News Details
2022.10.31
Preparation for the Invoice System Part 3 Requirements for Claiming Input CT Credit
1. Introduction
In the previous News, we mentioned some points of attention under the Qualified Invoice System. In this News, we will mention the requirements for claiming input consumption tax (CT) credit under the new system by referring to “Q&A regarding the Invoice System” released by the National Tax Agency (the NTA).
2. Requirements for claiming Input CT under the Qualified Invoice System
Under the Qualified Invoice System, companies are in principle allowed to claim input CT credit on their purchases by retaining qualified invoices issued by registered qualified invoice issuers and accounting books which meet certain conditions.
3. Cases where the retention of qualified invoices is not required
Under the Qualified Invoice System, certain taxable purchases such as public transportation fares less than JPY 30,000 and other de-minimis transactions are exempt from issuing qualified invoices due to several reasons including the difficulties of issuing them. In such cases, companies can claim input CT credit on their purchases just by retaining accounting books in which certain matters are described.
(1) Transactions for which only the retention of accounting books is required
In detail, the following transactions are exempted from issuing qualified invoices. In other words, from the buyer side, input CT credit on taxable purchases is eligible just by retaining accounting books.
① Public transportation fares for less than JPY30,000 which are exempted from obligations of issuing qualified invoices.
② Admission tickets and other related purchase in which certain matters required for qualified simplified invoices (except for the date of the transaction) are described and which would be collected when they are used
③ Purchase of second-hand goods from non-qualified invoice issuers by second-hand dealers
④ Purchase of pawn articles from non-qualified invoice issuers by pawnbrokers
⑤ Purchase of buildings from non-qualified invoice issuers by registered real estate dealers
⑥ Purchase of recycle resources or goods from non-qualified invoice issuers by recycling agents
⑦ Purchase of goods through vending machines for less than JPY30,000 which are exempted from obligations of issuing qualified invoices
⑧ Postal services by postage stamps which are exempted from obligations of issuing qualified invoices (limited to those which were delivered to mailboxes)
⑨ Commutation and travel allowance paid to employees (travel expenses, accommodation expenses, daily allowances for travel expenses)
(2) Matters to be described on accounting books
In principle, the following matters should be described on accounting books.
① Name of the supplier for the taxable purchase
Transaction date of the taxable purchase②
③ Details of the taxable purchase of assets and services (also, identifying the transactions for which the reduced tax rate is applied)
④ Total amount of the taxable purchase
In addition to the above, the following matters should also be described in accounting books for the taxable purchases mentioned in 3(1).
・Description that the transaction is one of the taxable purchases mentioned in 3(1) for which only the retention of accounting books is required.
For example, “Transportation fares less than JPY30,000,” “Admission tickets, etc.”
・Address or location of the supplier (excluding certain transactions)
4. Conclusion
In this News, we mentioned the requirements for claiming input CT credit under the Qualified Invoice System. Although it is in principle mandatory to retain qualified invoices and accounting books, there are some exceptional rules because of the nature of some businesses. Companies need to ensure the internal rules of classifying and retaining invoices and keeping accounting books adequately, depending on the kinds of transactions.
Please note that this News only introduces general outlines and does not include professional advice. So please make sure not to make any decisions without taking professional advice individually. If you have any questions, please feel free to contact us.
(Reference)
National Tax Agency
“Q&A regarding the Invoice System”（Updated in April, 2022）(in Japanese)
(Accessed on October 27, 2022)
Query on the phone+81-3-6821-9455