Revision of Electronic Books Preservation Act in 2023 Tax Reform
In 2023 Tax Reform, the Electronic Books Preservation Act (the E-Preservation Act) were further relaxed in order to enhance smooth transition to the new rule. (The grace period under 2022 Tax Reform will expire as of 31 December, 2023). In this News, we will mainly introduce the revision of electronic transaction data (e-transaction data) in the E-Preservation Act which will take into effect on or after January, 2024.
2. Overview of the E-Preservation Act
As mentioned in our previous News, the documents principally required to retain in physical forms are allowed to preserve by data in the following ways. Certain rules and regulations are required in order to prevent falsification.
① Electronic books preservation (Not mandatory)
② Scanned document preservation (Not mandatory)
③ E-transaction data (Mandatory for the taxpayers of corporate and individual income taxes.)
3. Revision of e-transaction data in 2023 Tax reform
(1) Relaxation of the search function requirements
Taxpayers who are exempt from the search function requirements are as follows.
① Sales are JPY50 million or less (Currently, JPY10 million or less) in its “base period” (the year two years prior to the current year).
② Documents related to e-transaction data are maintained by paper documents, organized according to transaction date and client name, and ready to present or provide upon request from the tax authority.
(2) Abolishment of grace period
The grace period introduced in 2022 Tax Reform will be abolished after 31 December 2023. In case taxpayers have applied grace measures and retained e-transaction data by paper documents, they will be continuously allowed to retain the paper documents during the required preservation period even after 1 January, 2024.
(3) New transitional measures in 2023 Tax Reform
New transitional measures will be applied in 2023 Tax Reform. Taxpayers who meet both of the following conditions will be exempt from complying with the required rules for the preservation of e-transaction data.
a) The tax authority acknowledges that the taxpayer has a valid reason for not being able to comply with the required rule for the preservation of e-transaction data.
b) The taxpayer can download e-transaction data and present or provide paper documents upon request in conjunction with a tax audit.
In this News, we mentioned the revision of E-Preservation Act in 2023 Tax Reform. This new rule mentioned above will be applied to e-transaction data occurring on or after 1 January, 2024.
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.
（References / in Japanese）
National Tax Agency
・ Electronic Books Preservation Act Special Website
（Accessed on June 19, 2023）
・ Revision of the Electronic Books Preservation Act ～Overview of Revised Electronic Books Preservation Act under 2023 Tax Reform～
（Accessed on June 19, 2023）
（Related English News）
ARK Outsourcing KK
Electronic Books Preservation Act Scanner Preservation Rules (2022.11.30)
Revision of Electronic Books Preservation Act (2021.09.30)
Electronic Books Maintenance Act (2017.09.30)