The Invoice requirement in Japan is a lot less stringent when compared to those of other governments. The Japanese government is not particular about any standard structure or requirement for an invoice. So what then happens is those different companies come up with the basic format that they require for invoices that come to them. But then the basic constituents that every Invoice should have include:

  • A unique identification number
  • The name of the company alongside the address and contact information
  • The name of the client-company being invoiced, and the address of the company
  • A detailed description of the good, or service
  • The supply date for the goods or service
  • The date of issuance of the invoice
  • The amount(s) being charged for the good or service
  • VAT amount (if applicable)
  • The total amount charged

These are the basic requirement for an invoice in Japan. Other than that:

  1. Different Requirements for Invoices
  2. Detailed Invoice Requirements in Japan
  3. Commercial invoice requirements
  4. VAT Invoices
  5. Introduction of new invoicing method

Invoice Requirements in Japan

But given that there are several types of invoices, there are some invoices that have certain tweaks to them.

Different Requirements for Invoices

Limited company invoices

  • Invoices for limited companies must have the full name of the company included in it. And it must be placed in the same position as it appears on the certificate of Incorporation.
  • If for any reason, you decide to include the name of any of the company’s directors on the invoice, then, the names of all the directors in the company will have to be included.

VAT Invoices

  • You must use VAT invoices if you and your customer are VAT registered

Commercial Invoice

This document containing information on a foreign trade transaction usually comes with a lot more detail, and require more accuracy. The commercial invoice will include information about the type of goods, the quantities, the unit prices, their trading terms, the agreed forms of payment, and other details that will be instrumental to the safe delivery of the goods from the supplying company’s location, to the buyer’s country.

The commercial invoice for Japan is not just any document that should be treated with no regard. It is a document that can be used as a means of certifying valid sales. In some other cases, it can also be used as a reference document when there is a need to apply for insurance. Again, the government in Japan does not particularly prescribe any format for the commercial invoice. , but the basic for it to contain information that is needed by the Customs Bureau of Japan as regards the sale and transport of the goods.

Basic Details for a Commercial Invoice:

  • Shipper Name
  • Shipper Address
  • Consignee Name
  • Consignee Address
  • Notify Party Name
  • Notify Party Address
  • Invoice Date
  • Invoice Number
  • Page Number
  • Invoice Page No.
  • Consignee PO No.
  • Purchase Order No.
  • Delivery Date
  • Port of Departure
  • Port of Arrival
  • Office of Destination
  • Incoterms
  • Item Number
  • Item Description
  • Item Quantity
  • Invoiced Quantity
  • UoM
  • Currency
  • Item Line Amount
  • Total Quantity
  • Total Amount
  • Remarks

Sole trader’s Invoice

Invoices for sole trading enterprises should be crafted to include the following:

  • The name of the sole trader/ founder and the name of the business in question.
  • A recognized address that can be used for official meetings and that official documents can be delivered to.

While invoicing requirements are crucial to a successful payment process, efficiency in invoicing is very key.

Detailed Invoice Requirements in Japan

To make payments and transactions faster and less complicated in Japan, a standard invoice should have the following items to prove validity.

  • Specific invoice number together with the word “invoice”
  • The official business/company name
  • The business/ company registered address
  • Business contacts information
  • Name of the company receiving the invoice
  • Description of goods and delivery date
  • Amount of goods
  • Value-added tax amount (VAT)

Businesses operate at different levels and there are different invoice requirements for each type of business.

Commercial invoice requirements

A commercial invoice is issued to confirm a transaction. Commercial transactions are not complete without an invoice which indicates sale to both the seller and the buyer. It should contain the following details.

  1. Name of both buyer and seller
  2. Addresses of both buyer and seller
  3. Descriptions of goods sold or services rendered- this includes the quantity and nature
  4. The delivery date of the goods
  5. The unit price as well as the total amount
  6. Terms of trade
  7. Payment agreement method

VAT Invoices

VAT invoices are purely used when doing transactions involving businesses and buyers that are registered with the VAT system.

Limited companies (Ltd.)

The registered name which should correspond to what is used on the incorporation notice is the name that should be used on all invoices from a limited company.

Moreover, where the name appears on the certificate of incorporation is the same position it should appear on the invoice.

Sole proprietorship

Sole proprietorships are not left out on the invoicing system. A simple invoice prepared for use in a sole proprietor business should have the following details.

  • Registered business name
  • The official name of the Sole proprietor
  • Address

Introduction of new invoicing method

Japan announced the rollout of a new invoicing system in the year 2023. When the new system is implemented, sellers will be required to retain a copy of their customers’ invoices. Furthermore, all taxpayers will have to register as well as indicate the tax rate and specific amount on the invoice.

The new changes will affect businesses that sell goods and services under the reduced consumption tax bracket (8%). They will be required to use a ‘simplified qualified invoicing method’ where it’s not mandatory to have tax registration numbers on tax invoices.