Transitional Deduction Calculator for Purchases from Tax-Exempt Businesses (80%/70%/50%/30%) (免税事業者からの仕入れ経過措置計算)
Enter the purchase date, payment amount, tax rate, and annual cumulative amount to automatically determine the deduction rate (80%/70%/50%/30%/no deduction) for the Japanese invoice system's transitional measure on purchases from tax-exempt businesses, and estimate the deemed deductible tax for free.
What Is the Transitional Deduction Calculator for Tax-Exempt Purchases
The Transitional Deduction Calculator for Purchases from Tax-Exempt Businesses lets you enter the purchase date, payment amount, tax rate, and annual cumulative amount to automatically determine the deduction rate that applies to taxable purchases from tax-exempt businesses (unregistered suppliers) under Japan's invoice system, and estimate the resulting deemed deductible tax.
Under the invoice system, purchases from businesses other than registered qualified invoice issuers are generally excluded from the input tax deduction. To avoid a sudden tax burden increase, a transitional measure gradually reduces the deduction rate starting October 2023. A March 2026 tax reform restructured this into a gentler five-stage, eight-year schedule (80% → 70% → 50% → 30% → 0%), and added a 100 million yen annual cap starting October 2026 — making the applicable conditions vary by purchase date in a way this tool automates.
How to Use
- Enter the purchase date Enter the date of the taxable purchase from the tax-exempt business subject to the transitional measure. The deduction rate is determined automatically based on this date.
- Select the consumption tax rate Choose whether the standard rate (10%) or the reduced rate (8%) applies to this purchase.
- Enter the payment amount (tax included) Enter the amount actually paid to the tax-exempt business, including tax.
- Enter the annual cumulative amount Enter the total (tax included) of taxable purchases from tax-exempt businesses for the current year or fiscal year, including this transaction. This is used for the 100 million yen cap check for periods from October 2026 onward.
- Check the deduction rate and deemed deductible tax The applicable transitional period, deduction rate, and the actual deemed deductible tax amount are displayed.
Tips for getting more out of it
- This transitional measure applies only to taxable purchases from tax-exempt businesses that cannot issue qualified invoices. Purchases from registered qualified invoice issuers are fully deductible as usual, and this calculation is unnecessary for them.
- The deduction rate is determined by the purchase date. Even for the same supplier, the applicable rate can change if a fiscal year-end falls across a transition date, so check the purchase date on each invoice individually.
- The 100 million yen annual cap that applies from October 2026 is based on the total (tax included) of taxable purchases from tax-exempt businesses. Purchases from registered qualified invoice issuers are not included in this cumulative amount.
- To apply this transitional measure, you must keep books recording the same details required for classified invoices, plus a note that the purchase is subject to the transitional measure.
- This tool provides a simplified estimate for planning purposes. Actual consumption tax filings may require more detailed aggregation, such as itemized calculations per purchase or handling multiple tax rates within the same period.
Use Cases
Deciding whether to continue transactions with tax-exempt suppliers
Estimate in advance how much input tax deduction you can still receive under the transitional measure if a supplier remains tax-exempt, to decide whether trading terms need review.
Checking the deduction rate for transactions spanning a fiscal year-end
For transactions that span a rate-change date such as October 2026 or October 2028, check the different deduction rate that applies to each purchase individually by its purchase date.
Tracking progress toward the 100 million yen annual cap
Businesses with high purchase volumes from tax-exempt suppliers can enter their annual cumulative amount to see how close they are to the 100 million yen cap.
Glossary
- Transitional measure (経過措置)
- A time-limited system that allows a set percentage of taxable purchases from tax-exempt businesses to be treated as deductible input tax, in order to soften the sudden tax burden increase caused by the invoice system.
- Tax-exempt business (免税事業者)
- A business exempted from the obligation to pay consumption tax. Because it cannot register as a qualified invoice issuer, purchases from a tax-exempt business are generally excluded from the input tax deduction.
- Deemed deductible tax (みなし仕入税額)
- The amount of a taxable purchase from a tax-exempt business that is treated as eligible for the input tax deduction under the transitional measure, calculated as payment amount × tax rate conversion factor × transitional deduction rate.
- Principled taxation method (原則課税)
- The standard consumption tax calculation method, which totals actual taxable purchases and deducts the actual amount from the consumption tax on taxable sales. This transitional measure applies to businesses using this method.
- 100 million yen annual cap
- A restriction, applicable from October 2026 during the 70%/50%/30% deduction periods, under which the portion of the annual total (tax included) of taxable purchases from tax-exempt businesses exceeding 100 million yen is excluded from the transitional measure.
Frequently Asked Questions
Side Note — Why the Transitional Measure Shrinks in Stages
When Japan's invoice system began in October 2023, an immediate switch to zero deduction for purchases from tax-exempt businesses would have hit many taxable businesses with a sudden tax burden increase, simply because a supplier happened to be tax-exempt. To avoid this, a six-year transitional measure (October 2023 – September 2029) was set up, shrinking the deduction rate in stages from 80% to 50% to 0%, giving businesses time to adjust their trading practices.
However, the fiscal year 2026 tax reform (enacted March 31, 2026) restructured this schedule into a gentler eight-year path (October 2023 – October 2031) with five stages: 80% → 70% → 50% → 30% → 0%. This change reflected concerns that more small and medium-sized businesses than expected were still trading with tax-exempt suppliers, and that a sudden burden increase remained a real worry.
The 100 million yen annual cap introduced at the same time is a safeguard to prevent this relief measure from being used excessively by large-scale businesses to reduce their tax burden. Since relatively few businesses purchase more than 100 million yen annually from tax-exempt suppliers, the cap is expected to mainly affect a limited number of businesses with large-volume purchases.
October 2031, when the transitional measure finally reaches zero, marks exactly eight years since the invoice system began. By then, it is expected that many tax-exempt businesses will have registered as qualified invoice issuers, or that taxable businesses will have reviewed their supplier relationships — making the transitional measure a time-limited mechanism designed for a soft landing into the new system.