Why tax professionals oppose the “invoice system,” which is the same as the “miner card” and has not been properly discussed. | FRIDAY DIGITAL

Why tax professionals oppose the “invoice system,” which is the same as the “miner card” and has not been properly discussed.

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510,000 signatures against the project exceeded the number of signatures for the Tokyo Olympics! Lawyers, tax accountants, and judicial scriveners gathered…

The “invoice system (qualified invoice)” will start on October 1, 2011.

Despite its imminence, how many people in Japan have a correct understanding of its contents?

The following comment made by Takafumi Horie on X (formerly Twitter) on September 5 in response to a report of more than 360,000 signatures signed by a volunteer group of freelance tax collectors brought the real situation into sharp relief.

I say, ‘You’ve been ‘embezzling’ consumption tax until now. Pay up!

This comment was met with harsh criticism on social networking sites and Internet message boards, such as “This person has no understanding of how the consumption tax works,” and “What does a guy who was arrested (in the Livedoor case) have to say about that?

The aforementioned signatures refer to the online signatures for the “STOP! Invoice” campaign against the invoice system organized by the “Freelancers’ Association for the Invoice System. This is the largest number of online signatures in the history of online petitions, surpassing the 465,000 online petitions against the Tokyo Olympics, which is said to be the largest in Japan.

On September 4, Prime Minister Kishida is said to have asked the finance minister to “accommodate business operators” regarding the invoice system… (PHOTO: AFLO)

He said, “We have been submitting letters of opposition to the National Tax Agency and the Ministry of Finance for a long time, and until now there has been very little reaction.”

However, while there are so many voices of opposition, why is it that statements such as the one made by Mr. Horie above can be found in some quarters? The fact is that the invoice system is too complicated and too difficult to understand.

Under these circumstances, on September 14, the “National Three Youth Associations,” consisting of lawyers, certified tax accountants, and judicial scriveners, held a press conference calling for the abolition of the invoice system. Why are these professionals making a statement against the invoice system? We interviewed five members of the National Federation of Young Certified Public Tax Accountants to find out.

The invoice system is a tax system that will increase the burden not only on freelancers and other sole proprietors, but on the entire nation. We felt that we had to make this more known and work toward its abolition, so we took action to make a statement of opposition.

Why now? Some people may ask, “Why now?” But we have been submitting written opinions opposing invoicing to the National Tax Agency and the Ministry of Finance for a long time, and until now there has been almost no reaction. (Ryuichi Yamada, former president of the federation )

For example, Mr. Yamada explains the common misconception of the “pro-invoice” camp as follows.

“There is an opinion that it is a ‘profit tax’ (a part of the consumption tax paid by the consumer to the vendor becomes the profit of the vendor without being paid) or that the problem is that tax-exempt businesses do not pay consumption tax, but from a tax accountant’s point of view, this is a complete misunderstanding; there is no such thing as a ‘profit tax.

In addition, on February 10, 2011, Parliamentary Secretary to the Minister of Finance Kaneko clearly stated at a meeting of the House of Representatives Cabinet Committee that “the consumption tax is a deposit-type tax, and is not a deposit tax. In other words, he admits that there is no such thing as a ‘deposit tax’ or ‘profit tax.

In other words, the “elimination of profit tax” that proponents have repeatedly argued as the basis for the introduction of invoicing has collapsed from the bottom up.

Huge administrative costs forced on small businesses for a 248 billion yen tax increase

What is expected to happen if the invoice system is introduced?

Small, tax-exempt businesses with annual sales of 10 million yen or less will not only have to pay consumption tax, but their administrative costs will be so enormous that some will have to go out of business.

Salaried workers and civil servants will also be affected. For example, expense reimbursement. Since the companies will not know whether or not to recognize receipts purchased from businesses that have not registered for invoicing, they will have to choose the right stores when purchasing necessary items, and when taking cabs, they may have to look out for the mark of a qualified invoicing business. Chairman Kazumasa Tomikawa).

On September 14, the National Three Youth Associations, a group of three youth organizations of lawyers, tax accountants, and judicial scriveners, held a press conference calling for the abolition of the invoice system (PHOTO: courtesy of “STOP! Invoice”).

A strange phenomenon that runs counter to the trend of the times is already taking place.

On “News Station” (broadcast on September 18), it was reported that stamp shops are suddenly becoming more and more active. It’s hard to write down every single invoice number by hand, so they prepare stamps.

Clients say, ‘You’ve made it more analog, haven’t you? They have been advocating digitalization and elimination of the stamp, but they are going backwards. I have no idea what direction the government wants to go in.

The reduced tax rate itself is not a measure for the weak, since high-income earners tend to spend more money on food and beverages, and therefore, high-income earners benefit more from the system.

Furthermore, it is said that the introduction of the invoice system will make up for the 1 trillion yen shortfall in tax revenue that was reduced by the introduction of the reduced tax rate, but the increase in tax revenue expected from the introduction of the invoice system is said to be around 248 billion yen.

In contrast, tax-exempt businesses will incur costs, such as hiring a tax accountant, in order to comply with the invoice system. It is said that tax-exempt businesses becoming taxable businesses will see an average tax increase of about 150,000 yen per business, but they will also have to pay additional costs for filing tax returns. I am certain that the public will feel a burden that exceeds the increase in tax revenue. (Mr. Takayuki Kamegawa, Chairperson of Sansei-Kai, Japan)

There are also reports that “the invoice system to be launched in October will cost 4 trillion yen a year for a 250 billion yen increase in tax revenues.

The other report states, “I believe that consumption tax delinquency will also increase. The largest amount of delinquency in tax revenue is consumption tax. If invoicing is introduced there, businesses that do not understand the system will be confused, and delinquency is expected to increase further. (Mr. Norimitsu Takahashi, Director of the Current Law Department)

Confusion over “tax returns” will inevitably hamper side businesses and start-ups.

Mr. Kamegawa also expressed his concern about how next year’s tax returns will be handled.

Many businesspeople are able to prepare a simple tax return with just pluses and minuses, but when it comes to a consumption tax return, they will probably have to install software.

I often assist at tax return filing sites, and when invoices are introduced, even if I am asked to prepare a consumption tax return on the spot, it is not something I can do immediately, so I am very worried when I imagine the confusion that will arise. I believe the confusion will be even greater than with the introduction of the My Number system.”

In fact, confusion at the field level has already begun, according to former Director of the Legal Affairs Department, Ms. Isako Fujiwara.

The invoice system is very complicated, and it does not end with just obtaining a registration number and paying consumption tax. The contents are too complicated for businesses to deal with.

I have customers in their 60s and 70s who are working hard and making invoices by hand, but they are using invoices that are not Kokuyo invoice-compliant. We are still in the process of buying them in bulk and still have a surplus in stock.

Kokuyo explains that the invoices can be used as they are after October 2011 if the invoices are sent out with the registration number on both invoices for the 8% tax rate and the 10% tax rate separately. However, the recipients of the invoices do not understand this, so they demand that we change the invoices or install a system instead of writing them by hand.

As a tax accountant, I explain properly to my clients, but they are still worried that they may not continue to do business with us if they are judged to be unable to respond due to their incorrect understanding. I want to tell them that the field is already in turmoil.”

When the invoice system was first introduced, what was the reaction among tax accountants and other specialists?

It is no exaggeration to say that almost all tax accountants were opposed to the invoice system when it was first decided. Even the Japan Federation of Certified Public Tax Accountants’ Associations (JFTA), at first, kept saying ‘invoice should be abolished,’ but for some reason they suddenly changed their opinion last year, just before the system was decided. The opinion of the Japanese Federation of Certified Public Tax Accountants was not the consensus of the members at all, and the opinions of us tax accountants in the field were not reflected at all, but only the top management decided on their own to provide mitigation measures for small, medium, and micro businesses as an alternative proposal.

From the tax accountant’s point of view, this system is completely meaningless. It will only increase the burden on the public as a whole and will not increase tax revenues much, so I wonder what the point is of this system and who will benefit from it. I wonder who benefits from this system. The financial bureaucrats have only a plus/minus perspective on the numbers, and they are not paying any attention to the administrative burden on the public, which is seen as a problem even among tax accountants” (Takayuki Kamekawa).

Takayuki Kamegawa, a tax accountant, said, “I can’t help but worry about what will happen to my tax return next year,” and “I wonder what the point of this system is and who will benefit from it.

The tax system reform that was promoted without experts, and for whom and what…

When asked who and how the system was created in the first place, Mr. Kamegawa adds, “There are almost no practitioners in the field of tax reform.

I think it’s also very problematic that the tax reform process rarely includes practicing tax accountants. In the end, I often feel that tax system reform is being carried out to lobby legislators or to target industries with large amounts of donations.

In fact, there are almost no tax accountants among the members of the Government Tax Commission and the LDP Tax Commission.

As was the case with the Electronic Bookkeeping Law a short while ago, I feel that decisions are being made by people who are not on the ground, or rather, are just sitting on their desks. Furthermore, I wonder how many members of the Diet have a firm understanding of the invoice bill,” said Takayuki Kamekawa.

Some foreign countries are considering “abolishing” invoices…

Incidentally, Yamada points out that although other countries use invoices to file consumption tax returns, problems have arisen with rampant tax evasion through “counterfeit invoices. Japan is going against this trend.

I would like each and every citizen to better understand that the invoice system is a tax system that affects the entire nation,” he said. Tax payments will increase, administrative costs will increase, small and micro businesses will go out of business, and the social infrastructure will be destroyed. We would like to convey the message that the number of people opening new businesses will also decrease, which will affect the Japanese economy as a whole. If it is well understood, I believe that the decision will be made that the invoice system will never happen,” said Takayuki Kamekawa.

The invoice system is like suddenly removing a ladder from a system that has been promoting side hustles and freedom in the way people work. What about a system in which the tax system limits the way people work? For example, when you want to start a business and take the first step in the future, it will be a major stumbling block when you first try freelancing on the side.

This means that it will be difficult for new businesses to start up and compete with the global economy when viewed from the perspective of Japan as a whole. I feel that we should think about what we should do, looking further into the future than we are now.

Even the “tax office” does not understand properly!

The “tax office” doesn’t understand it either!

With so much trouble over “My Number” alone, it is hard to believe that the government can control such a complicated system that is difficult even for experts to understand. Mr. Tomikawa also told us about the other side of the story.

The tax office doesn’t understand it either. As for tax audits, they say they will basically suppress them with administrative guidance for two years, but there are so many tax audits now that when I ask an inspector, ‘How are you going to investigate when invoicing starts? and they say, ‘We don’t know how to investigate.'”

The limit is now just around the corner. Natsumi Koizumi, founder of “STOP! Invoice,” shared her thoughts.

On September 25, we are planning to hold our final action in front of the Prime Minister’s Office. We want to deliver to the government and the media not only the thoughts of the 500,000 people who have signed the petition online, the largest number in history, but also the voices of the many people behind the petition who have concerns that have not yet been made visible. We started this petition in December 2009, and I feel hopeful that so many people’s voices have been gathered with only a sense of crisis among citizens, even though there has been no good invoice coverage.

I feel hopeful that everyone, regardless of industry, right or left, will join together to abolish invoicing, which is not in anyone’s best interest. That’s all I can think of right now.”

The Freelancers’ Group for the Invoice System is planning to hold the last large-scale action before the start of the invoice system in front of the Prime Minister’s Office on Monday, September 25, at 6:30 p.m.
  • Interview and text by Wakako Tako

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