Japanese Business Glossary

電帳法 (dencho-ho) refers to the Electronic Bookkeeping Act in Japan, a law that governs the electronic storage and management of financial records and documents. This act allows businesses to maintain their accounting records digitally, provided they adhere to specific guidelines and standards set by the Japanese tax authorities.

The main objective of the Electronic Bookkeeping Act is to promote efficiency and accuracy in record-keeping by leveraging digital technology. Businesses that choose to use electronic bookkeeping must ensure that their digital records are secure, easily accessible, and verifiable. This includes using reliable software for data management, maintaining backups, and implementing measures to prevent data tampering or loss.

Complying with the act can streamline accounting processes, reduce paperwork, and facilitate easier tax audits. However, businesses must obtain approval from the tax office to store their records electronically and demonstrate that their systems meet the required standards.

By adopting electronic bookkeeping under this act, businesses can benefit from more efficient financial management and potentially lower administrative costs, while also ensuring compliance with Japanese tax regulations.

減価償却 (genka shokyaku) refers to depreciation in Japan, the accounting process of allocating the cost of a tangible asset over its useful life. This method recognizes the gradual decrease in value of assets like buildings, machinery, and equipment due to wear and tear, usage, and obsolescence.

In accounting,* genka shokyaku* (depreciation) allows businesses to spread the expense of an asset over several years, matching the cost with the revenue generated by the asset. This process provides a more accurate representation of an asset’s value and the company’s financial position.

Several methods can be used for calculating depreciation, including the straight-line method and declining balance method. The choice of method and the specific rules governing depreciation, such as useful life estimates and residual values, are determined by Japanese tax laws and accounting standards.

Implementing depreciation helps businesses reduce their taxable income by accounting for the decreasing value of their assets. Properly managing depreciation is essential for compliance with tax regulations, accurate financial reporting, and effective long-term financial planning.

減価償却費 (genkashoukyakuhi) means depreciation expense in Japanese.

Depreciation expense is the accounting process of allocating the cost of tangible assets over their useful lives. This method recognizes that assets like machinery, vehicles, and buildings lose value over time due to wear and tear, usage, or obsolescence.

In Japan, depreciation expense is a significant component of financial statements, helping businesses reflect the declining value of their fixed assets accurately. The amount and method of depreciation can affect a company's taxable income, making it crucial for tax reporting and financial planning.

The two common methods of depreciation in Japan are the straight-line method, where the asset's cost is spread evenly over its useful life, and the declining balance method, where higher depreciation expenses are recorded in the earlier years of the asset's life, decreasing over time.

Understanding and correctly applying depreciation expense is essential for accurate financial reporting and tax compliance in Japan.

税理士法人 (zeirishi hojin) refers to a tax accountant corporation in Japan. This type of corporation is formed by certified tax accountants (税理士 = zeirishi) who are licensed to provide tax-related services. These services typically include preparing and filing tax returns, providing tax advice and planning, representing clients in tax audits and disputes with tax authorities, offering bookkeeping and accounting services, and assisting with corporate tax strategies and compliance.

Tax accounting corporations allows tax accountants to pool their resources and expertise, offering a wider range of services and serving more clients effectively. These corporations are regulated under Japanese law to ensure they maintain professional standards and ethical practices.

インボイス対応 (inboisu taiou) refers to the necessary actions businesses must take to comply with Japan's new Invoice System, implemented on October 1, 2023. This system, known as the 適格請求書等保存方式 or Qualified Invoice System, requires businesses to issue and retain qualified invoices to claim input tax credits for consumption tax (VAT).

Qualified invoices must include details such as the invoice issuer's registration number, applicable tax rates, and the tax amount categorized by tax rate. Only businesses registered as "qualified invoice issuing businesses" can issue these invoices. To become registered, businesses need to apply to the tax office and receive approval.

Both issuers and recipients of qualified invoices must retain copies for seven years. This retention can be done electronically if compliant with Japan’s e-Document Law.

For sellers, this means updating invoicing processes to meet the new criteria. Buyers need to ensure they receive qualified invoices to claim input tax credits, and cannot claim these credits if they receive invoices from non-registered businesses.

Companies like freee offer accounting software that automates the creation and management of qualified invoices, ensuring compliance with the new system. The Japanese government provides support, including IT subsidies, to help small and medium-sized enterprises transition smoothly.

受領書 (juryosho) refers to a receipt or acknowledgment of receipt. This document serves as proof that goods, services, or payments have been received. It typically includes details such as the date of receipt, the name of the recipient, the description of the items or services received, and the signature of the receiving party. Receipts are important for record-keeping and can be used for accounting, auditing, or resolving any disputes that may arise regarding the transaction. In business, providing and obtaining juryosho ensures transparency and accountability in financial and material exchanges.