From 1 April 2027, the consumption tax rate on food and beverages is set to fall from the current 8% reduced rate to 1% — and to stay there for two years before reverting. The measure has been approved as government policy and now awaits the passage of the related tax reform legislation.

Press coverage has treated this as a cost-of-living story. For a finance function it is a systems and process change with a hard deadline, and a second one two years later.

What it touches

Japanese companies currently account separately for the 10% standard rate and the 8% reduced rate on food and drink. Moving that second rate to 1% flows through to:

• Tax rate configuration in the accounting system or ERP
• Invoice issuance and processing under the qualified invoice system
• Purchasing and expense claims
• Sales and order management systems

Build for the reversion, not just the cut

The two-year limit is the part most likely to be underestimated. A configuration change made in a hurry in early 2027, with no thought given to how it is unwound in 2029, tends to become someone else’s problem later — usually at year-end, and usually in the middle of an audit. It is worth deciding now whether your rate tables can carry two scheduled changes rather than one.

The legislation has not yet passed, and the detail will need to be confirmed against the final tax reform and the National Tax Agency’s guidance. But on an April 2027 start, this belongs on the finance function’s watch list now rather than in the 2026 year-end pile.

We will follow this up with a practical note on what a finance department should actually prepare ahead of the change.