Understanding the Qualified Invoice System (QIS) in Japan

Japan introduced the Qualified Invoice System (QIS) as part of its JCT framework. If you sell to business customers in Japan, this system directly affects whether your customers can claim input tax credits on purchases from you.

What Is the Qualified Invoice System?

The QIS requires JCT-registered sellers to issue qualified invoices in order for buyers to claim input JCT credits. An invoice is considered "qualified" when it is issued by a Qualified Invoice Issuer (QII) and includes the seller's T-number.

Why This Matters for Non-Resident SaaS Sellers

If you sell SaaS or digital services to Japanese business customers and you are not registered as a QII, your Japanese customers cannot claim the full input JCT credit on purchases from you. This puts you at a competitive disadvantage compared to registered suppliers.

Registering as a QII signals to your Japanese business customers that transactions with you are fully creditable, which makes your services more attractive.

What a Qualified Invoice Must Include

A qualified invoice issued to a Japanese business customer must contain:

• Your Qualified Invoice Issuer registration number (T + 13 digits)

• The date of the transaction

• A description of the goods or services supplied

• The applicable JCT rate (10% or 8%)

• The tax amount, separated by rate

• The total amount payable, including JCT

Invoices for B2B Cross-Border Sales (Reverse Charge)

When you are a non-resident seller and your customer is a registered Japanese business, you do not charge JCT on the invoice. Instead, the invoice should include a notation such as:

"Reverse charge: the recipient is liable for Japanese consumption tax."

The Japanese buyer will self-assess and remit JCT directly to the NTA.

Platform Taxation Update (April 2025)

Starting April 1, 2025, designated platform operators — such as major app stores — are responsible for collecting and remitting JCT on B2C digital service transactions that exceed JPY 5 billion per year through their platform. If this rule applies to you, your obligation to collect JCT on those transactions may shift to the platform. However, this does not necessarily eliminate your registration obligation for sales made outside of those platforms or for direct B2B transactions.

These articles are intended as a general guide and do not constitute legal or tax advice. For specific questions about your JCT obligations, consult a qualified tax professional or reach out to Kintsugi Support.