A Comprehensive Guide to Supplier Compliance Under the Invoice System! Explained Clearly with a Checklist

Key Points for Buyers and Sellers Regarding the Invoice System

The Invoice System impacts both buyers and sellers in a transaction. Since the requirements for each differ, it is essential to implement measures tailored to your specific role.

Key Points for Buyers (Managing Suppliers)

□ For ongoing business partners (suppliers, etc.), individually:
　1. Confirm whether they are registered as an Invoice Issuer.
　2. Align on the format and receipt method for invoices.

□ Perform system updates for accounting and procurement systems as necessary.

□ Conduct internal training regarding the Invoice System for employees.

Key Points for Sellers

□ Evaluate whether your customers require invoices.

□ Compare and evaluate the implications of registering versus not registering.

Key Points for Those Registering

□ For ongoing business partners (clients, etc.): 　1. Share your registration number, and 2. Align on the invoice format and delivery method.

□ Review your current documents to determine how to update them to meet invoice requirements.

□ Determine your invoice delivery method (e.g., providing electronic invoices).

□ Perform system updates for POS registers, accounting, and order management systems as necessary.

Buyer Preparation: Pre-verification with Suppliers

First, determine whether your company will apply the Simplified Tax System.
If you apply the Simplified Tax System, you do not need to store invoices for purchase tax credit purposes, so the following items do not require consideration.

Point 1: Evaluate Whether Your Purchases and Expenses Require Invoices

In principle, storing invoices is a requirement for purchase tax credits, even for one-time or small-amount transactions.

There are exceptions where storing invoices is not required, such as public transportation costs under 30,000 JPY, daily allowances paid to employees, business travel expenses, and commuting allowances.

Point 2: For Ongoing Transactions, Verify That Invoices Received Meet Requirements and Consult with Suppliers as Needed

Confirm in advance whether your suppliers are registered as Invoice Issuers.

It is important to reach a consensus with suppliers on what constitutes a valid invoice.

Discuss price adjustments if necessary. Note that you may also receive requests for price adjustments from your suppliers.

Point 3: Determine How to Store and Manage Received Invoices

It is important to manage invoices by distinguishing between those with and without registration numbers.

To apply transitional measures (80% or 50% deduction) for taxable purchases from non-registered entities, you must store the itemized invoices.

Consider utilizing scanner or smartphone storage as permitted under the Electronic Book Preservation Act.

Point 4: Determine Methods for Bookkeeping and Calculating Purchase Tax

Bookkeeping requirements remain unchanged after the start of the Invoice System.

If you apply exceptions where invoice storage is not required or use transitional measures for purchases from non-registered entities, you must record that fact in your books.

There are two methods for calculating purchase tax: the cumulative calculation method and the gross calculation method.
(If you use the cumulative method for sales tax, you must also use the cumulative method for purchase tax.)

uSonar Enables Bulk Assignment of Registration Numbers for Business Partners and Suppliers

uSonar maintains the proprietary corporate database, LBC. LBC covers business locations nationwide, including individual stores and factories.

Since it also holds invoice numbers, our customer data integration solution, uSonar, which is powered by LBC, allows you to assign registration numbers to your internal data in bulk.
Please feel free to contact us.

Summary

This article explained the critical aspects of supplier management under the Invoice System.
Proceed with your preparations after understanding the key points for both buyers and sellers, as well as the procedures for pre-verifying suppliers as a buyer.

uSonar provides a Customer Data Integration Solution centered on the LBC corporate database.
By leveraging LBC, we can support you in assigning invoice registration numbers. Please check the details in the materials below.

Invoice Number Assignment Available
Data Enrichment via One of Japan's Largest Corporate Databases