In Japan, the e-Invoice Promotion Association (EIPA) was founded to develop and promote a uniform e-Invoicing system. EIPA and the Japanese government have been collaborating together with OpenPEPPOL to develop a Japanese standard that meets the country’s legal and business requirements. The new Japanese standard for tax-compliant e-Invoicing is based on the Peppol standard with a local specification. The Peppol format is encouraged for the exchange of electronic invoices by the Japanese Digital Agency.
The new consumption tax invoicing system is called the ”Qualified Invoice System”. Japanese Consumption Tax (JCT) payers will have to keep track of tax-qualified invoices generated by registered suppliers in order to claim tax credits. They will also need to modify their invoicing templates and procedures to include the new information and the requirement to register with the relevant tax authorities. The main objective of the project is to encourage the use of technology for the management and exchange of standardized documents, which will aid in the country’s digital transformation.
You can check the top 5 critical questions related to the e-invoicing system in Japan.
- What is the date that e- Invoicing will become mandatory?
Under the new system, as of October 1st, 2023 qualified invoices will be required to be retained for input tax credit purposes which can be exchanged electronically using the Peppol Network. Meanwhile, taxpayers wishing to do so may continue to use paper-based invoices aswell.
2. What are the details of the Peppol Standard?
Japan is the first country to use Peppol with a local specification, ‘Peppol BIS Billing JP’. EIPA and OpenPeppol collaborated to create the “Peppol BIS Billing JP” specification. The basis of the Japanese model is PINT which is the international version of Peppol based on BIS Billing 3.0. The PINT model is created to facilitate cross-border invoicing in an international context and is developed on the basis of the EN-16931 and Peppol BIS Billing 3.0. In other words, while allowing for the addition of local characteristics, this version is made to comply with international standards.
3. How can taxpayers comply with the implementation of e-invoicing?
The tax office must receive an application from obligated taxpayers in order to grant them a consumption tax ID, which must be displayed on the “qualified invoices” that abide by the new system. March 31st, 2023 is the deadline for businesses to register and obtain a Japan Consumption Tax system ID.
Secondly, for service providers who wish to serve in Japan, it is obligatory to be approved by the Peppol Authority of Japan, Japan’s Digital Agency. Throughout the approval process, the Peppol Authority of Japan evaluates security measures, compliance with tax regulations, and a provider’s knowledge of the local market and the businesses.
4. Who is affected by the e-Invoicing mandate?
The new Qualified Invoice System will be mandatory for taxpayers as listed below;
- Japanese Consumption Tax (JCT) payers to preserve tax-qualified invoices issued by registered suppliers for tax credits.
- Business is required to retain Qualified Invoice for the purpose of input tax credit.
Non-registered taxpayers will not be able to issue qualified invoices.
5. Will there be a digital signature for the invoices and what is the format?
A digital signature is not mandatory for the so-called qualified e-invoices and the format will be an XML file.
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