Japan Consumption Tax Hike Hit Hotels

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The consumption tax will rise from 5% to 8% on April 1, 2014, and is set to further rise to 10% in October 2015.

Park Hyatt Tokyo Consumption Tax

The consumption tax is in addition to 10% to 15% service charges that most “luxury” hotels charge. The service charge is also taxable.

So, the baseline rates shown on hotel websites don’t include the 22% combined service charge/consumption tax that will be 24.3% in October next year.

There is an additional accommodation tax of 200 JPY per person when the rate is over 15K and 100 per person when it is less.

Conclusion

Maybe these consumption tax changes will lessen the demand and lower the prices that Japanese hotels can charge.

The consumption tax (why don’t they just call it a VAT?) has certainly been very low in Japan compared to most western countries, but doubling it in the span of 16 or so months is unheard of.

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