The new Invoice system of Japan (notice on the public site)

On governmental sites, there are some guidance to introduce the new Invoice system on the Revised Consumption Tax Law of Japan. Three governmental organizations explain the new Invoice system from their respective view point as follows;

1. Ministry of Finance(MOF)
MOF is in charge of the general budget and the tax law system in Japan.
On MOF site, the new Invoice system is explained as follows;

○ Introduction of the invoice-based method
– The invoice-based method will be introduced in October 2023.
– Business entities seeking input tax deductions are required to preserve invoices and keep related books. The amount of tax deduction is calculated by totaling the amounts of tax written in the invoices or calculating the amounts of tax based on the total amount of transactions.

2. National Tax Agent (NTA JAPAN) under Ministry of Finance
NTA is in charge to administer the statutory Tax Laws and collect taxes.
The annual “NATIONAL TAX AGENCY REPORT” says the new Invoice system as follows;

Regarding the invoice system that will be introduced in October 2023, the
applications for invoice issuer registration will be accepted from this October.
For the smooth introduction of the invoice system, upon ensuring that business operators fully understand the system, we are working for public announcements and

b. Outline of the method of storing eligible invoices
Starting October 2023, the method of storing eligible invoices (so-called invoice system) will be introduced.
Under the invoice system, purchase tax credits require the storage of accounting books and bills such as eligible invoices (so-called “invoices”) issued by a taxable business operator who applied and has been registered as an “eligible invoice issuer” by the District Director of a Tax Office.

3. Digital Agency under Cabinet
Digital Agency, which is newly organized on September, 2021, is mainly in charge of general affairs to push ahead with a digitalization for the public sectors. One of its affairs is to introduce e-invoicing system by applying EU open-Peppol. On the occasion of the revised Consumption Tax Law being into effect, the qualified Invoice is scheduled to apply on the taxable transaction. Digital Agency expects that private business sectors would apply open-Peppol for the qualified invoice of Consumption Tax Law.
Digital Agency is now coordinating with EU Peppol members how to apply the open-Peppol invoice format to Japanese commercial practices.
In Peppol BIS Japan Billing chapter, the qualified invoice is explained as follows;

5.5. New Input Tax credit system (Qualified Invoice Base method)
On October 1st, 2023, the current input tax credit system will be changed. “Qualified Invoice Base method”, new input tax credit system, will be implemented. It is almost same as Invoice Based method in other countries.
Under the new method, a taxable business shall retain an accounting book with certain descriptions and a Qualified Invoice issued by a registered taxable business. A Qualified Invoice can be issued only by a registered taxable business. This means that a taxable business without the registration and an exempt business can’t issue a Qualified Invoice. So that, a taxable transaction with them is not subject to input tax credit.
From October 1st2023 to September 30th 2029, the transitional rule will be applicable. Under the transitional rule, a taxable business can recover a certain percentage of input tax paid on a taxable transaction with a non-registered taxable business or an exempt business by retaining the Document (same as the document under the current system) and an accounting book.

Under the new method, “Self-billing” is allowed continuously. It may be used only if the seller is registered taxable businesses. The information required are same as a Qualified Invoice.

5.6. Information required in a Qualified Invoice
A Qualified Invoice must contain the following information.
* Name of Supplier
* Supplier’s Registration number for Qualified Invoice purpose
* Date of taxable transaction
* Description of taxable transaction ※If the taxable transaction is subject to the reduced tax rate, a statement clarifying this must be included
* Taxable amount per tax rate (tax included or tax excluded)
* Tax amount per tax rate (expressed in JPY)
* Tax rate
* Name of Buyer

You may notice, the definition of terms in quotations are uncoordinated.