20% Special Provision Tax Calculator (Consumption Tax 2-Wari Tokurei)
Free simulator that compares Japan's consumption tax "20% Special Provision" for new invoice-registered businesses against the simplified and principled taxation methods, just by entering your taxable period and sales.
What Is the 20% Special Provision Tax Calculator?
The 20% Special Provision Tax Calculator lets you enter your taxable period, taxable sales, business category, and taxable purchases to estimate and compare, side by side, the tax payable under Japan's "20% Special Provision" relief measure for new invoice-registered businesses, alongside the existing simplified and principled taxation methods.
The 20% Special Provision is a time-limited measure for sole proprietors and small businesses that became taxable persons because of the invoice system, letting them pay just 20% of the tax on their taxable sales. Because the window is fixed (taxable periods including any day from October 1, 2023 through September 30, 2026), the tool automatically checks whether your entered period qualifies. For sole proprietors' tax years 2027 and 2028, the successor 30% Special Provision (30% of the tax on sales) is also included in the comparison.
Sources used in this calculation
Statutory figures such as tax and insurance rates come from the public bodies listed below. They change when the law is revised, so please also check the primary source before relying on the result for an important decision.
- Invoice system 20%/30% special provisions and deemed purchase ratios under simplified taxation — National Tax Agency (国税庁) Effective 2023-10 to 2028-12 ／ Last checked 2026-10-17
How to Use
- Enter your taxable period start and end dates Sole proprietors typically use January 1 to December 31; corporations should enter their fiscal year. Eligibility for the 20% Special Provision window is checked automatically.
- Choose the tax rate and business category Select standard 10% or reduced 8%, and pick the business category (1 through 6) used to compare against simplified taxation.
- Enter taxable sales and taxable purchases Enter this period's taxable sales and your actual taxable purchases (excluding tax).
- Check the most advantageous method See the tax payable under the 20% Special Provision, simplified taxation, and principled taxation, and which one comes out cheapest.
Tips for getting more out of it
- The 20% Special Provision is only available to businesses that became taxable persons specifically because they registered as qualified invoice issuers. Businesses that were already taxable persons before the invoice system cannot use it.
- No advance filing is required to use the 20% Special Provision — you simply indicate your choice on the tax return itself (unlike simplified taxation, which requires an advance election form).
- You can choose the 20% Special Provision, simplified taxation, or principled taxation independently for each taxable period, so you can re-evaluate every year as your sales and purchases change.
- The window for the 20% Special Provision is fixed: for sole proprietors it covers tax years 2023 through 2026 (partial year in 2023), and for corporations it covers fiscal years that include any day from October 1, 2023 through September 30, 2026.
- Even if you already filed an election form for simplified taxation, you can still choose the more advantageous 20% Special Provision during its window — the election form is not automatically revoked, so simplified taxation resumes once the window closes.
Use Cases
First tax filing after invoice registration
Sole proprietors who just became taxable persons by registering as qualified invoice issuers can check ahead of time whether the 20% Special Provision makes sense for their first consumption tax filing.
Deciding whether to file for simplified taxation
Compare simplified and principled taxation in advance of the 20% Special Provision window closing, to decide whether to file a simplified taxation election for future years.
Re-checking the best method each period
Since the method can be chosen independently for each taxable period, re-run the comparison whenever your sales or purchase mix changes.
Glossary
- 20% Special Provision
- A time-limited relief measure letting businesses that became taxable persons under Japan's invoice system pay just 20% of the tax on their taxable sales as consumption tax.
- Qualified invoice issuer
- A taxable business registered with the tax office to issue qualified invoices (Japan's version of a VAT invoice). Registration converts a previously tax-exempt business into a taxable one.
- Simplified taxation
- A simplified consumption tax calculation method that applies a fixed "deemed purchase rate" by business category instead of tallying actual taxable purchases.
- Principled taxation
- The standard consumption tax calculation method, which deducts the actual tax paid on taxable purchases from the tax due on taxable sales.
- Deemed purchase rate
- Under simplified taxation, the fixed percentage — set per business category (1 through 6) — used to calculate the deductible input tax.
FAQ
Side Note — Why exactly 20%?
The 20% Special Provision's rule of paying 20% of the tax on taxable sales corresponds to a uniform 80% deemed purchase rate. Under simplified taxation, the deemed purchase rate is 80% for Category 2 (retail, etc.) and 70% to 40% for Categories 3 through 6, so for most industries other than wholesale, the 20% Special Provision results in a lighter tax burden. Category 1 (wholesale), on the other hand, has a 90% deemed purchase rate: under simplified taxation the tax payable is only 10% of the tax on sales, half that of the 20% Special Provision, so wholesalers are better off with simplified taxation.
The measure was introduced alongside Japan's invoice system in October 2023. Under that system, a business's customers can only claim input tax credits if the business is a registered qualified invoice issuer, which pressured many previously tax-exempt small businesses to register and become taxable just to keep their clients. The 20% Special Provision was created as transitional relief, easing both the paperwork and the tax burden of that sudden shift.
The cutoff of September 30, 2026 reflects a policy of gradually phasing out the relief as the invoice system becomes established. After the window closes, corporations will file under simplified or principled taxation, while for sole proprietors the fiscal year 2026 tax reform created the 30% Special Provision (3割特例), which sets the tax payable at 30% of the tax on sales for tax years 2027 and 2028 only. Comparison tools like this one become increasingly useful as the deadline approaches.