Core answer: tax-inclusive price = net × (1 + rate); net = inclusive ÷ (1 + rate). Net ¥10,000 with a 13% VAT special invoice: inclusive ¥11,300, tax ¥1,300. "Adding tax points for invoicing" means a quote given net needs 6-13 extra points when an invoice is required.
Inclusive ↔ net conversions
| Conversion | Formula | Example (13%) |
|---|---|---|
| Net → inclusive | ×(1+rate) | 10,000 → 11,300 |
| Inclusive → net | ÷(1+rate) | 11,300 → 10,000 |
| Tax amount | net × rate | 10,000×13% = 1,300 |
| Tax inside inclusive | inclusive − net | 11,300−10,000 = 1,300 |
Careful: tax ≠ inclusive × rate (11,300×13% = 1,469 is WRONG) — strip the tax out first.
VAT rates cheat sheet
| Rate | Applies to |
|---|---|
| 13% | Sale of goods, processing & repair |
| 9% | Construction, transport, real estate, farm produce |
| 6% | Modern services, consulting, tech services |
| 3% reduced to 1% | Small-scale taxpayers (preferential — check current policy) |
| 0% | Exports and specific cases |
Special vs general invoices: special invoices let the buyer deduct input VAT (money in their pocket); general invoices don't. Small-scale taxpayers issue special invoices at their levy rate (1%/3%).
How "tax points for invoicing" works
Scenario: ¥10,000 quoted net; the client wants an invoice; the seller says "add 6 points":
- Invoice amount = 10,000×1.06 = ¥10,600
Is it fair?: at a 13% rate, 6 points doesn't cover the full tax — but the seller deducts input VAT, so the real burden is only on the value-added part. 6-8 points is common market practice.
Reverse scenario (individual working for a company): the company demands an invoice; the individual gets one issued at the tax bureau. Agree upfront on who bears the cost (1% VAT + surcharges + withheld income tax).
Invoicing for labor services
An individual invoicing a company (tax-bureau issuance):
- VAT: 1% (small-scale preference)
- Surcharges: 12% of VAT (about 0.06% after half-levy)
- Income tax: withheld by the payer — ≤4,000: (amount−800)×20%; >4,000: amount×0.8×(20-40%)
Example: ¥10,000 labor fee — withheld income tax = 10,000×0.8×20% = ¥1,600; take-home 8,400 (plus ~100 VAT). Settled at the annual reconciliation for refunds or top-ups.
Common mistakes
- Tax = inclusive × rate: wrong. Tax = inclusive ÷ (1+rate) × rate. The tax inside 11,300 is 1,300, not 1,469.
- "13 points cheaper without an invoice": illegal and risky. Without an invoice the buyer can't book or deduct the cost — it may actually cost more; the seller hiding income is tax evasion.
- Small-scale issuing 13% special invoices: small-scale taxpayers can only issue 1%/3%; 13% requires general-taxpayer registration.
- Writing tax points as a vague "extra fee": the contract must spell out the tax-bearing clause and calculation method — a verbal "add 6 points" invites disputes.