Learn in the textbookTaxes and the Invoice System
DefinitionConsumption tax (消費税) is levied on sales of goods and the provision of services; it is ultimately borne by the consumer, while the selling business collects it and pays it to the state.
ExplanationA tax where the person who bears it differs from the one who files and pays it is an indirect tax (間接税), and consumption tax is the leading example. A business takes the consumption tax it collected from buyers on its sales, subtracts the consumption tax it paid on its own purchases, and pays the remainder; this subtraction is the input tax credit (仕入税額控除). Since each stage of the trade pays only the difference, the payments of all stages add up to the tax the consumer finally bore.
AnalogyIt is like a bucket brigade: each shop along the way hands the state only its own share of the tax added to the price tag. The water comes from the final buyer, and the shops are just the carriers.
Memory hook"Indirect" means the tax takes a detour: it travels from the consumer who bears it to the state through the business standing in between.