: Purchase amount: 50 million yen; Input consumption tax (10%): 50 million yen × 10% = 5 million yen. All these goods are exported to the United States, and the company has no other sales activities in Japan, so there is no output tax. According to the refund formula, the refund amount that the company can apply for is: Refund amount = 5 million yen – 0 = 5 million yen. The company needs to submit purchase invoices, export declarations, and related documents to apply to the Japanese tax authorities for a refund of 5 million yen in consumption tax.

Example: How companies determine the refund amount

Suppose a cross-border e-commerce company sells electronic products globally through an online platform. The company purchased products worth 100 million yen from local Japanese suppliers, paying input consumption tax of: 100 million yen × 10% = 10 million yen.

Subsequently, the company exports these products to European and American markets and successfully passes through Japanese customs. Since these goods meet the conditions for export tax refunds, the company can apply for a refund of 10 million yen in consumption tax. The company needs to submit export declarations, bills of lading, and purchase invoices to prove that the goods have been legally exported, thereby completing the tax refund application.

If the company, in addition to exporting goods, also sells some products in the Japanese market, its output tax will be deducted from the input tax. For example, if the company sold products worth 30 million yen in Japan, collecting consumption tax: 30 million yen × 10% = 3 million yen. In this case, the company’s refund amount would be: Refund amount = 10 million yen – 3 million yen = 7 million yen. In this way, companies can accurately calculate their refund amount in export business and apply to the Japanese tax authorities for a refund of the corresponding consumption tax. This refund mechanism provides Japanese companies with financial flexibility, helping them achieve sustainable development in international markets.

Export Tax Refund Application Process

2.1 Step One: Tax Registration

To apply for export tax refunds, companies must first complete tax registration with the Japanese tax authorities and become general taxpayers for consumption tax. According to the provisions of the Japanese Consumption Tax Law and the Tax Registration Act, only general taxpayers for consumption tax are eligible to apply for refunds of input consumption tax paid during the export process.

After establishment, companies need to immediately submit a tax registration application form to the local tax office, clearly stating that they are general taxpayers. This registration process requires companies to submit a series of documents, including company registration documents, business licenses, company addresses, and business scope. It should be noted that companies need to complete tax registration within the first month of starting operations to avoid affecting their eligibility for export tax refund applications due to delays.

In addition, if a company’s annual turnover exceeds 10 million yen, it automatically becomes a general taxpayer for consumption tax. If a company’s annual turnover is less than 10 million yen, the company can choose to become a general taxpayer to enjoy the tax refund policy. This choice is particularly important for companies with a high proportion of export business, as export tax refunds can significantly reduce the company’s tax expenditure and improve its cash flow. After receiving the company’s application, the tax office usually completes the registration within two to three weeks and issues a tax registration number to the company.

2.2 Step Two: Prepare Export Proof Documents

After completing tax registration, when applying for export tax refunds, companies must provide a series of supporting documents to prove that goods or services have been exported. These documents are key to the success of the tax refund application. According to the provisions of the Japanese Customs Law and Consumption Tax Law, companies should submit the following documents:

Export Declaration: This is the document submitted by companies to customs when declaring goods for export, proving that the goods have passed through Japanese customs and left Japan. The declaration must be stamped by Japanese customs and indicate specific information about the goods, such as product name, quantity, value, etc.

Bill of Lading or Air Waybill: This is a document issued by the transport company, indicating that the goods have left Japan by sea or air transport. The bill of lading or waybill is a key proof that the goods have actually left Japan, and copies of these documents must be attached when applying for tax refunds.

Commercial Invoice and Packing List: The invoice details the value of the goods, information about the buyer and seller, and the specifications and quantities of the goods. The packing list provides detailed information about the packaging of the goods, including the contents and weight of each package. These documents are used to support the legitimacy and specific details of the export transaction.

Export Contract: Sometimes companies need to submit export contracts signed with foreign customers to prove the authenticity and legality of the transaction, especially for export orders of larger amounts.

Companies should ensure the accuracy and consistency of all documents, as any inconsistencies or errors in the data may lead to rejection or delay of the tax refund application. In addition, companies should keep copies of all documents as a basis for future tax audits.

To obtain export declarations and other export proof documents, companies need to cooperate with customs. Usually, companies need to declare to customs before the goods leave the country, and customs will issue an export declaration after confirming that the goods have left. For goods exported by sea, the bill of lading is issued by the carrying shipping company, while for goods exported by air, the air waybill is provided by the airline. These documents are core supporting materials for tax refund applications.

2.3 Step Three: Submit Tax Refund Application

After preparing all the supporting documents, companies need to choose the timing to submit their tax refund application. According to the provisions of the Japanese Consumption Tax Law, companies can choose to file tax refunds quarterly or annually. For companies with larger export volumes, quarterly filing is recommended to receive refunds more quickly; while for companies with lower export frequency or smaller business volumes, annual filing may be more appropriate.

When submitting a tax refund application, companies need to fill out the “Consumption Tax Refund Application Form.” This form requires companies to list in detail the input tax paid for goods and services purchased domestically in Japan and calculate the amount of tax to be refunded. When filling out the tax refund application form, companies should pay special attention to the following points:

Detailed listing of input tax: Companies need to list in detail each item of input tax related to production or procurement on the form, including the supplier’s name, purchase date, detailed information of goods or services, and the amount of tax paid. This data must be consistent with the company’s purchase invoices and accounts.

Declaration of output tax for exported goods: Since exported goods are considered tax-free supplies, companies do not need to collect consumption tax when selling exported goods. Therefore, companies usually do not have output tax to deduct when declaring, which means that the total amount of input tax can be fully applied for refund.

Calculation of refund amount: Companies should calculate the refund amount according to the following formula:

Refund Amount = Input Tax – Output Tax

Suppose a company paid 10 million yen in input tax when purchasing goods domestically, and the output tax for exported goods is zero, then the refund amount the company can apply for is: 10 million yen – 0 = 10 million yen. If the company also has some sales activities in Japan, it needs to deduct part of the output tax according to the proportion of domestic sales.

Additional documents: Companies must submit all relevant export proof documents along with the application form, including export declarations, bills of lading, invoices, and purchase invoices. These documents will serve as the basis for the tax refund application, supporting the company’s declared amount.

After submitting the tax refund application, the tax office will review all submitted documents and data to ensure their accuracy and consistency. Usually, the review process takes 3 to 6 months, depending on the complexity of the application and whether the company has provided complete documents as required. If the tax office deems it necessary, they may request the company to provide more documents or explanations, thus extending the review time. Therefore, companies should ensure that all documents are accurate and complete before submitting the application to avoid delays in review due to missing or incorrect materials.

Required Documents and Points to Note

3.1 Essential Documents

When applying for Japanese export tax refunds, companies must prepare and submit a series of key documents. These documents are important bases for the Japanese tax authorities to review whether the company’s application complies with the provisions of the Japanese Consumption Tax Law. The accuracy and completeness of the tax refund application directly relate to the success of the refund, so companies need to be particularly careful when preparing these documents. According to the Tax Procedure Law, the following are essential documents when applying for export tax refunds:

Tax Refund Application Form

The tax refund application form is the core document for companies to submit applications. It needs to list in detail the company’s domestic procurement information and tax situation of export activities in Japan. The main parts of the form include the company’s basic information, reporting period, calculation of input tax and output tax, etc. Companies must accurately fill in every item, especially the details of input tax, which need to be consistent with the company’s financial records and purchase invoices.

The application form needs to be submitted according to the time specified by the tax office. Companies can choose to report quarterly or annually. For companies with frequent export business, quarterly reporting is more appropriate as it can speed up the refund process and reduce cash flow pressure.

Export Proof Documents (Customs Declaration, Bill of Lading, Invoice, etc.)

According to the Japanese Customs Law, the legitimacy of exported goods and the authenticity of their departure are prerequisites for companies to obtain tax refunds. Export proof documents usually include the following key documents:

Export Declaration: This is the declaration document submitted by companies to Japanese customs, confirmed by customs stamp, proving that the goods have left Japan. The declaration needs to clearly indicate detailed information such as the type, quantity, and value of the goods.

Bill of Lading or Air Waybill: This is a document issued by the carrier, indicating that the goods have left Japan by sea or air transport. The bill of lading or waybill is an important proof of the actual transport of goods out of the country.

Invoice and Packing List: These documents are used to explain in detail the quantity, specifications, price, and packaging of exported goods. The invoice should also list the information of both parties to ensure the authenticity and legality of the transaction.

These documents are core materials for the tax office to verify whether the company meets the conditions for tax refunds and must be consistent with the actual transaction situation. Lack of these documents, or inaccurate information in the documents, will lead to rejection of the tax refund application.

Purchase Invoices and Bank Account Proof

Purchase invoices are evidence that the company has paid input tax during the domestic production or procurement process. According to the Consumption Tax Law, companies must submit all purchase invoices related to exported goods, listing the amount of tax paid, supplier information, and purchase date, etc. The calculation of input tax will be based on the amounts in these invoices, so the accuracy and completeness of the invoices are crucial.

In addition, companies need to submit bank account proof for receiving the refund. The bank account must be a valid account opened by the company in Japan, and the company needs to ensure that the account is consistent with the tax registration information to avoid the refund not being credited due to incorrect account information.

3.2 Important Points to Note

After preparing all the necessary documents, companies need to pay special attention to the accuracy of the documents and the submission deadline. The following are common problems and potential risks that companies should avoid in the tax refund application process.

Document Accuracy and Time Limit Requirements

The Japanese tax office has strict requirements for the accuracy of tax refund application documents, especially regarding the content of input tax amount, output tax amount, and export proof documents. According to the Tax Procedure Law, all documents must truly reflect the company’s transaction situation, and any inconsistency in data or missing documents may lead to application failure. For example, the quantity and amount of goods shown on the invoice must be consistent with the information in the customs declaration and bill of lading. If the invoice amount is inconsistent with the declared amount in the export declaration, the tax office has the right to reject the tax refund application.

In addition, according to Article 30 of the Tax Procedure Law, tax refund applications must be submitted within five years after export. Applications beyond this time limit will not be accepted. Therefore, companies need to strictly comply with the time regulations and ensure that applications are completed within the legally allowed period. Furthermore, companies should ensure that the submitted documents are error-free to avoid delays in tax refund applications due to incomplete or incorrect information.

Common Reasons for Tax Refund Application Rejection

The main reasons for rejection of export tax refund applications usually focus on incomplete, inaccurate, or non-compliant documents with legal requirements. The following are common reasons for rejection:

Lack of export proof documents: Failure to provide export declarations, bills of lading, or invoices is one of the most common reasons for tax refund application rejection. The tax office cannot verify whether the goods have truly left Japan, leading to the application not being approved.

Invoices inconsistent with actual transactions: The refund of input tax must be based on accurate purchase invoices. If the product description, quantity, or price in the invoice is inconsistent with the actual export situation, the tax office will doubt the authenticity of the declaration and thus reject the tax refund application.

Exceeding the tax refund application time limit: As mentioned earlier, companies must submit tax refund applications within five years after export. Any application beyond this period will be directly rejected.

Incorrect bank account: The bank account submitted by the company must be consistent with the information registered with the tax office. If the company provides an incorrect bank account when applying, the refund will not be credited, leading to rejection or delay of the application.

Process Time

4.1 Tax Refund Review Time

In Japan, the export tax refund review process is primarily handled by the tax bureau, and the entire process usually takes a certain amount of time. The specific duration depends on the completeness and accuracy of the documents submitted by the company, as well as the internal processing efficiency of the tax bureau. According to the Tax Procedure Law, after receiving an export tax refund application, the Japanese tax bureau conducts a detailed review of the tax refund application form and related documents submitted by the company to ensure that the application complies with the provisions regarding tax refunds in the Consumption Tax Law. Typically, the tax refund review time is 3 to 6 months. This timeframe depends on the following factors:
Completeness and accuracy of documents: If the documents submitted by the company are complete and accurate, the tax bureau’s review process will be relatively faster. Conversely, if there are missing documents, inconsistent information, or data errors, the tax bureau may request additional materials from the company, extending the review time.
Company’s tax record: If a company has a history of non-compliance in past tax filings, the tax bureau may subject it to more stringent scrutiny. This scrutiny includes detailed verification of the company’s input and output tax records to ensure there has been no false reporting or improper tax refund behavior.
Application volume and tax bureau workload: During peak application periods, the tax bureau’s workload may be higher, especially during quarter-end or year-end reporting periods. Increased workload at the tax bureau can also extend the tax refund review time.

4.2 How to Expedite the Review Process

To ensure that tax refund applications are smoothly approved and completed as quickly as possible, companies can take the following measures to expedite the review process:
Prepare complete documents in advance: Companies should carefully check the accuracy and consistency of all documents before submitting the application, ensuring that key materials such as export declaration forms, bills of lading, invoices, and purchase invoices are complete and error-free. Any inconsistencies or missing information will lead to extended review times.
Use of electronic filing system: The Japanese tax bureau provides an electronic filing platform through which companies can submit tax refund applications. This method not only speeds up the submission and processing but also allows real-time tracking of application progress, ensuring timely follow-up if issues arise.
Maintain communication with the tax bureau: During the tax refund review process, companies should maintain contact with the tax bureau. If the tax bureau requests additional materials, companies should respond promptly, providing the required information to avoid delays in the review. By maintaining active communication with the tax bureau, companies can resolve potential issues more quickly.
Assistance from tax advisors: Hiring professional tax advisors can help companies ensure the compliance and accuracy of application documents. Experienced tax advisors can identify potential issues in a timely manner and assist companies in resolving them quickly, thus shortening the review time.

4.3 Tax Refund Deposit Time

After the tax refund application passes review, the tax bureau will transfer the refund amount to the company’s designated bank account. Based on past experience, the time for the tax refund to be deposited is typically 2 to 4 weeks after the review is approved. This timeframe mainly depends on the tax bureau’s fund processing procedures and whether the company’s bank account information matches the tax registration information.

After completing the review, the tax bureau will send a notification to the company confirming that the tax refund application has been approved and informing them of the specific refund amount. Subsequently, the tax bureau will transfer the refund to the company’s registered bank account in Japan. Therefore, when applying for a tax refund, companies must ensure that the provided bank account information is correct and accurate. If the bank account information is incorrect or inconsistent with the company’s tax registration information, the refund may not be deposited in a timely manner, leading to further delays.

4.4 Common Causes of Delay

Although the tax refund process is typically completed within 3 to 6 months, in practice, tax refund applications may sometimes be delayed for various reasons. The following are some common causes of tax refund delays:
Incomplete documents or inconsistent information: The most common reason for tax refund delays is when companies submit incomplete, inaccurate, or inconsistent documents. In particular, discrepancies between export proof documents, invoices, and export declaration forms can raise suspicions at the tax bureau, leading to requests for additional supplementary materials.
Failure to respond promptly to tax bureau’s supplementary requests: During the review process, the tax bureau may ask companies to provide additional documents or explain certain transaction details. If companies fail to respond to these requests in a timely manner, the review progress will be put on hold, delaying the issuance of the tax refund.
Incorrect bank account information: As mentioned earlier, the company’s bank account must match the tax registration information. If the bank account information provided by the company is incorrect or outdated, the tax bureau will be unable to deposit the refund into the designated account, resulting in a delay. Therefore, companies must ensure the accuracy of their bank account information when submitting applications.
Tax bureau workload: During quarterly or annual reporting peak periods, the number of tax refund applications processed by the tax bureau surges, potentially leading to extended review and fund processing times. In such cases, companies may need to wait longer to receive their tax refunds.

Tax compliance issues: If a company has a history of non-compliance in past tax filings, the tax bureau may subject its tax refund application to more stringent scrutiny, extending the review and deposit times. Therefore, companies should ensure compliance in their past tax filings to avoid being classified as high-risk review subjects.

Conclusion and Recommendations

For companies, export tax refunds are an important financial tool that can significantly improve cash flow by recovering consumption tax paid during domestic production and procurement processes, thereby enhancing competitiveness in international markets. Export tax refunds not only alleviate tax burdens but also enable companies to enter global markets with more competitive prices, further expanding their market share.
In the tax refund application process, the key is to prepare complete documents in advance, ensure the accuracy and consistency of all data, and strictly adhere to submission deadlines to avoid review delays or application rejections. Additionally, making reasonable use of tax advisors’ professional knowledge can help companies effectively handle complex tax procedures, reduce potential errors, and accelerate the review and deposit process of tax refunds.