Japanese Business Glossary

請求 (seikyuu) is a Japanese term that means "invoice" or "billing." It refers to the act of requesting payment for goods or services provided. In a business context, a 請求書 (seikyuusho) is an invoice document that details the amount owed, the items or services provided, and the payment terms.

In Japan, issuing a seikyuusho is an essential part of the business transaction process, ensuring that all parties are clear on the payment amounts and deadlines.

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.

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.

適格請求書発行事業者 (tekikaku seikyusho hakko jigyosha), qualified invoice issuing business, refers to businesses registered to issue qualified invoices (適格請求書 = tekikaku seikyusho, "qualified invoices") under Japan's new invoice system, introduced on October 1, 2023. These invoices are essential for buyers to claim input tax credits for consumption tax.

To become a qualified invoice issuing business, a business must first be a taxable entity and submit an application to the tax office. The application must include specific documents such as the registration application form and identity verification documents. Once approved, the business receives a registration number, which must be included on all issued invoices.

The registration process and adherence to the invoicing requirements are critical for compliance and ensuring that business partners can claim their input tax credits. Failure to issue these qualified invoices can result in reduced business transactions or demands for price reductions from buyers who cannot claim their tax credits.

インボイス方式 (inboisu hoshiki), also known as the Invoice System, is a method used in Japan for managing value-added tax (VAT) transactions between businesses. This system requires businesses to issue and retain invoices that include specific details about the transaction, such as the seller's and buyer's information, the date of the transaction, a description of the goods or services, the amount, and the applicable VAT.

The primary purpose of the invoice system is to ensure accurate VAT reporting and to prevent tax evasion. By maintaining detailed invoices, businesses can substantiate their VAT claims and ensure they are correctly reporting their tax obligations. This system facilitates better tracking of taxable transactions and enhances transparency in business dealings.

Under the invoice system, businesses can also use these invoices to claim VAT deductions for the taxes they have paid on their purchases. To be eligible for these deductions, the invoices must comply with the requirements set by tax authorities, including the proper documentation of VAT amounts. This encourages businesses to keep meticulous records and promotes fair tax practices.

インボイス対応 (inboisu taiou) refers to the necessary actions businesses must take to comply with Japan's new Invoice System, implemented on October 1, 2023. This system, known as the 適格請求書等保存方式 or Qualified Invoice System, requires businesses to issue and retain qualified invoices to claim input tax credits for consumption tax (VAT).

Qualified invoices must include details such as the invoice issuer's registration number, applicable tax rates, and the tax amount categorized by tax rate. Only businesses registered as "qualified invoice issuing businesses" can issue these invoices. To become registered, businesses need to apply to the tax office and receive approval.

Both issuers and recipients of qualified invoices must retain copies for seven years. This retention can be done electronically if compliant with Japan’s e-Document Law.

For sellers, this means updating invoicing processes to meet the new criteria. Buyers need to ensure they receive qualified invoices to claim input tax credits, and cannot claim these credits if they receive invoices from non-registered businesses.

Companies like freee offer accounting software that automates the creation and management of qualified invoices, ensuring compliance with the new system. The Japanese government provides support, including IT subsidies, to help small and medium-sized enterprises transition smoothly.