Japan recently raised sales tax (consumption tax), and it’s now 10% (it used to be 8% before September 30th 2019).
However, there are some exceptions to this.
Eating inside: 10%, taking out: 8% by VAT relief
When you buy some Food at convenient stores or fast food stores and take out the food, the sales tax rate will be 8% instead of 10% by VAT relief. But the rules are complicated and everyone (even Store clerks) is confused, so I’m going to give some examples here.
I think the government is generous for foreign tourists, but remembering the rules wouldn’t harm.
Examples
Buy food at convenient store and eat it in the eating area inside the store: 10%
Some convenient stores have an eating area. The tax rate didn’t change wherever you ate the food you just bought at the store until September, but if you eat in the eating area of the same convenient store, you now have to pay 10% as from October 2019.
Buy McDonald’s and eat inside the store:10%
This is just the same as buying food at a convenient store and eat in its eating area. It you buy a hamburger and eat it inside the store, the tax rate will be 10%. If you take out, it’s 8%.
Buy food at convenient store and eat it at home: 8%
I think this is the simplest example. If you Buy Food at convenient store or any shop but take out the food to eat somewhere else, the sales tax rate will be 8% because the VAT relief will be applied.
Buy food at a convenient store and eat it in the parking area outside the store: 8%
If you buy food at a convenient store to take out and eat it in the parking area of the same store, the tax is still 8% even though you will still be on the premise. This is because you don’t use the eating area. The same applies when you eat in your car in the parking area.
Have meal at standing restaurant: 10%
There are so many standing fast noodle restaurants in Japan, especially at train stations. Even though those restaurants don’t have any seats or some of them are not even located in a building, but regardless of whether the restaurant has seats or is located indoors, eating at the table of a restaurant requires 10% sales tax.
Buy food at a food stall and eat it on the street: 8%
If there is a food stall on the street and you buy food to eat while walking, the tax will be 8% because you don’t eat at the stall.
Buy food at a food stall and eat it on the bench besides the stall: 10%
This might be a bit confusing, but if you find a food stall on the street that has a bench besides it and buy food to eat on the bench, the tax will be 10% and not 8%.
Even if the stall isn’t inside a building and just sells food on the street, as long as it has an eating area attached to it (a bench for example), it’ considered as eating inside.
Buy food at convenient store and eat it on a bench outside the store: ?%
This is a bit controversial and there is no definite answer to this. Some experts say it’s 10% because a bench on the premise of a store is considered to be an eating area no matter how it’s located outside the store, but others say it should be 8% as long as the eating area is outside the store.
The judgment is left to each store, so if you are not sure, just let them know that you are eating in the eating area (bench) outside the store and have them apply the appropriate tax rate.
OK, and when and how is the tax rate decided then?
Just like at McDonald’s, whenever you buy food at a convenient store with an eating area, the clerk will ask you if you are eating inside or take out. If you say eat here, the clerk will type 10%. If you say to go, the rate will be 8%. This is when the sales tax rate is decided.
The important thing is that you have to be honest. If you feel like eating inside but tell the clerk to take out, that will be bad because you intentionally avoid paying 10% and only pay 8% (but as far as I know, there is no explicit punishment for this).
Don’t blame if store clerks don’t know if it’s 10% or 8%; everyone is still confused
But as I mentioned at the beginning, everybody is still confused about this new tax relief and even store clerks sometimes don’t know if it’s 8% or 10%.
If a clerk can’t answer your question (provided that there is no language barrier to begin with) about the tax rate, don’t blame him. They will learn over time, but as of now it’s been only a few days since the new rate came into practice and nobody fully understands how it works.
Afterthought
As of now, I don’t think there are so many articles that explains the new tax rates in English, so I hope my post was helpful.
Once you are in Japan and not sure what the tax rate for your purchase would be, remember that it’s whether or not you eat in the eating area attached to the store, no matter how it’s just a bench, located outdoors or you will eat standing.
