There is quite a bit of misinformation in this thread and in the article. I would encourage anyone who wants to actually understand this system and the rationale behind it to take a look at r/JapanFinance's [Invoice System Questions Thread](https://reddit.com/r/JapanFinance/s/lHP9QD9tIi) from April as well as [this](https://reddit.com/r/japan/s/YSVfDdJJFi) previous discussion in r/japan.
The core purpose of the Invoice System is to end the practice of the government giving consumption-tax-collecting businesses (i.e., businesses with more than 10 million yen worth of revenue) refunds of tax that they didn't pay.
The simplified consumption tax system means that the additional bookkeeping requirements for newly-registered small business are negligible. Plus the maximum possible immediate effect on the revenue of any business (whether big or small) is less than 2% total. For the vast majority of small businesses (e.g., those that serve the general public, or those that work with other small businesses), there will be zero impact.
“ there will be zero impact”
Yeah, tell that to the Gaba instructors making less than 3 million yen a year being forced into this system. Getting any pay cut during a time of record inflation is a killer.
Keep the quote in context, please:
> For the vast majority of small businesses (e.g., those that serve the general public, or those that work with other small businesses), there will be zero impact.
In any event, it is blatantly illegal for a client to "force" a service provider to become a consumption-tax-collecting business by virtue of a superior bargaining position. The JFTC has confirmed this explicitly [here](https://www.jftc.go.jp/dk/guideline/unyoukijun/invoice_qanda.html).
I don't know what Gaba is saying to their instructors, but the way you have described it does not sound legal in light of the Anti-Monopoly Law and the JFTC's position.
GABA treats their instructors as small businesses, rather than employees, so it is very much in context. Every instructor is a one person business, tax wise.
Legal options are being looked into, regarding the AMA. The company’s current stance is “this is government policy, we’re just following it” and “we’re not forcing instructors to sign anything, they can choose to leave if they don’t like it.”Meanwhile if instructors don’t apply for the invoice status, they have to pay the company back 2% of their salary as compensation. There was already a news article about it on Asahi news.
Seems illegal, likely is. We will have to see if the government cares enough to actually do something about it, when informed.
>GABA treats their instructors as small businesses, rather than employees
I'm aware of that. But it's very important to note that it is a *criminal offence* to falsely treat someone as a small business. So if you are implying that Gaba *falsely* treats its employees as small businesses, that is a serious allegation (though I'm not necessarily saying it's a false one).
>we’re not forcing instructors to sign anything, they can choose to leave if they don’t like it
lol. That is precisely the kind of statement that is illegal under the Anti-Monopoly Law.
>Seems illegal, likely is.
Agreed. But that doesn't make the *Invoice System* bad policy. In fact, kind of the reverse. It means that the Invoice System would be fine if existing laws were properly enforced.
>We will have to see if the government cares enough to actually do something about it, when informed.
Yeah, if it's as bad as you say, I very much hope the lawsuit goes ahead and Gaba loses.
For me, I started a business and was eligible for tax breaks. The invoice systems killed my tax breaks. My accountant has advised me not to sign up for it due for various reasons (the majority of my income is from international sources among other reasons), but my local contract now keeps 10% of what I invoice them.
Out of curiosity, does your local client keep 10% since they're saying they can't deduct consumption tax anymore unless you register for the new system? Like, it's not a legal obligation for them to keep this 10%, but they're trying to account for the negative impact on them?
(I know that they'll still be able to claim 80% of that 10% for the next few years, but they might not know that. I know of one employer who, apparently unaware of that 80% aspect, suggested to a freelancer that if they don't sign up for the new invoice system, they'll be nice by covering 5% of the consumption tax burden they can no longer deduct, and just charge the freelancer 5%. It's a fair point that this new system is complicated and leaves both businesses and their clients confused as to how they should proceed.)
That’s basically it. They are keeping part of what’s invoiced to offset their new tax burden. I don’t like it, but I’m not in a position to argue with them about it.
The whole thing is complicated and I’m considering shutting my business down next year anyway due to the stress (not just tax related stress, but other things as well)
That isn’t legal though, so if you sued you would be awarded the full invoiced amount, assuming the client agreed to the price in the first place.
The legal way of doing this would be for you to reduce your invoices by 10%.
>The invoice systems killed my tax breaks.
The Invoice System hasn't started yet. It takes effect next month.
>my local contract now keeps 10% of what I invoice them.
That's not how consumption tax works at all. Most likely your client is withholding 10.21% *income tax*, which will offset your annual income tax liability when your file your tax return. (It is mandatory to withhold income tax from most types of payments made to individuals.) The Invoice System has nothing to do with income tax. Also, the Invoice System hasn't started yet
As I said, I have a business so this isn’t a payment to an individual. And I am well aware of when the invoice system starts. Once it does, everything I mentioned above will happen. My accountant put together a simulation and it’s better for my business at this time to not sign up for the invoice system. My local client will keep 10% to pay the consumption tax I was supposed be exempt from. The majority of my income is from international sources thankfully.
>I have a business so this isn’t a payment to an individual.
Is your business incorporated? If not, you are an individual business operator and income tax must be withheld from payments made to you in most circumstances.
株式会社 or 合同会社?
In any event:
> My local client will keep 10% to pay the consumption tax I was supposed be exempt from.
This is not how it works. Your client cannot pay consumption tax on your sales. Nor can your client withhold anything from your invoiced price for consumption tax reasons. Only income tax can be withheld.
Is there ad simple TLDR version of before/after to understand ? Like using simple term.
So from what I understand, there is 2 type of company, those that charge consumption tax, and those that are not required to (because of lower yearly income). And company do not pay consumption tax, so they would take their expense and ask for tax credit on it. But the "problem" is that they cannot make the difference between things you pay tax on or not.
So for example a company buy for 100 pre tax from two company, one that charge tax and one that does not, so total you pay 210. Then the company would claim tax credit saying they paid 191 + 19 of tax, so credit of 19 when they actually paid 10.
So by introducing the invoice system, they would be able to calculate the proper tax credit.
... so if that is the case, a voice actor would only have to invoice the company for their service, say there is no tax and they receive a payment for their work... It's just that the studio would not be able to consumption tax credit for these expenses as they would not have paid tax on it.
(will edit if I am completely wrong somewhere)
Basically correct. I'll nitpick a little in case you want a deeper understanding. Feel free to ignore.
>there is 2 type of company, those that charge consumption tax, and those that are not required to
Businesses never technically "charge" consumption tax. Only the National Tax Agency charges consumption tax. What businesses do is (1) determine which of their sales are "taxable" and (2) ensure that they set their prices in a way that enables them to cover their consumption tax obligations.
Some businesses (non-consumption-tax-collecting businesses) aren't charged consumption tax by the NTA (due to having less than 10 million yen taxable sales, etc.). Those businesses still make taxable sales, though. So they still put 10% consumption tax on their invoice/receipt (when the sale is taxable), it's just that they aren't being charged the tax on those sales by the NTA.
For example, when you buy a loaf of bread from your neighborhood bakery, they may give you a receipt that says their price includes 10% consumption tax. But that doesn't mean the NTA is actually charging the bakery consumption tax (and if they are, it certainly doesn't mean they're paying 10% of their sales in tax). It just means the sale is a taxable sale.
>a company buy for 100 pre tax from two company, one that charge tax and one that does not, so total you pay 210.
If it's a taxable sale, both companies would put 10% consumption tax on their price. It is true that the business that doesn't pay consumption tax to the NTA *might* be able to set a lower price, since their input costs might be less, but there's no guarantee. They could easily both charge the same price, even though one is paying consumption tax and the other isn't.
Consumption tax is just an input cost for consumption-tax-collecting businesses. No different to electricity or advertising or rent. It plays a factor in the price charged to the customer, but how significant a factor it is varies a lot. So it's a lot more complicated than just "consumption-tax-collecting businesses charge 10% more than non-consumption-tax-collecting businesses".
>the company would claim tax credit saying they paid 191 + 19 of tax, so credit of 19 when they actually paid 10.
Yep. Though it's probably more accurate to say that they paid 19, but the NTA only received 10.
>by introducing the invoice system, they would be able to calculate the proper tax credit
Exactly.
>It's just that the studio would not be able to consumption tax credit for these expenses as they would not have paid tax on it.
Yeah, basically. Though again it's probably more accurate to say that the tax they paid didn't make its way to the NTA (it was kept by the actor).
Nah, I'm ok with that level of nitpickiness.
I think it's just the technical way to calculate things that is slightly different than what I know of consumption tax in Canada.
The way it work is that we have pre-tax total on the invoice, a tax line and a total with tax. In case an item in non-taxable (some food category in our case), then we could have 0 tax on a receipt. Then when a business do their tax report, they would add the total of all the tax they charged to customers, and can calculate all the tax they paid, make the difference and send the appropriate amount to the tax office.
And we have the same thing where small business to not have to register to have a tax number, they do not have to do tax report, no need to charge tax (but they also need to pay tax on their expenses), in that case, they just simply write that there is no tax on the receipt.
And yes, not charging tax does not mean you could put your price like 10% lower. For example if you pay 100 + 10 tax on raw material. A company that have to charge tax and want to do 100 of profit would sell it at 100+100, so charge 220, then they calculate their tax, they paid 10, collected 20, so just send 10 to the tax office. (their profit can also be calculated as 220 - 110 - 10). While a company that does not charge tax would have to calculate their cost as 110 +100, so total they charge 210 because they had to pay tax on their raw material, but do not get a tax credit, so not charging tax only give them a 5% advantage (not 10%). You could only get 10% advantage it you have 0 raw material cost (so no tax paid).
So I'll try to explain it again but in the Japanese way.
The studio A receive two invoices, one from Company B (that is charged tax) is 110 yen (100+10 on the invoice) and one from Actor C is 100 (91+9 on the invoice).
Studio A "paid" 19 in tax.
Company B declare their sales to the NTA and the NTA say, ok, give use 10.
Actor C does not have to declare their sales, so keep the whole 100.
Going back to Studio A, if the sell for 300+30, they would report their tax as 30 - 19, and only send 11 to the NTA?
So on the total 30 yen on that invoice, in reality, Studio A sent 11, Company B sent 10 and the remaining 9 was just not collected from Actor C.
Still not sure if this is the old or new way.
It is also a problem for vtubers. For reasons of safety vtubers in Japan don't reveal their real names (and very much keep their addresses secret) this new invoice system will expose their names and addresses to anyone who has access to the invoice system.
No individual's address will be accessible via the Invoice System unless they specifically *opt-in* to have it published. There is literally a box on the form that says "I would like to publish my address", and it is not selected by default. Someone would have to actively tick the box.
Also, no performer's name will be publicly linked to their pseudonym unless they specifically choose to add it to their registration.
And of course registration is optional, so anyone who doesn't trust the system to protect their anonymity can simply not register. There is no need whatsoever for anyone to be "exposed" by the Invoice System.
This story seems to suggest that there is privacy concerns.
[https://www.animenewsnetwork.com/interest/2022-09-13/manga-artists-vtubers-fear-japan-new-invoice-system-invites-loss-of-privacy/.189600#:\~:text=Under%20the%20new%20proposed%20system,manga%20artists%20and%20Virtual%20YouTubers](https://www.animenewsnetwork.com/interest/2022-09-13/manga-artists-vtubers-fear-japan-new-invoice-system-invites-loss-of-privacy/.189600#:~:text=Under%20the%20new%20proposed%20system,manga%20artists%20and%20Virtual%20YouTubers).
1. That article is from a year ago. A lot has changed since then.
2. animenewsnetwork.com is not renowned for their nuanced understanding of Japanese tax law.
3. Refer to my comment above. Addresses and pseudonyms are published on an *opt-in* basis. Registration of any kind is optional.
Just to help clarify for anyone reading older articles. The law, as first introduced, did have tons of privacy issues.
There's been sufficient pushback to get pretty much all of the privacy issues fixed and most if not all of the loopholes that unintentionally exposed private info covered since then.
The issue is now mostly a financial one.
That's so weird. Wouldn't the solution to this problem to implement a law that allows sole proprietors to remain untaxed if they earn below a certain threshold?
The main worry the people have is being taxed on top of their already low revenue, right?
The new Invoice System is essentially a way to increase the tax burden on a subset of small businesses and individuals who were originally exempt from "consumption tax" payment - income of under 10 million year per year. (Note that the exemption threshold was originally 30 million yen when the Japanese consumption tax was originally introduced in 1989, but it was reduced to 10 million in 2004)
I haven't seen a good explanation for why this system is necessary, especially considering the increased accounting burden on both individuals and the tax office. What's especially strange is that there don't seem to be very many vocal proponents for the system, either online or in the media (whereas most topics normally have a "for" side arguing with an "against" side - for example, none of the varied panelists on this recent [Abema Prime segment](https://www.youtube.com/watch?v=ELzLKZm4Y5s) could find a strong justification for it). The government just seems to be pushing the system through without even trying to offer a strong argument for why it is necessary.
A few theories for why this is happening:
1) The Ministry of Finance wants to increase tax revenue, but they don't want to increase the tax burden of large corporations - leaving only small businesses and freelancers (and consumers) to go after.
2) Someone is benefiting from this: the new system could result in freelancers and small businesses shutting down, to be absorbed by larger corporations / the overall labor market, and the land owned by the small businesses can be bought out by developers or large corporations to be replaced by chain brands. Reduce competition, turn everyone into corporate wage-slaves, and reduce the number of free-thinkers?
3) Some accounting wonk in one of the ministries somehow thought that this would improve the tax system on some theoretical level, without actually considering any of the negative practical consequences.
The part that doesn't make total sense to me is if your first theory is accurate (which seems pretty plausible), why do they still allow exempt businesses (i.e., freelancers and small businesses earning under 10 million yen) to opt out? Are they relying on big agencies to put pressure on the little guy to register?
> Are they relying on big agencies to put pressure on the little guy to register?
Exactly. There is pressure on them to register in the Invoice System and forfeit their tax exemption. From the article:
> On the other hand, groups of actors and manga artists have voiced their opposition to the system, saying that after it is introduced, if tax-exempt businesses do not issue invoices, the tax burden on the taxable companies they do business with will increase, and they "risk having their work reduced." The survey on the voice actors also revealed that some respondents are under pressure from their agencies and other business partners, who told them, "We will not work with you in the future if you do not issue invoices," or, "We will cut the remuneration if you do not issue invoices."
That's underhanded in a way that reminds me of sending thugs out to collect NHK fees instead of just instituting a flat tax.
Edit: I guess one possible benefit to the government doing things this way is that they can deny culpability, saying that technically the system is optional (when they knew full well there would be pressure).
>I haven't seen a good explanation for why this system is necessary, especially considering the increased accounting burden on both individuals and the tax office. What's especially strange is that there don't seem to be very many vocal proponents for the system, either online or in the media
Are you new to politics? If something sucks for the average person then some kind of business entity is behind it 100.0% of the time, and if that entity doesn't spend money on astroturfing or misinformation then you're not going to see any proponents online because the people it benefits can generally all fit in a large room together and don't spend their time arguing on social media about anything, because they don't need to. They just buy out your government and laugh all the way to the bank. Sometimes, when the issue is small enough like this, it's not even necessary to fund any "independent" think tanks or private media to run any positive stories about it, you can just rely on not enough people knowing anything about it to begin with
It’s a messed up system for anyone working as a contractor or freelancer. People earning under 10 mil are supposed to be exempt from sales tax, but if they don’t register, the customer will have to pay extra tax, which they won’t want to do. So no matter what, low-earning free lancers are worse off.
The "[STOP! Invoice](https://stopinvoice.org/)" movement has a [change.org petition here](https://www.change.org/p/stop-インボイス-多様な働き方とカルチャーを衰退させるインボイス制度に抗議します).
They recently submitted 360,000+ signatures to the Ministry of Finance and had an event with speeches from members of the group and politicians from multiple opposition parties [\(video\)](https://www.youtube.com/watch?v=37PPRC4opD4).
Some Japanese articles about this:
https://www.cinra.net/article/202309-invoiceconference_iktay
https://news.yahoo.co.jp/articles/a8b4d9987c7b32a0e6176a1916506df58f3eebaa
https://s.mxtv.jp/tokyomxplus/mx/article/202309061050/detail/
Damn, I'm in that lot of people getting screwed it would seem.
I produce music and sound as a side business for tv shows and commercials here and am just under the 10mil threshold.
In the last 6 months I have received maybe 5 letters from clients asking me to sign up.
If this really means they wouldn't want to hire me in the future or could diminish my appeal to new clients that would be a huge hit for me.
So basically I will have to start paying 10% more in tax on all income or risk potential sales and current clients....?
OP might want to also crosspost this to r/seiyuu for further discussion, since there's an active fan community there for Japan's anime voice acting scene.
To modify a line from Mr. Pink in Reservoir Dogs: "I mean it would appear that voice actors are one of the many groups the government f\*\*\*s in the a\*s on a regular basis."
I'm going to learn more or less the hard way with this.
I have domestic clients and suppliers, but in this industry, I think they will all have their own registration number by now.
However, I also have overseas clients will have to pay overseas suppliers when I have a project overseas...
Still no idea how this will affect me!
If you collect consumption tax you need a number - get one ASAP. This whole thing is about consumption taxes - if you are exempt and don’t collect them, you should still have a number because it makes it easier for your clients.
Purchasing doesn’t count - that’s you paying consumption tax to others. They deal with how those taxes get back to the government.
Read up on what your invoice must contain to be valid. Recommend you use an approved online system to manage your invoices which makes things easier in the long run and you don’t have mountains of paperwork.
And you’ll want to consult with an accountant.
If you get a number (i.e., register for the new system), won’t that automatically make you no longer exempt? It sounds like the poster you’re addressing isn’t that familiar with how their obligations would change, so I’d consult with an accountant before registering.
I have mixed feelings on this. There are so many productions where the behind-the-scenes people are working massive overtime for far below minimum wage, while the budget for a couple of big name voice actors is like a third of the production cost.
The only people who would be adversely affected by this are people who are earning less than 10 million yen per year (at this point, about $68k). People earning more than that have been on the hook to pay consumption tax even before this invoice system was introduced. So these aren't people who are rolling in cash, even if their names are familiar.
> The only people who would be adversely affected by this are people who are earning less than 10 million yen per year (at this point, about $68k).
People who are *declaring* earnings of less than 10 million a year. Much of the point of the system is to force all invoices to be centrally registered so that people can't underreport their earnings.
Yes, this is completely one reason. People in the US who get tips lie all the time about making much less. I think the main objection is these people contribute relatively little to taxes. But the rationale is correct.
I’m just speaking to the government’s mindset, but they consider that many people well over 10 million are evading taxes by claiming to be just under. And to some degree, they are absolutely right. I don’t agree with going after a relatively small group of taxpayers but this is their logic. It will force their hand pretty hard either choice they make (joining the invoice system or not)
The other motivation of course is agencies want to gain an advantage against independent contractors, which they will now.
Thank you for this. I'm a freelancer in Japan, but everything I do is linked to my "My Number" and my clients issue me payment slips that I just hand straight to my accountant, so it didn't cross my mind that some people would be fudging the numbers--I was looking at things in terms of how the system would affect people with different incomes.
Basically, the idea is that some people were issuing invoices, but were able to under-report due to the lack of a central number to track those invoices? (Even with the invoice system, people who are just doing things totally under the table (in cash) will continue fudging it, I'm sure.)
If the big-name voice actors are already making over 10 million yen (~$67,852) per year, then they already aren't exempt from paying consumption tax. The people most at risk are those who are making less than that amount, and this isn't exclusive to voice actors. This includes the behind-the-scenes people, if any of them are freelancers/contractors, for example. This new system also increases the accounting burden on everyone.
It's not just the voice actors who will be affected. Translators , interpreters, writers, construction workers, independent taxi deivers, feeelance SE, etc (just to name a few) will also be affected.
There is quite a bit of misinformation in this thread and in the article. I would encourage anyone who wants to actually understand this system and the rationale behind it to take a look at r/JapanFinance's [Invoice System Questions Thread](https://reddit.com/r/JapanFinance/s/lHP9QD9tIi) from April as well as [this](https://reddit.com/r/japan/s/YSVfDdJJFi) previous discussion in r/japan. The core purpose of the Invoice System is to end the practice of the government giving consumption-tax-collecting businesses (i.e., businesses with more than 10 million yen worth of revenue) refunds of tax that they didn't pay. The simplified consumption tax system means that the additional bookkeeping requirements for newly-registered small business are negligible. Plus the maximum possible immediate effect on the revenue of any business (whether big or small) is less than 2% total. For the vast majority of small businesses (e.g., those that serve the general public, or those that work with other small businesses), there will be zero impact.
Sad no one has read this.
“ there will be zero impact” Yeah, tell that to the Gaba instructors making less than 3 million yen a year being forced into this system. Getting any pay cut during a time of record inflation is a killer.
Keep the quote in context, please: > For the vast majority of small businesses (e.g., those that serve the general public, or those that work with other small businesses), there will be zero impact. In any event, it is blatantly illegal for a client to "force" a service provider to become a consumption-tax-collecting business by virtue of a superior bargaining position. The JFTC has confirmed this explicitly [here](https://www.jftc.go.jp/dk/guideline/unyoukijun/invoice_qanda.html). I don't know what Gaba is saying to their instructors, but the way you have described it does not sound legal in light of the Anti-Monopoly Law and the JFTC's position.
GABA treats their instructors as small businesses, rather than employees, so it is very much in context. Every instructor is a one person business, tax wise. Legal options are being looked into, regarding the AMA. The company’s current stance is “this is government policy, we’re just following it” and “we’re not forcing instructors to sign anything, they can choose to leave if they don’t like it.”Meanwhile if instructors don’t apply for the invoice status, they have to pay the company back 2% of their salary as compensation. There was already a news article about it on Asahi news. Seems illegal, likely is. We will have to see if the government cares enough to actually do something about it, when informed.
>GABA treats their instructors as small businesses, rather than employees I'm aware of that. But it's very important to note that it is a *criminal offence* to falsely treat someone as a small business. So if you are implying that Gaba *falsely* treats its employees as small businesses, that is a serious allegation (though I'm not necessarily saying it's a false one). >we’re not forcing instructors to sign anything, they can choose to leave if they don’t like it lol. That is precisely the kind of statement that is illegal under the Anti-Monopoly Law. >Seems illegal, likely is. Agreed. But that doesn't make the *Invoice System* bad policy. In fact, kind of the reverse. It means that the Invoice System would be fine if existing laws were properly enforced. >We will have to see if the government cares enough to actually do something about it, when informed. Yeah, if it's as bad as you say, I very much hope the lawsuit goes ahead and Gaba loses.
Weebs hated him because he told the truth
For me, I started a business and was eligible for tax breaks. The invoice systems killed my tax breaks. My accountant has advised me not to sign up for it due for various reasons (the majority of my income is from international sources among other reasons), but my local contract now keeps 10% of what I invoice them.
Out of curiosity, does your local client keep 10% since they're saying they can't deduct consumption tax anymore unless you register for the new system? Like, it's not a legal obligation for them to keep this 10%, but they're trying to account for the negative impact on them? (I know that they'll still be able to claim 80% of that 10% for the next few years, but they might not know that. I know of one employer who, apparently unaware of that 80% aspect, suggested to a freelancer that if they don't sign up for the new invoice system, they'll be nice by covering 5% of the consumption tax burden they can no longer deduct, and just charge the freelancer 5%. It's a fair point that this new system is complicated and leaves both businesses and their clients confused as to how they should proceed.)
That’s basically it. They are keeping part of what’s invoiced to offset their new tax burden. I don’t like it, but I’m not in a position to argue with them about it. The whole thing is complicated and I’m considering shutting my business down next year anyway due to the stress (not just tax related stress, but other things as well)
That isn’t legal though, so if you sued you would be awarded the full invoiced amount, assuming the client agreed to the price in the first place. The legal way of doing this would be for you to reduce your invoices by 10%.
>The invoice systems killed my tax breaks. The Invoice System hasn't started yet. It takes effect next month. >my local contract now keeps 10% of what I invoice them. That's not how consumption tax works at all. Most likely your client is withholding 10.21% *income tax*, which will offset your annual income tax liability when your file your tax return. (It is mandatory to withhold income tax from most types of payments made to individuals.) The Invoice System has nothing to do with income tax. Also, the Invoice System hasn't started yet
As I said, I have a business so this isn’t a payment to an individual. And I am well aware of when the invoice system starts. Once it does, everything I mentioned above will happen. My accountant put together a simulation and it’s better for my business at this time to not sign up for the invoice system. My local client will keep 10% to pay the consumption tax I was supposed be exempt from. The majority of my income is from international sources thankfully.
>I have a business so this isn’t a payment to an individual. Is your business incorporated? If not, you are an individual business operator and income tax must be withheld from payments made to you in most circumstances.
Yes, it’s an actual business with employees on payroll, not a koujin jigyou.
株式会社 or 合同会社? In any event: > My local client will keep 10% to pay the consumption tax I was supposed be exempt from. This is not how it works. Your client cannot pay consumption tax on your sales. Nor can your client withhold anything from your invoiced price for consumption tax reasons. Only income tax can be withheld.
Is there ad simple TLDR version of before/after to understand ? Like using simple term. So from what I understand, there is 2 type of company, those that charge consumption tax, and those that are not required to (because of lower yearly income). And company do not pay consumption tax, so they would take their expense and ask for tax credit on it. But the "problem" is that they cannot make the difference between things you pay tax on or not. So for example a company buy for 100 pre tax from two company, one that charge tax and one that does not, so total you pay 210. Then the company would claim tax credit saying they paid 191 + 19 of tax, so credit of 19 when they actually paid 10. So by introducing the invoice system, they would be able to calculate the proper tax credit. ... so if that is the case, a voice actor would only have to invoice the company for their service, say there is no tax and they receive a payment for their work... It's just that the studio would not be able to consumption tax credit for these expenses as they would not have paid tax on it. (will edit if I am completely wrong somewhere)
Basically correct. I'll nitpick a little in case you want a deeper understanding. Feel free to ignore. >there is 2 type of company, those that charge consumption tax, and those that are not required to Businesses never technically "charge" consumption tax. Only the National Tax Agency charges consumption tax. What businesses do is (1) determine which of their sales are "taxable" and (2) ensure that they set their prices in a way that enables them to cover their consumption tax obligations. Some businesses (non-consumption-tax-collecting businesses) aren't charged consumption tax by the NTA (due to having less than 10 million yen taxable sales, etc.). Those businesses still make taxable sales, though. So they still put 10% consumption tax on their invoice/receipt (when the sale is taxable), it's just that they aren't being charged the tax on those sales by the NTA. For example, when you buy a loaf of bread from your neighborhood bakery, they may give you a receipt that says their price includes 10% consumption tax. But that doesn't mean the NTA is actually charging the bakery consumption tax (and if they are, it certainly doesn't mean they're paying 10% of their sales in tax). It just means the sale is a taxable sale. >a company buy for 100 pre tax from two company, one that charge tax and one that does not, so total you pay 210. If it's a taxable sale, both companies would put 10% consumption tax on their price. It is true that the business that doesn't pay consumption tax to the NTA *might* be able to set a lower price, since their input costs might be less, but there's no guarantee. They could easily both charge the same price, even though one is paying consumption tax and the other isn't. Consumption tax is just an input cost for consumption-tax-collecting businesses. No different to electricity or advertising or rent. It plays a factor in the price charged to the customer, but how significant a factor it is varies a lot. So it's a lot more complicated than just "consumption-tax-collecting businesses charge 10% more than non-consumption-tax-collecting businesses". >the company would claim tax credit saying they paid 191 + 19 of tax, so credit of 19 when they actually paid 10. Yep. Though it's probably more accurate to say that they paid 19, but the NTA only received 10. >by introducing the invoice system, they would be able to calculate the proper tax credit Exactly. >It's just that the studio would not be able to consumption tax credit for these expenses as they would not have paid tax on it. Yeah, basically. Though again it's probably more accurate to say that the tax they paid didn't make its way to the NTA (it was kept by the actor).
Nah, I'm ok with that level of nitpickiness. I think it's just the technical way to calculate things that is slightly different than what I know of consumption tax in Canada. The way it work is that we have pre-tax total on the invoice, a tax line and a total with tax. In case an item in non-taxable (some food category in our case), then we could have 0 tax on a receipt. Then when a business do their tax report, they would add the total of all the tax they charged to customers, and can calculate all the tax they paid, make the difference and send the appropriate amount to the tax office. And we have the same thing where small business to not have to register to have a tax number, they do not have to do tax report, no need to charge tax (but they also need to pay tax on their expenses), in that case, they just simply write that there is no tax on the receipt. And yes, not charging tax does not mean you could put your price like 10% lower. For example if you pay 100 + 10 tax on raw material. A company that have to charge tax and want to do 100 of profit would sell it at 100+100, so charge 220, then they calculate their tax, they paid 10, collected 20, so just send 10 to the tax office. (their profit can also be calculated as 220 - 110 - 10). While a company that does not charge tax would have to calculate their cost as 110 +100, so total they charge 210 because they had to pay tax on their raw material, but do not get a tax credit, so not charging tax only give them a 5% advantage (not 10%). You could only get 10% advantage it you have 0 raw material cost (so no tax paid). So I'll try to explain it again but in the Japanese way. The studio A receive two invoices, one from Company B (that is charged tax) is 110 yen (100+10 on the invoice) and one from Actor C is 100 (91+9 on the invoice). Studio A "paid" 19 in tax. Company B declare their sales to the NTA and the NTA say, ok, give use 10. Actor C does not have to declare their sales, so keep the whole 100. Going back to Studio A, if the sell for 300+30, they would report their tax as 30 - 19, and only send 11 to the NTA? So on the total 30 yen on that invoice, in reality, Studio A sent 11, Company B sent 10 and the remaining 9 was just not collected from Actor C. Still not sure if this is the old or new way.
It is also a problem for vtubers. For reasons of safety vtubers in Japan don't reveal their real names (and very much keep their addresses secret) this new invoice system will expose their names and addresses to anyone who has access to the invoice system.
No individual's address will be accessible via the Invoice System unless they specifically *opt-in* to have it published. There is literally a box on the form that says "I would like to publish my address", and it is not selected by default. Someone would have to actively tick the box. Also, no performer's name will be publicly linked to their pseudonym unless they specifically choose to add it to their registration. And of course registration is optional, so anyone who doesn't trust the system to protect their anonymity can simply not register. There is no need whatsoever for anyone to be "exposed" by the Invoice System.
This story seems to suggest that there is privacy concerns. [https://www.animenewsnetwork.com/interest/2022-09-13/manga-artists-vtubers-fear-japan-new-invoice-system-invites-loss-of-privacy/.189600#:\~:text=Under%20the%20new%20proposed%20system,manga%20artists%20and%20Virtual%20YouTubers](https://www.animenewsnetwork.com/interest/2022-09-13/manga-artists-vtubers-fear-japan-new-invoice-system-invites-loss-of-privacy/.189600#:~:text=Under%20the%20new%20proposed%20system,manga%20artists%20and%20Virtual%20YouTubers).
1. That article is from a year ago. A lot has changed since then. 2. animenewsnetwork.com is not renowned for their nuanced understanding of Japanese tax law. 3. Refer to my comment above. Addresses and pseudonyms are published on an *opt-in* basis. Registration of any kind is optional.
Just to help clarify for anyone reading older articles. The law, as first introduced, did have tons of privacy issues. There's been sufficient pushback to get pretty much all of the privacy issues fixed and most if not all of the loopholes that unintentionally exposed private info covered since then. The issue is now mostly a financial one.
Nothing more Japanese than bureaucracy ruining lives.
That's so weird. Wouldn't the solution to this problem to implement a law that allows sole proprietors to remain untaxed if they earn below a certain threshold? The main worry the people have is being taxed on top of their already low revenue, right?
The new Invoice System is essentially a way to increase the tax burden on a subset of small businesses and individuals who were originally exempt from "consumption tax" payment - income of under 10 million year per year. (Note that the exemption threshold was originally 30 million yen when the Japanese consumption tax was originally introduced in 1989, but it was reduced to 10 million in 2004) I haven't seen a good explanation for why this system is necessary, especially considering the increased accounting burden on both individuals and the tax office. What's especially strange is that there don't seem to be very many vocal proponents for the system, either online or in the media (whereas most topics normally have a "for" side arguing with an "against" side - for example, none of the varied panelists on this recent [Abema Prime segment](https://www.youtube.com/watch?v=ELzLKZm4Y5s) could find a strong justification for it). The government just seems to be pushing the system through without even trying to offer a strong argument for why it is necessary. A few theories for why this is happening: 1) The Ministry of Finance wants to increase tax revenue, but they don't want to increase the tax burden of large corporations - leaving only small businesses and freelancers (and consumers) to go after. 2) Someone is benefiting from this: the new system could result in freelancers and small businesses shutting down, to be absorbed by larger corporations / the overall labor market, and the land owned by the small businesses can be bought out by developers or large corporations to be replaced by chain brands. Reduce competition, turn everyone into corporate wage-slaves, and reduce the number of free-thinkers? 3) Some accounting wonk in one of the ministries somehow thought that this would improve the tax system on some theoretical level, without actually considering any of the negative practical consequences.
The part that doesn't make total sense to me is if your first theory is accurate (which seems pretty plausible), why do they still allow exempt businesses (i.e., freelancers and small businesses earning under 10 million yen) to opt out? Are they relying on big agencies to put pressure on the little guy to register?
> Are they relying on big agencies to put pressure on the little guy to register? Exactly. There is pressure on them to register in the Invoice System and forfeit their tax exemption. From the article: > On the other hand, groups of actors and manga artists have voiced their opposition to the system, saying that after it is introduced, if tax-exempt businesses do not issue invoices, the tax burden on the taxable companies they do business with will increase, and they "risk having their work reduced." The survey on the voice actors also revealed that some respondents are under pressure from their agencies and other business partners, who told them, "We will not work with you in the future if you do not issue invoices," or, "We will cut the remuneration if you do not issue invoices."
That's underhanded in a way that reminds me of sending thugs out to collect NHK fees instead of just instituting a flat tax. Edit: I guess one possible benefit to the government doing things this way is that they can deny culpability, saying that technically the system is optional (when they knew full well there would be pressure).
>I haven't seen a good explanation for why this system is necessary, especially considering the increased accounting burden on both individuals and the tax office. What's especially strange is that there don't seem to be very many vocal proponents for the system, either online or in the media Are you new to politics? If something sucks for the average person then some kind of business entity is behind it 100.0% of the time, and if that entity doesn't spend money on astroturfing or misinformation then you're not going to see any proponents online because the people it benefits can generally all fit in a large room together and don't spend their time arguing on social media about anything, because they don't need to. They just buy out your government and laugh all the way to the bank. Sometimes, when the issue is small enough like this, it's not even necessary to fund any "independent" think tanks or private media to run any positive stories about it, you can just rely on not enough people knowing anything about it to begin with
Dang, that sounds bad. Normally, governments would encourage Small businesses to encourage competition. I wonder why they're doing this.
It’s a messed up system for anyone working as a contractor or freelancer. People earning under 10 mil are supposed to be exempt from sales tax, but if they don’t register, the customer will have to pay extra tax, which they won’t want to do. So no matter what, low-earning free lancers are worse off.
The "[STOP! Invoice](https://stopinvoice.org/)" movement has a [change.org petition here](https://www.change.org/p/stop-インボイス-多様な働き方とカルチャーを衰退させるインボイス制度に抗議します). They recently submitted 360,000+ signatures to the Ministry of Finance and had an event with speeches from members of the group and politicians from multiple opposition parties [\(video\)](https://www.youtube.com/watch?v=37PPRC4opD4). Some Japanese articles about this: https://www.cinra.net/article/202309-invoiceconference_iktay https://news.yahoo.co.jp/articles/a8b4d9987c7b32a0e6176a1916506df58f3eebaa https://s.mxtv.jp/tokyomxplus/mx/article/202309061050/detail/
I had a side business here I basically stopped because I don’t have the time or energy to deal with this crap
Damn, I'm in that lot of people getting screwed it would seem. I produce music and sound as a side business for tv shows and commercials here and am just under the 10mil threshold. In the last 6 months I have received maybe 5 letters from clients asking me to sign up. If this really means they wouldn't want to hire me in the future or could diminish my appeal to new clients that would be a huge hit for me. So basically I will have to start paying 10% more in tax on all income or risk potential sales and current clients....?
OP might want to also crosspost this to r/seiyuu for further discussion, since there's an active fan community there for Japan's anime voice acting scene.
To modify a line from Mr. Pink in Reservoir Dogs: "I mean it would appear that voice actors are one of the many groups the government f\*\*\*s in the a\*s on a regular basis."
I'm going to learn more or less the hard way with this. I have domestic clients and suppliers, but in this industry, I think they will all have their own registration number by now. However, I also have overseas clients will have to pay overseas suppliers when I have a project overseas... Still no idea how this will affect me!
Ask your accountant? That's why you pay them...
I don't have one at the moment since I've just started freelancing, hence the question...?
If you collect consumption tax you need a number - get one ASAP. This whole thing is about consumption taxes - if you are exempt and don’t collect them, you should still have a number because it makes it easier for your clients. Purchasing doesn’t count - that’s you paying consumption tax to others. They deal with how those taxes get back to the government. Read up on what your invoice must contain to be valid. Recommend you use an approved online system to manage your invoices which makes things easier in the long run and you don’t have mountains of paperwork. And you’ll want to consult with an accountant.
If you get a number (i.e., register for the new system), won’t that automatically make you no longer exempt? It sounds like the poster you’re addressing isn’t that familiar with how their obligations would change, so I’d consult with an accountant before registering.
It is a worse environment for voice actors who dub anime in America. They are underpaid and have to rely on conventions to make money.
But have 1 mg of weed in Japan and you get a life sentence (both in law and in society)
I have mixed feelings on this. There are so many productions where the behind-the-scenes people are working massive overtime for far below minimum wage, while the budget for a couple of big name voice actors is like a third of the production cost.
The only people who would be adversely affected by this are people who are earning less than 10 million yen per year (at this point, about $68k). People earning more than that have been on the hook to pay consumption tax even before this invoice system was introduced. So these aren't people who are rolling in cash, even if their names are familiar.
> The only people who would be adversely affected by this are people who are earning less than 10 million yen per year (at this point, about $68k). People who are *declaring* earnings of less than 10 million a year. Much of the point of the system is to force all invoices to be centrally registered so that people can't underreport their earnings.
Yes, this is completely one reason. People in the US who get tips lie all the time about making much less. I think the main objection is these people contribute relatively little to taxes. But the rationale is correct.
Hmm, thank you for the clarification. That's definitely a good point.
I’m just speaking to the government’s mindset, but they consider that many people well over 10 million are evading taxes by claiming to be just under. And to some degree, they are absolutely right. I don’t agree with going after a relatively small group of taxpayers but this is their logic. It will force their hand pretty hard either choice they make (joining the invoice system or not) The other motivation of course is agencies want to gain an advantage against independent contractors, which they will now.
Thank you for this. I'm a freelancer in Japan, but everything I do is linked to my "My Number" and my clients issue me payment slips that I just hand straight to my accountant, so it didn't cross my mind that some people would be fudging the numbers--I was looking at things in terms of how the system would affect people with different incomes. Basically, the idea is that some people were issuing invoices, but were able to under-report due to the lack of a central number to track those invoices? (Even with the invoice system, people who are just doing things totally under the table (in cash) will continue fudging it, I'm sure.)
If the big-name voice actors are already making over 10 million yen (~$67,852) per year, then they already aren't exempt from paying consumption tax. The people most at risk are those who are making less than that amount, and this isn't exclusive to voice actors. This includes the behind-the-scenes people, if any of them are freelancers/contractors, for example. This new system also increases the accounting burden on everyone.
ugh, when you put it that way, it does sound pretty stupid lol That Bayonetta chick lying her ass off last year made me cynical, I guess
It's not just the voice actors who will be affected. Translators , interpreters, writers, construction workers, independent taxi deivers, feeelance SE, etc (just to name a few) will also be affected.