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Pedro_Utz
Advisor
Advisor
This blog provides you the main notes regarding  Japan FY 2016 Tax Reform Invoice Method valid from October 1st, 2023

Remark: Japanese Emperor's era REIWA started from May 1st, 2019. Even if the source documents, websites say HEISEI, to easily understand the year, on this blog itself, HEISEI is replaced with REIWA accordingly.

Introduction


On December 16th, 2015, Japanese Government published Outline of FY 2016 Tax Reform:



https://www.jimin.jp/news/policy/131061.html

http://www.mof.go.jp/tax_policy/publication/mail_magazine/20151217.html

It mentions that VAT legal change will occur in Japan.

(1) Standard VAT rate would become 10%, effective on April 1st, 2017 (HEISEI 29).

(2) Reduced VAT rate, which would be 8%, would be applied for transfers of a certain goods only.

(3) Regarding separate accounting (KUBUN KEIRI), "TEKIKAKU SEIKYUSHO TOU HOZON HOUSHIKI" (equal to Invoice Method in Europe) would be finally introduced into Japan from April 1st, 2021 (REIWA 3). Until there, an easy method, "KUBUN KISAI SEIKYUSHO TOU HOZON HOUSHIKI" was introduced.

On HEISEI 28 (2016) November 18th, in House of Councilors Plenary Session, the amendment law to postpone raising VAT rate to 10% to REIWA 1 (2019) October 1st from HEISEI 29 (2017) April 1st was approved and passed.

As a result, the schedule on raising VAT rate to 10% and introducing the reduced VAT rate system was postponed to REIWA 1 (2019) October 1st, which is 2.5-years shift. Nevertheless, it was confirmed that “Specified Date” of transitional measures on VAT rate for the contracted constructions, etc, was HEISEI 31 (2019) April 1st.

Finally, the schedule to introduce TEKIKAKU SEIKYUSHO TOU HOZON HOUSHIKI (so-called, Invoice Method) is changed to REIWA 5 (2023) October 1st.

Observation: This information is based on legislation and regulations that could be subject to change at any time by the respective authorities, and are therefore not binding. This blog will be updated if necessary.

 



SAP KBAS & Notes Available


For further understanding of the requirements on Invoice Method (TEKIKAKU SEIKYUSHO HOZON TOU HOUSHIKI) and SAP's understanding to it, please refer to the Main note:

3067001 - Japan - HEISEI 28 (FY 2016) Tax Reform - Introduction of Invoice Method (TEKIKAKU SEIKYUSH....

After understanding the context of this legal requirement change, if you want to understand how this impact on S/4HANA Cloud System in contrast, please check:

3223860 - Japan - HEISEI 28 (FY 2016) Tax Reform - Introduction of Invoice Method (TEKIKAKU SEIKYUSH...

 

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