Streamline expense settlement

Committee:
Tax
status:
New
Published:
Japan has made significant strides in digital transformation, particularly through the adoption of cashless payments and secure data systems. Cashless payments and tamperproof systems, along with sensible rules on expense processing eliminated the need for receipts in a large portion of employee expense claims. However, the introduction of the Qualified Invoice System in October 2023 has inadvertently complicated expense claim processing by newly requiring receipts for almost all transactions, even for small cashless payments. Previously, companies could rely on electronic transaction data from credit card companies for expense claims without needing receipts.

Recommendations

  • Extend the current exemption for travel expense receipts under 30,000 JPY to include a wider range of expenses or payments made using company credit cards by amending Article 49 of the Consumption Tax Act Enforcement Order.
  • Eliminate the need for receipts in cases where cashless payments (e.g., company credit cards) automatically link transaction data to expense settlement systems by amending Article 30-9 of the Consumption Tax Act.
  • Establish an automated system for payment data integration.
  • Provide financial support and guidance to accomplish system updates. Ensure that payment terminal makers, payment network operators, card issuers, and international card brands are able to implement the requirements by providing subsidies to cover related expenses.