How will it impact your business?
From October 2023, a strict new set of requirements around invoicing for consumption taxable sales will come into place in Japan. it is important for businesses to comply with these requirements in order to be able to continue to fully claim consumption tax credits.
In order to become a “Business issuer of qualified invoice” in Japan, companies will need to register as such with the tax office. The application period for this registration will end on March 31, 2023. Once the application has been made, a consumption tax number that is unique to your company will be issued.
Moving forward, for an invoice to be valid, the key information that needs to be visible on the invoice is:
Name or title of the qualified invoice issuer and their registration number
Transaction details (indicating that the item is subject to a reduced tax rate)
Compensation amount totaled separately by the tax rate (Excluding or including tax)
Consumption tax amount -categorized by the tax rate
Name or title of the business operator to whom the invoice is issued to
In order to be able to apply to become a qualified invoice issuer, businesses must submit an application to the NTA. However, it is worth noting that even non-consumption tax paying/filing companies who apply to become a qualified invoice issuer, will automatically become a consumption tax filer, so it is important to seek some advice from your accountant or tax advisor.
There will be a 3-year period for non-qualified invoice issuers to be able to claim up to 80% of input consumption tax (October 1, 2023, to September 30, 2026) and then a further 3 years where only 50% can be claimed (October 1, 2026, to September 30, 2029) and finally from October 1, 2029, input consumption tax cannot be claimed anymore.
The NTA is strongly urging companies to become qualified consumption tax filer in order to be able to fully claim consumption tax credits.
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