Due to amendments to the JCT Law, starting April 1, 2025, Platform Taxation will be introduced for game distribution and similar services (including the distribution of applications, e-books, and music) provided by foreign companies to consumers in Japan. Please note that in this column, the term “foreign companies” refers to those without a Permanent Establishment in Japan.

1.Before the Introduction of Platform Taxation (Up to March 31, 2025)
For the provision of internet online service (e.g., game distribution) to Japanese consumers (B2C Online Service) by foreign companies, the foreign companies providing the B2C Online Service are responsible for filing and remitting JCT to the Japan Tax Office. For example, foreign companies that distribute games to Japanese consumers via platforms such as App Store, Google Play, or Nintendo eShop need to file and remit the JCT included in the fees received from Japanese consumers.

2.After the Introduction of Platform Taxation (From April 1, 2025 Onward)
For B2C Online Service provided by foreign companies through Digital Platforms operated by Designated Platform Operators (as appointed by the Japan Tax Office), the Designated Platform Operator will be responsible for filing and remitting the JCT to the Japan Tax Office. Consequently, foreign companies that distribute games through the Digital Platforms will no longer need to file and remit JCT themselves.
As of March 13, 2025, the following distribution platforms have been designated by the Japan Tax Office as Digital Platforms:

(1) iTunes K. K.
‐ App Store
‐ Apple Books
‐ Apple Podcasts
(2) Amazon Web Services Japan G.K.
‐ AWS Marketplace
(3) Google Asia Pacific Private Limited
‐ Google Play
(4) Nintendo Co., Ltd.
‐ Nintendo eShop

3. Impact on Foreign Companies Engaged in Game Distribution
From April 1, 2025 onward, since the Designated Platform Operator will handle the filing and remittance of JCT on behalf of foreign companies, the compliance burden for these foreign companies will be significantly reduced. For a foreign company providing B2C Online Service exclusively through the above-mentioned Digital Platforms, the JCT payable on game distribution after April 1, 2025 is expected to be zero. However, please note that from that date onward, the JCT portion will likely be excluded from the game fees paid by the Designated Platform Operator to the foreign company (as this JCT will be remitted directly by the Operator to the Japan Tax Office).
Furthermore, it is anticipated that under the Platform Taxation regime, all JCT included in the game fees collected via Designated Platform Operator will be captured by the Japan Tax Office. So, there is a possibility that the Japan Tax Office may conduct tax investigations to check whether foreign companies failed to properly declare JCT amount on game distribution through Digital Platforms prior to the introduction of Platform Taxation.

4. Penalties for Failure to Declare JCT Prior to the Introduction of Platform Taxation
For game distribution via Digital Platforms before the introduction of Platform Taxation, if JCT payable amount is amended (or filed for the first time after the filing due date), the following tax penalties may apply:

(1) Penalties in case of corrections discovered through a tax investigation:
‐ Penalty Tax: 10% to 50% of the increased JCT payable amount (the rate varies depending on the case)
‐ Late Payment Interest: Approximately 2.5% to 9% per annum on the increased JCT payable amount (the rate varies depending on the case)
(2) Penalties for voluntarily filed amended return (without tax investigation):
‐ Penalty Tax: 0% to 5% of the increased JCT payable (the rate varies depending on the case)
‐ Late Payment Interest: Approximately 2.5% per annum on the increased JCT payable

Thus, in cases of voluntary amendment, the penalties are significantly reduced compared to those imposed in case of corrections discovered through a tax investigation.