JCT Compliance 2023-1

Upcoming Changes to Japanese Consumption Tax in 2023

Category: ,

Author: Kensaku Kimura

Post Date: December 27, 2022

Last edit: February 6, 2023


If you have any business relationships with customers in Japan, you may have heard that Japanese Consumption Tax (JCT) will be going through significant changes in 2023.

The TLDR (Too Long, Didn’t Read);

  1. Japanese Tax Authorities will be introducing the JCT Qualified Invoice System in 2023.
  2. Only Qualified Invoices can be deducted when your customer files a consumption tax return
  3. Only Qualified Invoice Issuers can issue qualified invoices
  4. In order to become a qualified invoice issuer, you need to register as such with the tax authorities by March 31, 2023

We’ll be covering the basics of JCT in future articles but in this article, we will focus on what these changes mean to you and what you should be doing.

March 31, 2023 is right around the corner and as you will see, this requires your immediate attention!

Let’s dive in.


Who Does This Concern?

If you currently issue invoices to customers in Japan, this concerns you.

If the transaction between you and the Japanese customer is taxable, you have to act now.

Under JCT rules, some transactions are taxable while some aren’t.

That distinction will have to be made on a case by case basis and we’ll be covering the basics in future articles.


What is the issue?

Your Japanese customers won’t be able to claim consumption tax credits from purchases made from you.

From October 1, 2023 and onward, a “Qualified Invoice” will be required for Japanese businesses to claim a credit for consumption taxes that were paid.

A “Qualified Invoice” can only be issued by businesses that have registered with the Japanese Tax Authorities as a “Qualified Invoice Issuer”.


What Should I Be Doing?

Register as “Qualified Invoice Issuer”

Here is a simple to do list for you (items in bold letters are urgent):

  • Asses whether transactions with your Japanese customer is subject to JCT
  • If yes, register as a “Qualified Invoice Issuer” with the Japanese Tax Authorities
  • Appoint a tax agent in Japan if you don’t have an office (physical establishment) in Japan
  • Provide Japanese customers invoices that meet the requirements of a “Qualified Invoice” starting October 1, 2023
  • Submit Japanese consumption tax returns


When is the deadline?

March 31, 2023

The Japanese Tax Authorities are requiring applications of “Qualified Invoice Issuer” to be submitted by March 31, 2023.

Invoices that meet the requirements of a “Qualified Invoice” will need to be sent to customers starting on October 1, 2023.


Who in Japan Can Help Me With This and Other JCT challenges?

Japan Professional Alliance can offer immediate assistance in complying with the new “Qualified Invoice System” and other Japanese Tax requirements that you may have.

We offer a comprehensive JCT solution that will help you meet the minimum requirements of JCT at an affordable price.

All work will be led by bilingual CPAs fluent in English and Japanese.

  • Asses whether the transaction with your Japanese customer is subject to JCT
  • Complete your registration as a “Qualified Invoice Issuer” with the Japanese Tax Authorities
  • Provide you with an invoice template that meets the requirements of a “Qualified Invoice”
  • Act as your tax agent in Japan
  • Prepare and submit Japanese consumption tax returns
  • Make tax payments to the tax authorities on your behalf


Reach Out To Us!

Reach out to us using the contact form below and let’s schedule a call to discuss next steps!

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