Do you know about the interim consumption tax payment method called provisional settlement?
This article is based on information as of July 2026.
Interim consumption tax payments are not limited to scheduled tax payments calculated based on the previous year's annual tax amount. By using a method called "provisional settlement," you may be able to make interim payments based on amounts closer to your actual business performance.
There are two methods for interim payments
There are two main methods for interim consumption tax payments.
The first is the scheduled tax return method. This is a method where you pay the amount calculated based on the previous year's annual consumption tax payment (excluding local consumption tax). The number of payments is determined by the amount: once a year if the previous year's final consumption tax amount was over 480,000 yen but not more than 4 million yen; three times a year if it was over 4 million yen but not more than 48 million yen; and 11 times a year if it was over 48 million yen. While the procedure is simple, it can result in discrepancies with your current period's actual situation.
The second is the provisional settlement method. This is a method where you treat the period subject to the interim tax return as a single taxable period, perform a provisional settlement, and determine the payment amount based on those results. Because it is calculated based on actual transaction records, the payment amount reflects the situation of the current period.
Consider a provisional settlement in these cases
Interim payments via provisional settlement are particularly effective in the following cases:
When you have purchased high-value assets
If you have constructed a business building or purchased high-value equipment, you may incur significant taxable purchases, which could greatly reduce your consumption tax burden. It may be easier on your cash flow to reflect the actual situation through a provisional settlement rather than paying the amount calculated by the scheduled tax return method.
When your business performance has clearly declined compared to the previous period
If your sales or profits have clearly declined compared to the previous period due to a reduction in employees or other factors, it is expected that your annual consumption tax for the current period will be significantly lower than the previous period. In such cases, the amount calculated by the scheduled tax return method based on the previous year's results is likely to be excessive, and you may be able to reduce the burden on your cash flow by keeping the payment amount closer to the actual situation through a provisional settlement.
Points to note when choosing a provisional settlement
If you choose to make an interim payment via provisional settlement, you must calculate the consumption tax for the target period. While it takes more effort than the scheduled tax return method, it can be an effective option when cash flow is tight.
If you do not submit your interim tax return by the deadline, it will be automatically deemed that you have filed using the scheduled tax return method. In this case, you cannot switch to the provisional settlement method later. If you wish to choose the provisional settlement method, you must submit the tax return within the deadline.
We recommend consulting with your tax accountant, taking into account your cash flow situation and your projected business performance for the current period.
[Checklist]
□ Have you paid a large amount of consumption tax (taxable purchases) this term due to the construction of business buildings or high-value capital investment?
□ Have your sales or profits decreased significantly compared to the previous period, and do you feel the burden of the "scheduled tax return method" based on the previous year's results is heavy?
□ Do you have a system in place to complete bookkeeping and consumption tax calculations (provisional settlement) for the target period by the interim tax return deadline?
□ Have you simulated whether the tax amount calculated via provisional settlement will truly be lower than the amount under the scheduled tax return method? (If it is higher, there is no point in choosing this option.)
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The information regarding tax laws, regulations, etc., posted in this article is based on laws, circulars, etc., in effect at the time of creation and explains general interpretations and examples. Because laws and tax regulations are subject to amendment, the content may be changed or revised due to future amendments, etc. We assume no responsibility for any damages or disadvantages caused by the use of the information in this article. For actual tax filings or individual cases, please be sure to consult with a tax accountant or your local tax office, and make your own final decisions.
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