The invoice data exchange accelerates SME banking innovation: Trends and initiatives for e-invoicing in Japan

Abstract

Electronic invoice (e-invoicing) is a system that digitises qualified invoices that are mandatory for the deduction of purchase tax under the qualified invoice system. This invoice system is intended to provide an appropriate consumption tax credit for purchases in response to the multiple tax rates for a consumption tax in 2019 and is scheduled to be introduced in October 2023. When the invoice system begins, only invoices issued by qualified invoicing businesses will be eligible for the purchase tax credit calculation. Invoices issued by others (eg tax-exempt businesses) will not be eligible for the purchase tax credit. The handling of these qualified invoices is expected to create an unprecedented workload for both buyers and sellers and presents an opportunity for innovation. Government and private sector organisations involved in accounting systems have begun discussions to introduce e-invoicing — complete digitalisation of invoices exchanged between companies — in preparation for the upcoming launch of the qualified invoice system. This paper introduces the global trend of electronic invoicing, especially the successful cases in Europe, which is ahead of other countries; analyses the digitalisation of receipts, invoices, etc from the viewpoint of innovation opportunities, targets and execution; and proposes innovations in small and medium-sized enterprises (SMEs) banking.