Japan’s Qualified Invoice System for Foreign Companies: 2026 Changes

A foreign company can register as a qualified invoice issuer (適格請求書発行事業者) provided it files consumption tax returns in Japan as a taxable business. A foreign business without an office in Japan must, in addition to filing a tax agent (納税管理人) notification, appoint a licensed tax representative (税務代理人) as a condition of registration. From October 2026, the transitional measures for purchases from unregistered suppliers have also changed.

What the Qualified Invoice System is, and why it matters to foreign companies

The Qualified Invoice System (インボイス制度, formally 適格請求書等保存方式) is the method for claiming consumption tax input tax credits that took effect on 1 October 2023. To claim an input tax credit, a buyer generally needs to keep a qualified invoice issued by the seller.

Only businesses registered by the head of a tax office can issue qualified invoices, and registration is open only to businesses that are taxable for consumption tax. A tax-exempt business that registers must file consumption tax returns as a taxable business.

If a Japanese customer is a taxable business, the credit it can claim on purchases from unregistered suppliers is partly restricted. As a result, foreign companies that trade regularly with Japanese businesses are increasingly being asked for their registration number.

What a qualified invoice must show, and the registration number

Besides the issuer’s name and registration number, a qualified invoice must show the transaction date, a description of the transaction, the consideration totalled by tax rate with the applicable rates, the consumption tax amount, and the recipient’s name.

For a business with a corporate number, the registration number is “T + corporate number (13 digits)”. Once registered, the business must issue a qualified invoice when a customer requests one and keep a copy. Registered businesses’ names and registration numbers are published on the National Tax Agency (国税庁, NTA) publication site, where customers can check whether a supplier is registered.

What to do, by type of business presence

What a foreign company needs to do depends on how it operates in Japan. Start by confirming which category applies.

Whether you enter Japan through a branch or a subsidiary also affects tax treatment. See Japan branch vs subsidiary for a comparison.

Registration requirements for foreign businesses with no base in Japan

A foreign business with no office or place of business in Japan is called a “specified foreign business” (特定国外事業者). To be registered, a specified foreign business needs the following in place.

• It files and pays consumption tax as a taxable business
• It has designated a person with an address or similar in Japan as its tax agent and has submitted a consumption tax agent notification (消費税納税管理人届出書)
• It has a licensed tax representative (such as a certified tax accountant) with authority to act for it in consumption tax matters

A tax agent submits returns and receives documents from the tax office, among other tasks, on the business’s behalf. A licensed tax representative is a certified tax accountant (税理士) or similar professional who handles returns and other tax representation.

The application must be accompanied by a certificate of tax representation authority (税務代理権限証書). It is submitted by post or through e-Tax; check the mailing address and forms in the NTA’s guidance for foreign businesses. Registration takes effect from the date on which the head of the tax office registers the business.

A specified foreign business whose registration has been revoked may be refused re-registration for one year from the date of revocation. It is important to have a reliable system for filing and paying tax in place before registering.

Foreign businesses may be unable to use simplified taxation or the 20% rule

For taxable periods beginning on or after 1 October 2024, a foreign business that has no permanent establishment (PE) on the first day of the taxable period cannot apply the simplified taxation system (簡易課税制度). This is the case even if it submitted a notification electing simplified taxation by 30 September 2024.

The 20% special rule likewise no longer applies to such businesses. A foreign business without a PE files under the general method, which totals the tax on both sales and purchases.

The end of the 20% special rule and the October 2026 changes to transitional measures

The Qualified Invoice System includes transitional measures to ease the burden on businesses. The FY2026 (令和8年度) tax reform revised them.

The 20% special rule runs to the taxable period that includes 30 September 2026

The 20% special rule (2割特例) allows a small business that has moved from tax-exempt status to registered invoice issuer to pay 20% of its output tax as its tax liability. The rule ends with the taxable period that includes any day up to 30 September 2026.

The successor “30% special rule” (3割特例) applies to sole proprietors who registered after being tax-exempt, for the 2027 and 2028 tax years. Corporations cannot use the 30% rule. Measures on the timing of notifications have also been introduced so that businesses that used the 20% (or 30%) rule can move smoothly to simplified taxation. Check the timing of notifications in the NTA’s guidance.

Creditable share on purchases from tax-exempt and other unregistered suppliers

A transitional measure allows a set percentage of the amount equivalent to input tax to be credited even on purchases from unregistered suppliers. The reform extended its application period by two years, and the percentages are now as follows. The percentage is determined by when the taxable purchase is made.

The reform also provides that, where total taxable purchases from the same supplier exceed JPY 100 million in a year or business year, the transitional measure cannot be used for the excess. The previous cap was JPY 1 billion. Check the NTA’s materials for when this cap starts to apply and how it is calculated.

The transitional percentages are used in calculating the buyer’s credit and do not affect the tax that a foreign company, as seller, reports. For Japanese customers, however, the burden grows the more they trade with unregistered suppliers.

The lower a customer’s creditable percentage, the more likely it is to ask an unregistered supplier to revisit prices or terms. Foreign companies that trade heavily with Japanese businesses should decide early whether to register.

Providing digital services from outside Japan

For services provided over the internet (electronic services, 電気通信利用役務の提供), who files and pays the tax depends on the customer.

A foreign business providing business-to-business services is required to state in advance that the transaction is subject to the reverse charge.

“Platform taxation” (プラットフォーム課税) began on 1 April 2025. Where a foreign business distributes to consumers through a platform designated by the Commissioner of the NTA and receives payment via that platform, the platform operator files and pays the tax. One of the designation requirements is that the consideration received from transactions with consumers in Japan exceeds JPY 5 billion in a taxable period.

When to register if you set up a Japanese corporation

If you are setting up a Japanese corporation (subsidiary), it is prudent to decide before incorporation whether to register from the first year.

• A newly established corporation with share capital of JPY 10 million or more is a taxable business from incorporation.
• A corporation with share capital below JPY 10 million is, in principle, tax-exempt at the outset, except where it belongs to a large corporate group or in certain other cases. Whether a tax-exempt corporation also needs to file a notification electing taxable status (課税事業者選択届出書) when registering depends on the timing of registration and the transitional measures.
• If it submits an application stating that it wishes to be registered from the first day of the taxable period in which it was incorporated, by the last day of that period, it is deemed registered retroactively from that first day.
• Where registration is to start part-way through a taxable period, among other cases, there are rules on the requested registration date and the application deadline. Check the dates in the NTA’s guidance before applying.

Other notifications required after incorporation are listed in Filings after incorporation: list and deadlines. For the full picture including corporation tax and local taxes, see An overview of taxes on Japanese corporations.

What to check before registering

• Whether most of your Japanese customers are taxable businesses or consumers
• The scale of your sales in Japan, and the filing and payment burden if you become a taxable business
• Whom to engage as your tax agent and licensed tax representative
• Whether, after registration, your invoice templates and systems can issue invoices that meet the content requirements

Once registered, you must file consumption tax returns even in years with low sales. Deregistration also has notification deadlines, so agree a policy with a certified tax accountant before starting the process.

How TIMOA can help

For foreign companies, the right approach to the invoice system depends on the business structure and the customer mix. It is important to work through, together, whether to register, the arrangements for a tax agent and licensed tax representative, and the order of notifications when setting up a Japanese corporation.

Working with partner certified tax accountants, TIMOA supports you from the registration decision and application through to setting up a filing system after incorporation. For details, see our Accounting, Tax & HR services.