News Details


Revisions for the Invoice System - 20% Special Provision

List of news

1. Introduction
The Invoice System for Japanese consumption tax (JCT) purposes will be implemented from October 1, 2023. In 2023 Tax Reform, further revisions were made to enhance a smooth transition to the new system. In this News, we will introduce one of the transitional measures for small businesses, the 20% special provision.

2. 2023 Tax Reform - 20% special provision
The 20% special provision is aimed at reducing tax and administrative burdens of tax-exempt businesses (※) who become qualified invoice issuers (taxable businesses) due to the introduction of the invoice system.
In detail, in case tax-exempt businesses become qualified invoice issuers or submit the notification of the election to become a taxable business, the JCT liability can be set at 20% of the sales tax amount, which is called the 20% special provision. 
This special provision does not require prior-notice to tax authorities, and can be applied just by making a statement on tax returns. Also, the taxpayer can elect to apply the rule for each taxable period.
(※) Tax-exempt enterprises are those whose taxable sales for the base period are JPY10 million or less. The base period is the second preceding year before the taxable period.

3. Eligible taxpayers
All of the following must be met to be eligible for the 20% special provision.
① A taxpayer must register to be a qualified invoice issuer.
② If not registered as a qualified invoice issuer, a taxpayer would be treated as a tax-exempt business due to the tax-exempt threshold rules.
③ A taxpayer has not applied for the special provisions on taxable periods.

4. Applicable period
This transitional measure applies to the taxable period that includes the date from October 1, 2023 to September 30, 2026.

5. Conclusion
In this News, we introduced “Revisions for the Invoice System, 20% Special Provision.” As mentioned above, not all consumption taxpayers are eligible for the special provision. It is highly recommended to confirm whether the special provision can be applied for each taxable period.
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 / in Japanese)
 Ministry of Finance
 Revisions for the Invoice System under 2023 Tax Reform

 National Tax Agency
 Consumption Tax / Revisions for the Invoice System