Japan Approves Proposed Consumption Tax Cut on Food in House of Representatives

Japan's lower house approved a bill on November 6, 2026, to temporarily reduce consumption tax on eligible food and beverages from 8% to 1%. The measure would apply from April 2027 for two years, affecting retail pricing, POS systems and invoicing. Upper-house approval is still required.

Japan's House of Representatives approved a government bill on November 6, 2026, proposing to reduce consumption tax on eligible food and beverages from 8% to 1% for two years. The measure is intended to reduce household expenses and would be accompanied by an income-linked financial assistance program.

The bill was submitted by the government on October 9, 2026, and passed the lower house with the support of the ruling Liberal Democratic Party and its coalition partner, the Japan Innovation Party. It has now been transferred to the House of Councillors, Japan's upper house, for further consideration.

The tax reduction has not yet been enacted. As of November 9, 2026, the official parliamentary record confirms lower-house approval but does not show upper-house approval or promulgation. The government wants to secure passage before the current parliamentary session ends on December 12, 2026.

For retailers, supermarkets, grocery stores, convenience stores, e-commerce businesses and Point-of-Sale (POS) software providers, the proposal would require changes to consumption tax calculations, product classification, receipts and invoicing systems.

Japan currently applies a standard consumption tax rate of 10% and a reduced rate of 8% to eligible food and beverage products.

The government's proposal would temporarily reduce the combined national and local consumption tax on eligible food and beverages to 1%, while leaving the standard 10% rate unchanged.

The proposed reduced rate would apply from April 1, 2027, through March 31, 2029. The official bill specifies a national consumption tax component of 0.78%, with local consumption tax bringing the combined rate to 1%.

The existing reduced-rate rules generally exclude alcoholic beverages, restaurant dining and catering services. Consequently, the proposal would not reduce consumption tax on every food-related transaction.

The measure also does not propose a general reduction of Japan's standard consumption tax rate.

The proposed change is particularly relevant to businesses selling products subject to different consumption tax rates.

For example, a convenience store may sell packaged food, alcoholic beverages and non-food products in the same transaction. Under the proposed rules, the POS system would need to calculate 1% consumption tax on qualifying food products while continuing to apply 10% to standard-rated goods.

Restaurants and food service businesses would face another distinction. Eligible takeaway food would generally benefit from the temporary reduction, while meals consumed on the premises would remain subject to the standard rate.

For retailers, the correct tax treatment would therefore depend on the product category and the nature of the transaction, rather than simply whether the business sells food.

Businesses would also need to consider how the changes affect tax-inclusive pricing, discounts, returns and transactions occurring around the proposed implementation date.

Impact on POS systems, receipts and electronic invoicing

If the bill becomes law, retailers and POS software providers will need to update their systems before April 1, 2027.

The main requirement would be to replace the current 8% rate with 1% for eligible food and beverage transactions during the temporary period, while preserving the existing treatment of other products and services.

The changes would also affect Japan's Qualified Invoice System, introduced in October 2023. This system requires qualifying invoices to contain information supporting consumption tax calculations, including applicable tax rates and tax amounts.

Retailers issuing qualified simplified invoices would need to ensure that the correct rates and corresponding tax information appear on their documents.

POS providers should also assess whether the temporary rate can be introduced through existing tax configurations or whether additional software changes are necessary.

What should retailers and software providers do?

Retailers should monitor the parliamentary approval process and identify products currently subject to the reduced 8% consumption tax rate.

POS and ERP providers should assess the ability of their systems to support the proposed temporary 1% rate, including mixed-rate transactions, receipts, invoices, refunds and price calculations.

Businesses operating supermarkets, convenience stores, food delivery platforms and restaurants should pay particular attention to the distinction between eligible food sales and standard-rated dining or alcoholic beverages.

The main implementation challenge is not simply changing the tax percentage. It is ensuring that the correct consumption tax rate is assigned to each transaction and reflected consistently in POS calculations, invoices and accounting data.

Because the proposal introduces a temporary rate, businesses should also prepare for the scheduled return to 8% in April 2029, while avoiding production changes until the final legislation is confirmed.

The primary legislative source is Japan's House of Representatives official bill summary, including the proposed tax rate and implementation dates - Source

Ivana Picajkić Medior Legal Consultant Linkedin profile