Japan

PEPPOL framework on the “Qualified Invoice system” We previously wrote about the upcoming "Qualified Invoice system" for Japanese Consumption Tax (JCT), in which taxpayers are only able to claim input VAT from JCT registered vendors. All Japanese vendors intending to issue e-invoices must register with their local tax office before 31 March 2023. In addition to this, the Japanese government is working on implementing the “Qualified Invoice” system using Peppol standards. Peppol is a common framework for trading partners to exchange standards-based electronic documents over the Peppol network. EIPA (E-Invoice Promotion Association), established in July 2020, is the dedicated organization responsible for developing and building a simple-to-use electronic invoicing system for Japanese companies. The "Qualified Invoice" System will launch in October 2023, but businesses are encouraged to begin using Peppol-compliant e-invoicing software by October 2022.

Further details of new ‘Qualified Invoice Retention System’

Japan will introduce a new qualified invoice regime for Japanese Consumption Tax (JCT) with effect from 1 October 2023. This will bring the JCT regime more closely in line with European-style VAT regimes, and in order to claim input tax credit, the purchaser will be required to retain ‘qualified invoices’ issued by ‘qualified invoice issuers’. Only taxable persons are eligible to register as qualified invoice issuers, and cannot be JCT exempt enterprises (i.e. they cannot be exempt from the obligation to file a JCT return and remit JCT). Unlike the current system, this requirement applies even if the enterprise’s taxable sales for the base period are JPY 10 million or less. Registration to become a qualified invoice issuer opens on 1 October 2021.

Further details of new ‘Qualified Invoice Retention System’

Japan will introduce a new qualified invoice regime for Japanese Consumption Tax (JCT) with effect from 1 October 2023. This will bring the JCT regime more closely in line with European-style VAT regimes, and in order to claim input tax credit, the purchaser will be required to retain ‘qualified invoices’ issued by ‘qualified invoice issuers’. Only taxable persons are eligible to register as qualified invoice issuers, and cannot be JCT exempt enterprises (i.e. they cannot be exempt from the obligation to file a JCT return and remit JCT). Unlike the current system, this requirement applies even if the enterprise’s taxable sales for the base period are JPY 10 million or less. Registration to become a qualified invoice issuer opens on 1 October 2021.

Vendor registration to open for ‘Qualified Invoice Retention System’ from 1st October 2021

Japan will introduce a new qualified invoice regime for Japanese Consumption Tax (JCT) effective 1 October 2023. Under the current ‘Transitional Invoice Retention System’ (effective since 1 October 2019), in order to claim a JCT input credit, taxpayers are required to comply with certain bookkeeping and invoice retention requirements. This includes the recording of general information, such as the name of the vendor, date of transaction, consideration paid for transactions, etc.
Under the ‘Qualified Invoice Retention System’ (effective 1 October 2023), in addition to similar bookkeeping and invoice retention requirements, a taxpayer will only be able to claim an input JCT credit from a JCT-registered vendor.
To become a JCT-registered vendor and issue a qualified invoice, vendors must submit the appropriate application to the National Tax Agency (NTA). JCT exempt entities will be ineligible to become a registered vendor.
The application for this registration will begin on October 1, 2021, and in order to become a registrant by 1 October 2023, the vendor should file the application with the relevant tax office no later than 31 March 2023. The NTA will publish a list of registered entities on its website.

Vendor registration to open for ‘Qualified Invoice Retention System’ from 1st October 2021

Japan will introduce a new qualified invoice regime for Japanese Consumption Tax (JCT) effective 1 October 2023. Under the current ‘Transitional Invoice Retention System’ (effective since 1 October 2019), in order to claim a JCT input credit, taxpayers are required to comply with certain bookkeeping and invoice retention requirements. This includes the recording of general information, such as the name of the vendor, date of transaction, consideration paid for transactions, etc.
Under the ‘Qualified Invoice Retention System’ (effective 1 October 2023), in addition to similar bookkeeping and invoice retention requirements, a taxpayer will only be able to claim an input JCT credit from a JCT-registered vendor.
To become a JCT-registered vendor and issue a qualified invoice, vendors must submit the appropriate application to the National Tax Agency (NTA). JCT exempt entities will be ineligible to become a registered vendor.
The application for this registration will begin on October 1, 2021, and in order to become a registrant by 1 October 2023, the vendor should file the application with the relevant tax office no later than 31 March 2023. The NTA will publish a list of registered entities on its website.