Tax increases are propaganda. The invoice system is a response to the profit tax.

We frequently hear in the press about opposition to the invoice system.

After the introduction of the system in October next year, it is expected that businesses will be required to issue invoices from their suppliers.

On the other hand, small businesses that are currently exempt from consumption tax will be newly obliged to pay consumption tax once they register to issue an invoice. The citizens' group called for the cancellation or postponement of the introduction of the system on the grounds that it would effectively mean a tax increase for small businesses.

Citizens' Group Against NHK "Invoice System" Holds Massive Rally in Tokyo October 27, 2022 4:57 PM

Registration of the number for the invoice system is not mandatory.
There is no need to go out of your way to become a taxpayer for the sake of the invoice system.

There will be reports of opposition to the invoice system.
The news organizations are more likely to have a tone that does not interject too many assertions or just state the facts.

It's hard to speak directly about it.The real issue is that small businesses will no longer receive the benefit of the profit tax portion that they used to receive.It is.
Calling the fact that you will no longer get the profit tax you were receiving a "real tax increase" is a propagandistic impression!The following is a list of the most common problems with the
The IRS is also trying to make the deductions apply in stages, and I am not trying to be indifferent to that.

And the real concern would not be the transactions between large companies and small businesses, but whether the transactions between small businesses that are obligated to pay sales tax and small businesses that are not obligated to pay sales tax will continue properly.

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profit-tax problem

The consumption tax was introduced in 1989.
Profit taxation has always been a problem.

Mr. A, who is liable for consumption tax, and Mr. B, who is not liable for consumption tax, have different profits from the same transaction.
The portion that appears to be deposited as consumption tax but ends up in Mr. B's pocket is called profit tax.

Gross profits tax is incurred in the case of simplified taxation and in the case of tax-exempt businesses.

For example, there is sales of 10 million yen and provisional consumption tax received is 1 million yen.
Suppose there are purchases of 7,000,000 yen and the provisional consumption tax payable is 700,000 yen.
The difference, 300,000 yen, is paid to the government, etc., for taxation in principle.

Assuming simplified taxation and a deemed purchase rate of 901 TP3T, the consumption tax payable provisionally of 101 TP3T on 901 TP3T of 10 million yen is 900,000 yen.
The amount of consumption tax, etc. to be paid to the government, etc. as the difference is 100,000 yen.

Therefore, ¥200,000 in purple is the gain tax.

Even tax-exempt businesses are subject to the profit tax.
If the tax liability is for the current year, the green portion is paid if the tax is taxable in principle.
If it is a tax-exempt business, it does not have to pay the consumption tax portion to the government, etc., even if it collects the tax.

It is unfair to Mr. A and Mr. B for the same transaction.
From the standpoint of tax fairness, these types of gains taxes were considered problematic.

However, since 1989, small businesses have been exempted from the consumption tax for certain persons because of the administrative burden on small businesses in introducing the tax.

Therefore, a profit tax has been generated.
While exemptions are being reduced, gains taxes will not disappear.

Is the paperwork that much of a hassle?

So, was the administrative work difficult?

It is the timing of the introduction of Microsoft Office that is considered against the introduction of 1989.
June 25, 1993*1I see that this is the case.

In 1989, calculating sales tax would have required the use of little or no Excel, and would have required the use of specialized accounting software.

For example, freee, an example of cloud accounting, was established in 2012.
There are other companies, but accounting software has advanced remarkably, and it is now commonplace for it to be linked to bank activity and to sales ledgers.

There is a movement to introduce PEPPOL in the future, which will facilitate the exchange of invoices with a global standard.

The reasons for tax exemption in terms of hassle are diminishing.

There are transitional measures.

However, this does not mean that all claims for consumption tax, etc. from tax-exempt businesses will suddenly become nondeductible.

The following transitional measures are available

From October 1, 2005 to September 30, 2026 80% of the amount equivalent to tax on purchases
From October 1, 2008 to September 30, 2026 50% of the amount equivalent to purchase tax

Is it unfair to solve the problem of profit taxation?

For those who have been receiving the benefit tax, not being able to receive the sales tax portion will be a major blow.
For those who have not received it, it is irrelevant.

Which position should we take?

Some of you may have recently started your own businesses, but you were in a state of neglect for more than 30 years with sales tax gains available to you.
There is an inequity in taxation, but you have left the profit tax in place until now, weighing it against the administrative burden on small businesses.

From the point of view of someone who is just barely a small business, they will wonder why I have to pay sales tax while Mr. A gets the benefit tax.

Balancing the tax burden on small businesses will be necessary from the perspective of economic revitalization.
However, from the perspective of fairness in taxation, it seems to fit better with the elimination of inequities.

We feel that it is more than somewhat misleading to refer to the loss of the benefit portion that was previously received as a tax increase, as reported in the press.

*1 Microsoft Office.(2022, November 3). In Wikipedia. https://ja.wikipedia.org/wiki/Microsoft_Office

*2 freee.(2022, October 23). In Wikipedia. https://ja.wikipedia.org/wiki/Freee

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