Japan to implement temporary 1% consumption tax on food from 2027

The Japanese government has approved a plan to temporarily reduce the consumption tax rate on food and beverages from 8% to 1% for a two-year period starting April 1, 2027. This measure excludes alcoholic beverages, dining in at restaurants, and catering services, which will remain at the 10% rate. This creates a 9-percentage-point gap between takeout/delivery and dine-in services.

Research indicates a potential ‘tax implementation gap’ among businesses. A survey by Mitsumore found that approximately 60% of restaurants do not plan to lower takeout prices to reflect the tax cut, with 53% opting to keep takeout prices identical to dine-in prices. This trend is largely driven by structural challenges facing small, independent businesses. Unlike large chains, many independent shops lack advanced POS systems and the administrative capacity to manage complex price adjustments, staff training, and accounting changes required for the new tax structure.