Japan's Tax-Inclusive Price Display Rule: How to Write Prices on Tags and Menus

What is the total price display obligation?

The total price display obligation is a rule that when displaying prices to consumers in advance, you must show the total amount payable including consumption tax. It's set out in Japan's Consumption Tax Act. A special measure allowing tax-exclusive display, in place since 2013, ended at the end of March 2021, so showing the tax-inclusive price is now the rule.

The aim is to end the situation where you don't know what you'll pay until you reach the register. With only tax-exclusive prices, consumers have to multiply by 1.1 themselves to compare, and if display varies by store, prices can't be compared at all. The rule creates a situation where you can tell what you'll pay just by looking at the display.

Acceptable and unacceptable ways to write prices

The test is simple: can you tell the total amount payable on the spot? If the tax-inclusive price is shown, you may also show the tax-exclusive price or tax amount. If the tax-inclusive price appears nowhere, it's not allowed. These examples are for a product at ¥10,000 before tax with ¥1,000 consumption tax.

Showing the tax-exclusive price large with the tax-inclusive price small isn't a violation as long as the total can be read. But a display where only the tax-exclusive price stands out could be criticized under the misleading representations law as making things look cheaper, so in practice it's safest to make the tax-inclusive price the main figure.

Displays covered and not covered

The obligation applies to "displaying prices in advance to an unspecified number of consumers". Anything outside that condition isn't covered.

Invoices are exempt because they're documents issued individually to a specific party, not prices posted in advance. But under the rules of Japan's invoice system, invoices must show amounts by tax rate and the consumption tax. Each document has its own requirements, so also check what to write on an invoice and how to round to avoid confusion.

How to decide on fractions in tax-inclusive prices

Multiplying a tax-exclusive price by the tax rate usually leaves a fraction of a yen. Businesses can choose to round down, round to nearest or round up. Because there's no fixed rule, without one company-wide policy you can end up with the same product priced ¥1 differently across media.

1. 1

   You can also price from the tax-inclusive figure

   This means deciding a round total first, such as "¥980 with tax", then working back to the tax-exclusive price. Tags become easier to read and register totals come out neat. The tax-exclusive amount is 980 ÷ 1.1 = 890.9..., with the fraction handled in accounting.

2. 2

   Building up from the tax-exclusive price

   You set the tax-exclusive price based on cost or wholesale price, then calculate and display the tax-inclusive figure. It's easy to match against purchasing, but tax-inclusive prices tend to be awkward numbers such as ¥1,078.

3. 3

   Use your chosen method across all media

   If tags, the website and flyers round differently, the same product ends up with several prices. It's safest to store the rounding method in your product master and not recalculate on the display side.

The Japan Consumption Tax & Service Charge tool converts from either tax-exclusive or tax-inclusive prices and lets you choose rounding down, to nearest or up. It also switches between 10% and 8% tax rates, so when making a price list that includes items under the reduced rate, you can finalize prices while checking how to allocate 8% and 10%. When setting sale prices, the display changes depending on whether you calculate the discount or the tax first, so see also how to calculate discounts.

In practice on menus and online shops

• At restaurants, storefront signs, food sample displays and prices on delivery apps each need total price display.
• If you charge a service fee or a table charge separately, state this and the rate on the menu. If an amount is added later, the payment won't match the display.
• On online shops, prices on list pages are covered too. Making only detail pages tax-inclusive isn't enough.
• Set prices and "two for ¥X" displays should also be written as totals.
• At stores that mix items under the reduced rate with items that aren't, tax rates differ by item, so building a price list by bulk calculation from tax-exclusive prices will cause display errors.

There are borderline cases as to whether something is consumer-facing, such as membership-fee events and in-house sales. When telling participants how much you're collecting, communicating the total avoids disputes, whether or not you're obliged to. How to set the amount is covered in how to set event participation fees.

FAQ

Can "¥1,000 + tax" still be used?

Not on consumer-facing store displays or advertising. The special measure allowing tax-exclusive display ended at the end of March 2021, and showing the tax-inclusive total is now mandatory. You may show the tax-exclusive price too, in a form where the total can be read, such as "¥1,100 (¥1,000 before tax)". Price lists and quotes used in business-to-business deals aren't covered, so tax-exclusive display is fine there.

Can I write the tax-exclusive price large and the tax-inclusive price small?

Under the total price rule, there's no requirement on text size as long as the tax-inclusive price is shown. But a display where only the tax-exclusive price stands out may be an issue under the misleading representations law for giving a cheaper impression than the reality. In practice, making the tax-inclusive price the main display with the tax-exclusive price as a supplement is safest. Standardizing which is larger within your company also prevents mismatches across media.

Is rounding down or rounding to nearest correct for tax-inclusive prices?

Either is fine. The law doesn't specify how to handle fractions of a yen, so businesses can choose. What matters more than the choice is using the same method for all products and media. If tags round down and the website rounds to nearest, the same product ends up with two prices. The reliable approach is to store rounded prices in your product master and not recalculate on the display side.

Do invoices and quotes also need to show tax-inclusive prices?

The total price obligation doesn't apply. They're documents issued individually to a specific party and don't count as prices posted in advance to an unspecified number of people. But under Japan's invoice system, invoices must show amounts by tax rate and the consumption tax. That's a separate requirement from the total price rule, so even if you write tax-exclusive amounts, you can't omit the breakdown by rate and the tax amount.