Japanese Business Glossary

収入印紙 (shūnyū inshi) refers to revenue stamps in Japan. These stamps are used to pay certain government fees and taxes, particularly for transactions that involve legal documents. When you need to submit certain types of documents, such as contracts or receipts, you often have to affix these stamps to ensure that the necessary taxes are paid.

Revenue stamps can be purchased at post offices, convenience stores, and some government offices. The cost of the stamps varies depending on the amount required for the specific transaction.

Using revenue stamps correctly is important to comply with Japanese tax regulations. If you're unsure about the amount or the necessity of using these stamps for your documents, it's advisable to consult with a local expert or check with the relevant government office.

印紙税額 (inshi zeigaku) refers to the amount of stamp duty in Japanese. Stamp duty is a tax applied on documents that are legally significant, such as contracts, agreements, and other official papers. The exact amount of the tax can vary depending on the type and value of the document. In Japan, this stamp duty is necessary for the document to be considered valid in certain legal contexts.

インボイス制度 (Inboisu seido) in Japan is an invoice system that began on October 1, 2023, and is designed to ensure accurate accounting and tax compliance. Officially called the "Qualified Invoice System" (適格請求書等保存方式), this system requires businesses to issue and store invoices that meet specific criteria to claim input tax credits on consumption tax.

Qualified invoices must include the issuer's name and registration number, the transaction date, details of the transaction indicating any reduced tax rate items, the amount and tax rate, the tax amount for each tax rate, and the recipient's name. Only businesses registered as "Qualified Invoice Issuers" can issue these invoices, and registration involves submitting an application to the tax office, available only to taxable businesses. Exempt businesses must register if they wish to issue qualified invoices.

The system affects both sellers and buyers. Sellers need to ensure their invoices comply with the new standards, and buyers need to collect these invoices to claim tax deductions. The system aims to prevent tax evasion and errors by ensuring that all taxable transactions are properly documented and reported.

Both issuers and recipients of qualified invoices must keep these documents for seven years. This can be done electronically or in physical form, as long as all required information is preserved and accessible for tax audits.

The introduction of the インボイス制度 is significant as it changes the way businesses handle consumption tax. Companies need to update their accounting practices and software to comply with the new requirements. Those dealing primarily with exempt businesses may need to reconsider their business relationships due to potential changes in tax liability.

電子帳簿保存法 (denshi chobo hozon ho), Electronic Bookkeeping Preservation Act, is a Japanese law that allows businesses to store accounting records and transaction documents electronically instead of on paper. The law aims to promote paperless operations and streamline record-keeping processes for businesses. It covers three main types of documents: accounting books like journals and ledgers, transaction documents such as invoices and receipts, and electronic transaction data from internet banking or electronic receipts.

To comply with the law, documents must meet specific requirements, including the ability to track modifications and ensure data integrity. Businesses are required to keep records of all electronic transactions digitally since the law's amendment on January 1, 2022. This means any documents received or sent electronically must be stored in their digital form. The law includes provisions for using time stamps, maintaining records of corrections or deletions, and implementing measures to prevent data tampering. Businesses must be able to search and retrieve these documents efficiently by transaction date, amount, or counterpart.

To comply, businesses need to establish internal procedures and use compliant systems for storing electronic records. This helps improve transparency and accuracy in tax reporting and record-keeping, reducing the risk of errors and fraud.

年末調整 (nenmatsu chousei), year-end tax adjustment, is an annual process in Japan where employers adjust the amount of income tax withheld from employees' salaries to match the actual tax owed for the year. This process ensures that the correct amount of tax is paid, avoiding both overpayment and underpayment. Employers calculate the total amount of salary and bonuses paid to each employee throughout the year and compare it to the tax that was already withheld. They then apply various deductions and exemptions that employees are eligible for, such as deductions for dependents, insurance premiums, and housing loans. The adjustments result in either a refund if too much tax was withheld or an additional payment if too little was withheld.

Employees must submit necessary documents, including forms detailing any changes in their personal situation that affect tax calculations, such as changes in dependents or marital status. These adjustments are typically performed between October and January of the following year. If any documents or information are missing, employees may need to file a tax return during the regular filing period from February 16 to March 15 of the following year to claim any eligible deductions or credits not accounted for during the year-end adjustment.

適格請求書 (tekikaku seikyusho), a qualified invoice, is a specific type of invoice mandated under Japan's new invoice system, which began on October 1, 2023. This system ensures that businesses properly document transactions for accurate consumption tax reporting and deductions.

A qualified invoice must include the name and registration number of the issuer, the transaction date, details of the transaction including whether items are subject to reduced tax rates, the total amount for each tax rate category showing the applicable tax rate, the consumption tax amount for each tax rate category, and the name of the recipient. Only registered qualified invoice issuers can issue these invoices, and businesses must register with the tax authorities to become qualified issuers. The registration involves providing details such as the business name and a unique registration number, which for corporations is a combination of "T" and their corporate number​.

Certain industries, such as retail and restaurants, can issue a simplified version known as a 適格簡易請求書 (tekikaku kan-i seikyusho), which allows for less detailed documentation while still complying with the invoice system.