Japan’s 2022 tax reform bill includes an update on the 2023 introduction of Qualified Invoices – a form of e-invoices. This will replace current interim Transitional Invoice Retention System
Qualified invoices for tax deduction
Japan plans to introduce Consumption Tax qualified invoices from 1 October 2023. In the meantime, it will continue with its Traditional Invoice Retention System which has been in operation since 2019. Check VAT Calc’s global live VAT invoice transaction and e-invoice reporting tracker to see where else real-time submissions of invoices is being implemented.
The 2022 tax reform now expands the terms for voluntary registrations for Qualified Invoices by non-mandated taxpayers. Also, the tax office may compel non-residents to appoint a local Fiscal Representative to enter the scheme.
PEPPOL adopted for exchange of invoices
Japan has already adopted the international PEPPOL e-invoice standard – PINT, the international version of PEPPOL using BIS Billing 3.0.
Current tax books instead of VAT invoices
Japan has not operated the concept of a Consumption Tax (its version of VAT) invoice, used as proof of a VAT liability and right to deduction. Instead, taxpayers must maintain prescribed tax books. Currently, a VAT invoice is not necessary for the Japanese Consumption Tax purposes, and a taxpayer calculates the creditable input tax amount from the company records, rather than from VAT invoices.
In part, this was because there was historically only a single Consumption Tax rate. This changed in October 2019 when the Consumption Tax rate was increased to 10% and a second, reduced rate of 8% was introduced.
Under the Transitional Invoice Retention System, invoices must specify the sales amount and the applicable tax rate. Correspondingly, taxable purchases must be recorded in the taxpayer’s books at the applicable tax rate in order to claim an input tax credit.
Japanese Tax Qualified Invoice October 2023
To obtain certification, businesses will be able to first apply their National Tax Agency since 1 October 2021. The last date for application is 31 March 2023 to ensure the process is completed in time for 1 October 2023. The National Tax Agency will publish all registered operators, with their ID numbers.
Invoice disclosure requirements
The following information is required on any qualified invoices. The registered Consumption Tax business operator may issue electronic invoices instead of paper-based invoices provided that certain conditions are met.
- Issuer qualified invoice identification number (granted on successful application)
- Customer identification
- Description of taxable service
- Price (split by Consumption Tax if applicable)
- Consumption Tax charge
Asia Pacific e-invoicing
|Country||Date||Comments (click for details)|
|Australia||Jul 2023||PEPPOL-based e-invoicing with no govt intervention B2B|
|China||Jan 2023||Special e-fapiao VAT invoice being piloted with 2023 full implementation|
|India||Oct 2020||B2B pre-clearance with separate B2C; completed Apr 2021|
|Indonesia||Jul 2015||e-Factur Pajak electronic invoicing|
|Japan||Oct 2023||Tax qualified invoices|
|Kazakhstan||Jan 2017||e-invoicing IS ESF|
|New Zealand||Mar 2022||B2G PEPPOL-based e-invoicing|
|Philippines||Jul 2022||2022 pilot of e-invoices; to follow South Korea model|
|South Korea||2011||Near real-time invoice reporting|
|Taiwan||2017||Electronic GUI invoices; non-residents since 2020|
|Thailand||2018||E-invoice reporting where adopted|
|Vietnam||Nov 2021||Pre-clearance B2B verification code e-invoice|