An Easy Explanation of Japan’s Invoice System

Hi, my name is Taisei Koshida, and I am a certified public accountant and tax accountant.

I aim to assist non-Japanese business owners who need help with reading or writing in Japanese. If you find the Japanese tax return system challenging, I can help you with your tax filings.

If you are unsure about Japan’s invoice system, this blog can be helpful for you.

How Consumption Tax Calculation Works 消費税計算の仕組み

The invoice system refers to the method used by businesses to calculate the consumption tax they need to pay to the tax office. Specifically, you can record input consumption tax based on invoices or receipts. インボイス方式とは、事業者が税務署に納付する消費税を計算する方式です。具体的には、請求書や領収書に基づいて消費税の投入額を計上します。

If you want to learn more about the system of Japan’s consumption tax, please refer to the following. An Easy Explanation of Consumption Tax for Doing Business in Japan

When Does the Invoice System Start?

The invoice system will commence in October 2023.

What Changes with the Introduction of the Invoice System?

(1) From the Perspective of Paying Suppliers and Expenses 仕入先への支払いと経費の支払いの観点から

Only payments made to invoice-registered businesses can be recognized for input consumption tax. In other words, payments made to non-registered businesses will not qualify for input consumption tax recognition.

仕入税額控除の対象となるのは、インボイス登録事業者への支払いに限られます。つまり、インボイス登録事業者以外への支払いは、仕入消費税の課税対象となりません。

(2) From the Perspective of Receiving Payments from Customers 取引先から代金を受け取る場合

You are required to include the invoice number on the invoices and receipts you provide to your customers. Failure to do so may cause difficulties for your customers during tax audits.

取引先への請求書や領収書には、インボイス番号を記載する必要があります。この記載を怠ると、税務調査時に顧客から指摘を受ける可能性があります。

Should you become an invoice-registered business? インボイス登録企業になるべきか？

You have the choice to become an invoice-registered business or not. The main criteria to consider is whether your clients are businesses that pay consumption taxes.

請求書登録企業になるかどうかは、あなたの自由です。主な判断基準は、取引先が消費税の課税事業者であるかどうかです。

If you are subject to consumption tax

It’s advisable to become an invoice-registered business if your clients are businesses. This is due to a prevailing perception that it’s better to avoid doing business with non-invoice-registered entities. The only additional effort required for registration is to include your invoice number on your invoices.

取引先が事業者の場合は、インボイス登録事業者になることをお勧めします。これは、インボイス登録をしていない事業者との取引は避けた方が良いという認識が広まっているためです。インボイス登録に必要な手間は、請求書にインボイス番号を記載することだけです。

If you are not subject to consumption tax

If the majority of your clients are not businesses, there’s little need to register. However, if your clients are businesses that pay consumption tax, the decision becomes challenging. It is because your clients might not want to deal to non-invoice-registered entities.

取引先の大半が事業者でない場合は、登録の必要はほとんどありません。しかし、取引先が消費税を納める事業者である場合、その判断は難しくなります。取引先が、インボイス登録をしていない事業者との取引を嫌がる可能性があるからです。

By registering, you will be automatically considered a taxable entity and will be obligated to pay consumption taxes to the tax office.

登録すれば、自動的に課税事業者とみなされ、税務署に消費税を納める義務が生じます。

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