Note: If you're looking for information on Employer taxes in Japan click here.
AGENCY TAX SUMMARY FOR JAPAN
As an agency, your agreement is with RecruitiFi, and RecruitiFi has no physical presence in Japan, so the supply of candidates to RecruitiFi is not subject to Japanese Consumption Tax.
The National Tax Agency of Japan has reviewed our terms and business model and has provided the following guidance.
According to Japanese Consumption Tax (JCT) Law Article 4, only domestic transactions are subject to JCT.
RecruitiFi has no physical presence in Japan. Therefore, services provided by Japanese agencies to RecruitiFi are not domestic transactions, and are not subject to JCT.
But I have a contract with the Employer, and they're in Japan. Shouldn't I be charging JCT to the Employer?
This situation has been reviewed by the NTA, and technically, Agencies are not directly contracted with any Employers for the purposes of Japanese taxes. The Employers are contracted with RecruitiFi and pay RecruitiFi for the services. All Agencies are also contracted with RecruitiFi (which has no Japanese business presence), and RecruitiFi pays the Agencies as consultants.
Even if an Employer and an Agency had a prior relationship, the RecruitiFi Terms supersede their previous contracts for the duration of their engagement through RecruitiFi.
Since I'm providing the services in the U.S., is there U.S. sales tax?
All Agency services are received by RecruitiFi in New York state. Services are not taxed in New York, so there is no need to collect or pay local sales tax in the U.S.
Tags: Tax, Taxes, JCT, Japan, Consumption Tax, Agencies, Agency