Japan Introducing Mandatory E-archiving as Part of a Broader Tax Reform Strategy

Beginning in 2019, Japan started introducing a series of measures aimed at streamlining and leak-proofing its tax systems. Even though these measures stop short of introducing complete e-invoicing and e-reporting mandates, they still represent a significant step towards digitally streamlining complex tax processes. Below you will find the upcoming part of Japan’s invoice archiving requirement, in the context of its complex tax control reforms.

Japan as part of PEPPOL

In September 2021, the Japanese Digital Agency acquired PEPPOL Authority status, allowing it to join rapidly a growing network of PEPPOL authorized countries and greatly facilitating electronic document interchange for its businesses. Thanks to these developments, it is already possible for Japanese businesses to issue and receive e-invoices domestically and internationally.

New JCT invoicing standard

The country is set to introduce a qualified invoice system (QIS) on 1 October 2023. This system will require businesses to register as Japanese Consumption Tax (JCT) payers in order to issue an invoice. The document itself will also be required to feature additional information such as tax rates breakdowns for more efficient auditing.

E-archiving requirement update

The final measure planned so far is the implementation of updated e-invoice retention requirements as part of the wider Electronic Record Retention Law (ERLL).

The Japanese authorities adopted the amended ERLL bill in 2022, allowing a two-year grace period for all business entities to adapt to the new rules. The amendment is aimed at removing hard-copy retention across all entities, and introducing an electronic document retention mandate from 1 January 2024.

According to the law, the archiving mandate will encompass data from electronic transactions carried out not only via EDI, but also other Internet tools (including email).

Businesses will have numerous ways to stay compliant with the regulations, by:

• Timestamping the e-invoices before they are to be archived – either by the issuer of the recipient
• Establishing an internal an internal archiving system either preventing or keeping a record of file alterations

It is important to mention that similar regulations already apply to invoices digitized from their paper format. Entities keeping an electronic archive of their hard-copy invoices are required to implement measures allowing files to be timestamped with public authority certified software or using an archive preventing post-digitization file alteration.

Comarch as an established service provider in Japan

Comarch has been a member of the PEPPOL organization since 2018. On November 24, 2022, Comarch joined this small group and became an acknowledged PEPPOL Service Provider in Japan.

By offering services as a Certified PEPPOL Service Provider in Japan, Comarch gives its international and local customers the opportunity to offer electronic document exchange services in that country.

There’s more you should know about e-invoicing in Japan – learn more about the new and upcoming regulations.