About Consumption Tax Reporting

Use the Consumption Tax Report to report consumption tax data according to posted activity during a specified fiscal period. You can then use information from the report to fill out your Consumption Tax (CT) returns.

With the Consumption Tax, companies are taxed on the supplies they purchase, and taxes are withheld on goods the companies sell. Companies must periodically pay the difference between the CT paid on supplies and the CT charged on goods or services.

The frequency of filing Consumption Tax returns depends on your turnover. The tax return lists all of your company's transactions related to the supply of relevant goods or services. Any tax due must be paid simultaneously with the filing of the tax return. In the case of a tax credit, where the CT incurred by the company exceeds the CT charged on its sales and services in the reporting period, documentary proof related to the transactions is often requested.

Consumption Tax is recognized upon invoicing for both goods and services.

If the Japan Country Pack is licensed and enabled, the amount can be computed on either the invoice header or on the invoice lines. In large companies, where the unit prices tend to be large, they may prefer line-level tax calculations. In smaller companies, where the unit prices tend to be smaller, they may prefer header-level tax calculations. You set this preference on the Customers form.

If the Japan Country Pack is licensed and enabled, the calculated tax amount can be rounded off (for example, 4.4 becomes 4.0 and 4.5 becomes 5.0) or it can be rounded up (for example, 4.4 becomes 5.0). The rounding rule must be agreed upon by the customers and vendors and is also set on the Customers form.

The Consumption Tax has three components:

Input tax on vendor vouchered amounts
Output tax on customer invoiced amounts
Automatic tax entries

You must set up separate A/R and A/P tax accounts to record the amounts for these components.

Example ledger transactions created for sales, purchasing, and the manual journal entries could look as follows:

Ledger Transaction	Account	Amount
Manual Entry	30000	1000
Manual Entry	15000	50
Manual Entry	30000	500
Invoice	40000	2000
Invoice	20200	100
Invoice	40000	350
Voucher	50000	500
Voucher	50100	50
Voucher	50000	2500

The tax records in the various tables that correspond to these ledger records would be:

Table	Tax Account	Tax	Tax Basis	Tax Code	Tax Rate
Japan Journal Tax Table	15000	50	1000	OH	5
Japan Journal Tax Table	15000	0	500	NT	0
Invoice Sales Tax Table	20200	100	2000	OH	5
Invoice Sales Tax Table	20200	0	350	NT	0
Voucher Sales Tax Table	50100	50	500	US	10
Voucher Sales Tax Table	50100	0	2500	NT	0

For the Consumption Tax Report, you create records in the Consumption Tax Report Account Setup form for accounts 30000, 40000, and 50000, and give them a description to describe what kind of transactions they represent. The report generated would show:

Account	Description	Total Amount	Non-Taxable Amount	Taxable Amount	Tax Amount
30000	Travel	1550	500	1000	50
40000	Sales	2450	350	2000	100
50000	Purchases	3050	2500	500	50

If the Japan Country Pack is licensed and enabled, then for these same transactions, the Tax Control Report would show:

Tax Code: OH	Description: Ohio		Type: Rate	Rate: 5
Account	Description	Date	Tax Basis>	Tax Amount
15000	Travel Tax	11/12/13	1000	50
20200	Sales Tax Payable	11/5/13	2000	100

Tax Code: US	Description:United States		Type: Rate	Rate: 10
Account	Description	Date	Tax Basis	Tax Amount
50100	Sales Tax Expense	11/13/13	2000	100

Tax Code: NT	Description:Non-Taxable		Type: Exempt	Rate: 0
Account	Description	Date	Tax Basis	Tax Amount
15000	Travel Tax	11/12/13	500	0
20200	Sales Tax Payable	11/1/13	350	0
50100	Sales Tax Expense	11/4/13	2500	0