In recent years, Japan’s space industry has been expanding, with new initiatives emerging across a wide range of sectors, including satellite communications, remote sensing, debris removal, space resource exploration, and space travel. A common and indispensable foundation for all of these activities is “access to space,” for which satellite launch services play a critical role. Consequently, the development of satellite launch service businesses might be regarded as a fundamental driver of growth for Japan’s space industry.
While satellite launch services involve important technological and regulatory considerations, they also raise tax-related issues. In particular, the consumption tax (VAT) treatment of launch services has been a key point of attention.
Against this backdrop, the Tokyo Regional Taxation Bureau (TRTB) published a written response to an inquiry regarding whether satellite launch service is subject to the VAT. The TRTB confirmed that such services are exempt from the VAT as a qualifying export exemption under Japan’s Consumption Tax Act (the VAT Act).
In this GT Alert, we provide an overview of the TRTB’s response and discuss its practical implications.