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Lower sales tax rate to apply to school lunches but not cafeteria food

A draft from the Ministry of Finance regarding a reduced tax rate system to be implemented simultaneously with the consumption tax hike in April 2017 would allow a lower rate for school lunches but not for cafeteria food, it has been learned.

    Japan's consumption tax is set to rise from 8 percent to 10 percent in April next year, but the hike will not apply to products qualifying for a reduced tax rate. Except for alcohol and food people have when eating out, all food products are to qualify for the reduced rate. However, while categories like alcohol products, processed foods and fresh foods are defined under existing laws including the Liquor Tax Act and the Food Labeling Act, no clear legal definition for eating out exists, so defining such food has become an issue.

    In December last year, the Finance Ministry provided definitions regarding eating out. Those definitions included that the food is provided at a facility serving food and drinks, with furnishings for customers such as chairs and tables; or that the food is prepared in a set location, based on customers' orders. Since then, the ministry has removed school lunches and meals at nursing homes for the elderly from the eating-out category, saying that these are locations where people "live their lives" and "it is difficult (for people in these places) to have other kinds of meals."

    However, food ordered at company and school cafeterias -- as opposed to school lunches provided at elementary and junior high schools -- was considered to meet the definition of "eating out."

    Additionally, catered food, food prepared by hired chefs, hotel room-service dishes and food at karaoke parlors fall under the ministry's definition of eating out.

    The ministry plans to include its ideas for the classification of foods in a 2016 fiscal year tax system reform bill to be submitted to the Diet in early February. It will also explain the classifications at a meeting of the Liberal Democratic Party on Jan. 29.

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