OpenAI Announces the Introduction of Qualified Invoices for Japanese Consumption Tax (JCT)
OpenAI, renowned for its ChatGPT platform, enjoys significant popularity in Japan, with a substantial number of users subscribing to its services.
In November 2024, OpenAI informed its existing Japanese users via an email (in English) that it would begin collecting consumption tax from January 1, 2025.
Following this, in December 2024, the company sent another email, this time in Japanese, to reiterate the commencement of JCT collection in 2025.
Along with this notification, OpenAI also published a dedicated FAQ page addressing the implementation of the Japanese Consumption Tax (JCT).
OpenAI’s proactive approach to informing its users about billing changes serves as a noteworthy example for other companies planning to implement JCT. By ensuring thorough communication, OpenAI underscores the importance of clarity and transparency in managing tax-related changes.
The JCT FAQ published by OpenAI provides clear and concise answers to common questions about JCT and Qualified Invoices, making it an excellent resource for users unfamiliar with these topics. In this article, we will explore the key points from OpenAI’s FAQ on JCT.
For the original FAQ published by OpenAI, click here.
Why is OpenAI introducing Japanese Consumption Tax (JCT)?
In compliance with Japan’s Consumption Tax Act, OpenAI LLC will be required to charge and collect Japanese Consumption Tax (JCT) at 10% on your invoice for applicable services.
I don’t see JCT on a previous invoice. Will I need to pay JCT for previous charges?
No, JCT will only apply to charges incurred starting January 1, 2025.
Previous invoices will not be updated to include JCT.
Why am I being charged JCT on a USD-denominated price?
Starting January 1, 2025, OpenAI LLC, a US-based entity, will collect Japanese consumption tax for customers in Japan.
Since these services are considered a cross-border supply of digital services, OpenAI can continue displaying prices in USD.
Qualified Invoices provided to customers in Japan will show the applicable tax amount in Japanese Yen.
Author’s comment: See here for a post by us regarding this topic.
Does collecting consumption tax mean that you will be able to issue invoices as a Qualified Invoice Issuer?
Yes, OpenAI LLC will provide customers with Qualified Invoices as a Qualified Invoice issuer in Japan.
Author’s comment: See here for a post by us on why customers will want a Qualified Invoice.
Let Us Help You Become a Qualified Invoice Issuer In Japan
We are here to support your business and tax/accounting related needs in Japan as you become a Qualified Invoice Issuer.
OpenAI’s recent approach serves as a model for companies preparing to implement JCT in Japan.
By clearly communicating what changes will occur and why they are necessary, OpenAI helps foster understanding and prevents confusion among customers.
This proactive strategy is highly effective and offers valuable insights for businesses planning their JCT compliance and roll out.
At JPA, we handle numerous inquiries from companies worldwide regarding Japanese consumption tax, accounting, and tax-related matters.
Please feel free to contact us through our inquiry form for further assistance.
