An Easy Explanation of Japan’s Invoice System

【Koshida Accounting Firm Column Date:

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.



(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.



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.



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.



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.



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



Our accounting and tax office has been actively assisting foreign business owners in Japan with accounting and tax matters. Also, not only in the tax and accounting field, our office can support your business in Japan in the fields of visa, registration, social insurance, and law by networking with specialists. Plus, we have networked with specialists in web marketing, building websites, and business consulting suitable for Japanese customers. All services are provided in English. Please feel free to reach out to us through the inquiry form.