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Comment by aidog | Hacker News Reader

My animator friend is very upset about this because she will lose 10% of her income. I'm not sure if the anger is directed into the right direction, but I agree that it is not really a good change. I'm not looking forward to the effort and to publish my adress either. Inflation this year is absolutely brutal with some groceries almost twice as expensive.

As a freelancer I can invoice a client with consumption tax on the invoice, but not pay the consumption tax, yet the client can get the consumption tax he paid to me back. I wouldn't be suprised if criminals managed to get money from the government through fake invoices.

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In Poland VAT fraud used to be absolutely huge a bit under a decade ago. After the government established really strict tracking of invoices and they started going after the VAT gangs the budget revenues literally doubled in the span of few years. I have mixed feelings about VAT here. We have one of the highest rates in Europe on most goods(23%), but running a VAT registered company I do get the VAT on purchases back. However, in the UK, where I used to have my VAT business before I could keep 60% of the VAT my customers paid me with no expenses! This scheme had different percentages for different kinds of businesses. In my case it was 13% of the net value could be kept if I remember correctly. It sure was sweet to bill a customer £10k, get £12k paid and only send £700 of VAT to the tax man without having any expenses! (the income tax is another story and it is actually way better in Poland than in UK, but that is beside the point).

So despite having run VAT registered businesses for over a decade in two EU countries I'm confused what is it that Japanese government is doing now and why. If anyone can explain it comparing it to VAT/sales tax in other countries that would be great

This sounds like abuse of animators by studios to save a lot of money. They should give them a contract or pay them more instead of people being angry they don't get that much in the beginning.

The work is definitely undervalued. It seems that thanks to the current structure the barrier of entry is smaller and more projects are possible.

> As a freelancer I can invoice a client with consumption tax on the invoice, but not pay the consumption tax, yet the client can get the consumption tax he paid to me back.

And this is legal (not just in the sense that it’s technically allowed but also that you’re not technically required to file something at the end of the year and pay the difference [0])? Because you’re saying the government pays 10% of the purchase price in this scenario (crediting large businesses for 10% of the paid price, and that amount goes straight to you).

> I wouldn't be suprised if criminals managed to get money from the government through fake invoices.

If it really works that way, then there’s absolutely zero chance this wasn’t being milked for every ¥1!

[0] eg in the USA, residents of states that charge sales tax are legally not charged sales tax on purchases made in another state (with exceptions) but they’re technically required to track those purchases and pay the sales tax themselves at the end of the year. Enforcement is approximately zero, though.

> they’re technically required to track those purchases and pay the sales tax themselves at the end of the year. Enforcement is approximately zero, though.

That’s called “use tax”: https://en.m.wikipedia.org/wiki/Use_tax

Yes, legal as long as we're below a certain revenue (10million yen, I believe). It's the filing of those records that the freelancers do not want to do.

> My animator friend is very upset about this because she will lose 10% of her income

She won't, if she increases her price with 10 pct as she should.

> As a freelancer I can invoice a client with consumption tax on the invoice, but not pay the consumption tax,

A government charges tax. Not you. If you put it on your invoice, without giving it to the government, and then the same government has to pay that same amount back to your client, clearly something's wrong ?

> I wouldn't be suprised if criminals managed to get money from the government through fake invoices.

exactly.

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