Support for Japan Qualified Invoicing System

Starting October 2023, the Japan Qualified Invoicing System for consumption tax is implemented. The Japan Localization SuiteApp has features for complying with the requirements of the Qualified Invoicing System.

Enabling Invoice Summary Tax Adjustment

Compliance with the Qualified Invoicing System includes invoice summary tax adjustment. This is implemented with a new computation for consumption tax, and the succeeding reconciliation of the difference between the previous and new tax computation. To enable these features, do the following:

• On customer records with Use Invoice Summary enabled, check the Apply Invoice Summary Tax Adjustment box on the Japan Localization subtab.

  Note:

  You can apply the Qualified Invoicing tax adjustment to consolidated invoice summaries. For more information, see Applying Qualified Invoicing Tax Adjustment to Consolidated Invoice Summary.

• Specify a classification, in either Department, Location, or Class fields, on the Japan Localization Setup subtab on Japan subsidiaries for OneWorld accounts, or on the Company Information page for accounts without OneWorld. The specified classification will be referenced for invoice summary tax adjustment. If a Department, Location, or Class is not specified, an error will be encountered when generating the invoice summary.

• Select an AR debit/credit adjustment item to use in the AR Debit/Credit Adjustment Item field on the Japan Localization Setup subtab or the Company Information page.

  Note:

  Other Charge for Sale is the preferred option for the AR Debit/Credit Adjustment Item field.

  The difference in consumption tax between the previous and new computation is debited or credited to the account of the AR debit/credit adjustment item you selected. For more information, see Applying Payment Adjustments for Japan Qualified Invoicing System.

  Note:

  If Multicurrency is enabled, you must not use any payment adjustment, including the AR Debit/Credit Adjustment Item; otherwise, the AR adjustment record will have inaccurate values.

When you generate the invoice summary, the tax adjustment required by the Qualified Invoicing System will be applied.

Note:

Invoice summary tax adjustment only works the first time the invoice summary is generated. It does not work anymore if you regenerate the invoice summary. You should delete the existing invoice summary and generate it again.

You can apply tax rounding methods to the adjusted tax amount. For more information, see Setting Tax Rounding Methods - Japan.

Note:

If you need to regenerate the invoice summary, ensure that you use the same tax rounding method as in the initial generation; otherwise, you should generate a new invoice summary with a new tax rounding method.

Computation of Total Invoice Summary Tax

After enabling Apply Invoice Summary Tax Adjustment, the next time you generate a standard or consolidated invoice summary, the system automatically computes the total consumption tax as:

Invoice Summary Total Consumption Tax = (invoice 1 amount + invoice 2 amount + invoice 3 amount + …) x applicable Tax Rate (either 10% or 8%)

Tax amounts with the same tax rate (either standard rate 10%, or reduced rate 8%) are added and multiplied by the tax rate. Standard and reduced tax amounts are computed separately.

This is different from the previous computation of consumption tax that adds the invoice amounts of all the transactions included in the invoice summary and then multiplies the total with the tax rate.

The difference between the two computations is reconciled using accounts receivable (AR) debit/credit adjustment.

Compliance with Qualified Invoice Storage Requirements

As part of the Japan Qualified Invoicing System, a qualified invoice storage method is implemented. This means all qualified invoices with applicable consumption tax credits should be generated according to storage guidelines. The Japan Localization SuiteApp complies with this by including the following in the standard or consolidated invoice summary it will generate:

• Tax Registration Number – To set this up, see Including Tax Registration Number on Invoice Summaries. On invoice summaries, the Tax registration Number is displayed below the Customer Name.

• Tax amount by tax rate (tax at invoice summary level) – see Computation of Total Invoice Summary Tax

• Customer Name

Other required details such as the Company Name, Transaction Date, transaction details of items subject to reduced tax, and transaction amount by tax rate, are already included in the Japan Localization invoice summary even prior to the 2023.1 release of the SuiteApp.

Presentation of Transactions in the Invoice Summary

Transactions included in the invoice summary are grouped into invoices and credit memos. Invoices are presented first and then credit memos, as required by the Qualified Invoicing System. The Japan Localization SuiteApp implements this with the Invoice Summary Transaction Search. Previously, transactions in the invoice summary were sorted according to transaction date.

However, if you are using a customized saved search, do the following steps to comply with the required presentation of transactions in the invoice summary.

To modify a custom saved search for invoice summary transactions to comply with the presentation of transactions required by the Qualified Invoicing System:

1. Edit your custom saved search for including transactions in the invoice summary.

2. Click the Results subtab.

3. On the Columns subtab, under the Field column, add Record Type.

4. In the Sort By field, select Record Type, and then check the Descending box beside this field.

5. Click Save.

Enhancement to Credit Memos

The credit memo standard form contains the Invoice Date field. This is displayed if a credit memo is created from an invoice, otherwise the transaction date of the credit memo is displayed. On an invoice summary that reports credit memos, the Invoice Date is indicated in the Transaction Details section, which is required by the Qualified Invoicing System.

Changes to Default PDF Templates for Custom Transaction Forms

The PDF templates for Japan custom transactions have been updated to include the Tax Registration Number and Customer Name on the PDF printouts of the following custom transactions, as required by the Qualified Invoicing System:

• invoice

• sales order

• purchase order

• journal

The Tax Registration Number is displayed if you entered this in its corresponding field on the Japan Localization Setup subtab, see Including Tax Registration Number on Invoice Summaries. Also, the Customer Name is displayed instead of the Customer ID.

General Notices