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Freelancers aren’t happy with Japan’s new invoice system

142 points by mikhael 3y ago

RedShift1 3y ago
Only 10%? Cries in 21% VAT.
- realPubkey 3y ago
  10% increase, not 10% in total.
  - croes 3y ago
    >The government had introduced a reduced consumption tax rate of 8% for certain products like food and newspapers, besides the standard 10%
- closewith 3y ago
  23% in Ireland.
  - hirako2000 3y ago
    Norway, Sweden and Denmark takes 25%. Hungary shamelessly demands 27%
    - CafeRacer 3y ago
      Latvia is more like 33%... not even thinking about France.
      - jacquesm 3y ago
        VAT, not income tax.
      - seszett 3y ago
        France increased VAT from 19.6% to 20% in 2014, I think it is supposed to increase again to 22% in 2024.
      - deleted 3y ago
        [deleted]
      - ComputerGuru 3y ago
        Latvia seems to be up to 21%? https://www.avalara.com/vatlive/en/country-guides/europe/latvia/latvian-vat-rates.html https://www.avalara.com/vatlive/en/country-guides/europe/lat...
- naillo 3y ago
  10% increase, not just 10%
  - croes 3y ago
    >The government had introduced a reduced consumption tax rate of 8% for certain products like food and newspapers, besides the standard 10%
  - Ekaros 3y ago
    Technically 9%... As it is 10% tax, so it is not from 1, but 0.9091
- e61133e3 3y ago
  27% in Hungary
  - f1shy 3y ago
    Whaaaat? Are other taxes lower or non existing?! That is crazy!
- croes 3y ago
  But the average wage in Japan is only $39,319
  - miohtama 3y ago
    And small businesses have median wages below average.
    - croes 3y ago
      I suspect that the small companies in Japan and Europe are below average by the same factor. In the end it depends on the cost of living and the rents.
  - askonomm 3y ago
    Average wage in Estonia is way less than that (and I would imagine most of EU's average wage is less than that), at 21,420.78 USD, but we have 20% VAT.
    - croes 3y ago
      What are your costs of living?
      - morjom 3y ago
        https://www.numbeo.com/cost-of-living/in/Tallinn https://www.numbeo.com/cost-of-living/in/Tallinn
- gunapologist99 3y ago
  The people voted for these taxes (or they voted for the people who voted for them). Interestingly, however, increased govt revenue is not correlated with long-term increased economic output or GNP. (Of course, govt revenue will increase temporarily whenever taxes increase.) Most of the highest tax nations have mediocre national output.
chrisandchris 3y ago
> Small businesses that were previously tax-exempt may need to register or risk losing clients — but if they do register, they will have to pay an additional 10% in taxes. I can understand, and in Switzerland you are tax-excempt if you are (each year) under 100k revenue. However, you won't be able to get the tax others have on their bill back then (input tax). Besides that, taxes for revenue exist because a country (shall) provide value to you (like safety or administrative stuff, like debt collection). And this stuff must be paid too.
martin-adams 3y ago
This sounds just like the VAT rules in the UK. What I don’t understand is why a company buying the services of a freelancer who isn’t consumption tax registered would be an issue in Japan. In the UK it’s very common to buy services from non-VAT registered businesses. You don’t claim the VAT back because no VAT was added to the invoice.
- konschubert 3y ago
  It seems that in Japan, customers of small businesses could claim the VAT back even though the small business did not pay VAT. It was a subsidy that is being removed.
konschubert 3y ago
I don’t get it. We have the same system in Germany. If you’re a small business, you don’t pay VAT for the invoices you wrote, and your business customers cannot deduct any VAT when they buy from you. If you’re a big business, you pay vat and your biz customers deduct that vat again from their own vat payments. It’s all good and fair, no? I guess that before, the VAT-paying customers were subtracting 10% of their payments to small companies from their VAT payments, as if the small companies had already paid VAT? That was effectively a Japan-specific subsidy of small businesses with a hard cutoff at 10k. I suppose that’s why people are complaining: they would like to keep their subsidies.
- miohtama 3y ago
  In Finland and AFAIK all Nordics, all invoices must be VAT inclusive. If you are selling up until 15k EUR year you can do it VAT free, which is too small to be considered a professional business. Alternatively if you are selling services outside the EU (freelancing internationally). It sounds like it was indeed subsidy for small businesses. I don’t know about Japan, but in some countries like Italy there is a problem of small inefficient businesses. Whether such direct or indirect subsidies are good or not for the economy as whole, to keep these small businesses around, is a good question which may not have a definite answer. Internationally it may reduce competitiveness, but it may be good for local and rural area employment, which increases the quality of life for a very small national cost. Also there is cost for maintaining the records and adminstration: for 15k EUR/year this cost would be significant % for the actual value adding activity.
  - Zanfa 3y ago
    > In Finland and AFAIK all Nordics, all invoices must be VAT inclusive. If you are selling up until 15k EUR year you can do it VAT free, which is too small to be considered a professional business. Alternatively if you are selling services outside the EU (freelancing internationally). There's also VAT reverse charge for invoices when selling goods & services between EU countries where you don't include VAT on the invoice.
    - 3y ago
aidog 3y ago
My animator friend is very upset about this because she will lose 10% of her income. I'm not sure if the anger is directed into the right direction, but I agree that it is not really a good change. I'm not looking forward to the effort and to publish my adress either. Inflation this year is absolutely brutal with some groceries almost twice as expensive. As a freelancer I can invoice a client with consumption tax on the invoice, but not pay the consumption tax, yet the client can get the consumption tax he paid to me back. I wouldn't be suprised if criminals managed to get money from the government through fake invoices.
- ComputerGuru 3y ago
  > As a freelancer I can invoice a client with consumption tax on the invoice, but not pay the consumption tax, yet the client can get the consumption tax he paid to me back. And this is legal (not just in the sense that it’s technically allowed but also that you’re not technically required to file something at the end of the year and pay the difference [0])? Because you’re saying the government pays 10% of the purchase price in this scenario (crediting large businesses for 10% of the paid price, and that amount goes straight to you). > I wouldn't be suprised if criminals managed to get money from the government through fake invoices. If it really works that way, then there’s absolutely zero chance this wasn’t being milked for every ¥1! [0] eg in the USA, residents of states that charge sales tax are legally not charged sales tax on purchases made in another state (with exceptions) but they’re technically required to track those purchases and pay the sales tax themselves at the end of the year. Enforcement is approximately zero, though.
  - jt2190 3y ago
    > they’re technically required to track those purchases and pay the sales tax themselves at the end of the year. Enforcement is approximately zero, though. That’s called “use tax”: https://en.m.wikipedia.org/wiki/Use_tax https://en.m.wikipedia.org/wiki/Use_tax
  - aidog 3y ago
    Yes, legal as long as we're below a certain revenue (10million yen, I believe). It's the filing of those records that the freelancers do not want to do.
yayr 3y ago
I assume that a rate of 10% VAT is rather low in comparison internationally (e.g. EU is around 20 %). Also for typical business customers it should be identical to purchase something for a net amount of x or for a net amount of x plus taxes. They can deduct the taxes anyway and the net amount is identical. That is why usually you can display prices to business customers without VAT. So as I understand it, it is a change, but not with any real business effects unless one of the parties had incorrect taxes before... Which would mean that this party before was subsidised by other taxpayers. https://taxfoundation.org/data/all/eu/value-added-tax-2023-vat-rates-europe/#:~:text=The%20EU%27s%20average%20standard%20VAT,way%20of%20raising%20tax%20revenue https://taxfoundation.org/data/all/eu/value-added-tax-2023-v....
rjmalagon 3y ago
Minor inconvenience vs Mexico electronic invoice hell. Our VAT is 16%, for everyone except a select group of small business, of a now discontinued tax regimen. We must issue a dual cryptographic signed XML invoice (by the emitter and the tax authority) with individualized items with ID codes from a tax authority catalog of recognized products and services, that includes tampons (53131615) to warships (25111708) to radical ecological organizations (94131701). Every invoice needs to be sent to the tax authority servers to get the second signature, without it the invoice is not valid. Without it is not possible to deduct to VAT payments, or (monthly) tax filling in general. No internet, no invoice software, no computers, equals no invoice and no invoice is almost tax fraud. A fiscal invoice is only emitted when a customer asks for it, but businesses are obliged to emit a "general public invoice" with all the sales where customers don't ask for a fiscal invoice.
- twic 3y ago
  > warships (25111708) That's 3366113 in the US and Canada: https://www23.statcan.gc.ca/imdb/p3VD.pl?Function=getVD&TVD=139830&CVD=139832&CPV=3366113&CST=01012004&CLV=2&MLV=2 https://www23.statcan.gc.ca/imdb/p3VD.pl?Function=getVD&TVD=...
- isilofi 3y ago
  Try to vacation in Italy: Consumers are obliged to get an invoice, businesses are obliged to provide one. Including cryptographic signatures (but without the big-list-of-article-numbers and centralized signatures craziness). The financial police are allowed to stop customers within a certain distance of a business and ask for the invoice for their purchase. If the customer cannot provide one, the customer and the business are fined heavily. That's why the business owner will get very angry with you when you (as a clueless tourist) immediately chuck the invoice in the bin, because why would you keep the invoice for a pack of gum...
  - Topfi 3y ago
    > the customer [... is] fined heavily. Sorry, but do you have a source for that claim? Cause I have yet to witness the Guardia di Finanza charging a customer in any way whatsoever.
anigbrowl 3y ago
What is the rationale* for VAT? I have never, ever understood this. If you are an individual, you pay income tax on your earnings. Why should you be taxed on your spending as well? * 'We want to use the money for worthy purposes' isn't a rationale. A rationale is a reason people should pay.
- causi 3y ago
  It all seems rather geared towards funneling money upward instead of downward. Individuals pay taxes on gross income, while businesses only pay taxes on net profit. A poor person makes a big purchase in the form of a new computer or television and pays sales tax, while a rich person makes a big purchase in the form of stock, pays no taxes, and then when he sells it he only pays taxes if he sells it at a gain and if he sells it at a loss he gets to subtract the loss from his income for the year. Fucking imagine if you bought a car and when you resold it you could subtract the depreciation from your income taxes. No wonder the French decided public decapitation was the only solution.
  - gruez 3y ago
    >A poor person makes a big purchase in the form of a new computer or television and pays sales tax Because if you're buying it for personal use it's presumably for consumption, and if you're buying it for business use it's for business use. In the latter case you don't want to tax it because that would hurt businesses with low margins and give vertically integrated businesses an edge. There's definitely abuse of this with small businesses, where someone buys a pickup truck for "business use" but uses it for personal use, but that should be fixed with better enforcement of the tax code, not changing the tax regime entirely. >while a rich person makes a big purchase in the form of stock Because VAT/sales tax are consumption taxes, not a transaction tax. Stocks aren't consumed, so they aren't taxed. >Fucking imagine if you bought a car and when you resold it you could subtract the depreciation from your income taxes. So what are you advocating for? Abolition of all consumption taxes?
    - causi 3y ago
      For the application of sales tax to all purchases including stock and the abolition of capital gains tax. give vertically integrated businesses an edge Why is that bad? Vertical integration allows the more efficient use of resources.
kazinator 3y ago
It sounds very similar to the GST (goods and services tax) wee have in Canada, which was introduced by Brian Mulroney in the 1980s. Small operators are exempt from collecting GST. What that means is that if a small operator is your supplier, then when you purchase something from them, you don't have a GST receipt. Thus, you cannot claim the "input credit" on that purchase to recover any GST. I'm not entirely understanding the situation in Japan from the article's description, but it sounds an awful lot as if the people exploiting the small-time suppliers (freelancers making less than 10M 円) must have been fraudulently claiming that they paid the tax to those small-time suppliers, and using that to claim offset credits to reduce how much of that same tax which they collected from their customers they remit to the government. The freelancers will look 10% more expensive, because the corporations which exploit them can't use a loophole to hold on to tax dollars. "Please sign my petition so that my employers, who won't give me a full time job but keep me around as a disposable contract worker, can keep stealing tax money, so that I look cheaper to them, and consequently have a job so I can continue to barely make ends meet."
notpushkin 3y ago
https://archive.md/UV1WR https://archive.md/UV1WR
traspler 3y ago
I thought one of the reasons many smaller creators were afraid of it was the publication of their personal information when they register and that leading to potential harassment or if what you are creating is socially spicy it could lead to unwanted attention.
ilikeitdark 3y ago
Come to Spain...which must have one of the worse freelance systems in the free world.
sugarkjube 3y ago
> Historically, businesses with annual sales of under ¥10 million ($67,500) have been exempt from the consumption tax. This isn’t going away. Tax-exempt businesses technically can continue as they were. > Small businesses that were previously tax-exempt may need to register or risk losing clients — but if they do register, they will have to pay an additional 10% in taxes. Not sure what is going on. Either nothing changes and things are seriously misrepresented, either, more likely, a major tax evasion loophole is being closed off. > they will have to pay an additional 10% in taxes. Sounds more like large corporations can not deduct taxes any more that never were paid. I have the feeling the government is closing a tax loophole for big corporations, and those now 1) try to push that cost towards their freelancers/suppliers and 2) in order to justify this practice, started a marketing campaign that the "poor freelancers" are being targeted by the government. Business as usual imho.
- numpad0 3y ago
  It seems there are two major talking point: one is that it’s simple 10% cost penalty for previously exempted small businesses, that isn’t necessarily easy to reflect on prices. Another is that the requisite bureaucratic processing is apparently cumbersome. So “everyone” is trying to get registered, push 10% price hike, and prepare all the forms, all at once, and realizing that it’s a bit complicated to do right now, just now. And are complaining just now.
- rtpg 3y ago
  Big business sells stuff to consumers. They collect consumption tax from consumers. That consumption tax gets sent to the gov't. This is the same as its always been. Big business buys stuff from other businesses. When buying things, they are paying 10% in consumption tax. With this change, the consumption tax they pay to other businesses can be deducted from the consumption tax they send to the gov't from their sales to consumers (making consumption tax be a value added tax, and avoiding deeper value chains from being "consumption taxed" over and and over and over again). In order to support this, invoices have extra details (notably a tax number), to avoid VAT fraud. However, businesses also sometimes bought things from freelancers and the like, who mostly did not charge consumption tax. A freelancer with an existing business relation might send a 100k JPY invoice to a business, and the business pays it. But with this change, the business might say "hey, you're supposed to charge consumption tax right?" And would pressure a freelancer to charge 100k JPY (tax inclusive), effectively reducing the amount the freelancer get (since the consumption tax would need to be sent), _but also reducing the cost to the business_ since the 10% of paid tax reduces the amount of collected tax sent to the government, and they only really are paying like 91k JPY. Now really really, freelancers should be like "We are going to charge consumption tax so are increasing the tax inclusive amount by 10%. Please deduct things correctly" to businesses. B2B interactions are already basically marketed at tax exclusive rates. And hey, the business can deduct. But freelancers are bad at negotiating, and "please pay me more" is an argument that many freelancers are bad at doing this. On the business side, many businesses use freelancers specifically for cynical reasons and are very comfortable pushing for freelancers to offer to take the tax hit. I think it's important that in this model, the amount of consumption tax given to the gov't doesn't actually increase. The amount of consumption tax collected by the freelancer is deducted by the business from its collections. This is totally advantageous to "real businesses". I don't want to comment too much on the ethical/moral nature of it, because I'm fortunate enough to be exempt from this stuff for "clients being abroad" reasons. But it's a bit of a mess. EDIT: also, if you register into the tax system you gotta do a lot of paperwork. People not in the consumption tax system were basically just having to report their income on a single line, and paying income tax. There's a lot of good software to track this stuff, but taxes in Japan for a freelancer was basically easy enough to entirely do on paper by just adding up invoices and dividing, up until now.
Dalewyn 3y ago
Speaking as a Japanese-American who has some insight to what's going on: This is just Japanese resisting external demands to get with the times. Sending out invoices and paying sales tax to the government as a business is just a part of conducting business in the rest of the world; most of the Japanese resisting this are doing so because they are annoyed at the extra workload keeping track of numbers (they don't know what an invoice even is) and because literally nobody likes paying taxes. As for why the Japanese government is pursuing this, the simple answer is they need more taxes coming in to offset deficit spending. It's also worth noting the big businesses aren't complaining, because they already handle invoices simply as a part of doing business anyway. In particular, any business with international customers need to handle invoices, regardless of size, because the rest of the world demands invoices. I have no sympathy for Japanese folks who are against this, they need to get into the 20th century. If they're selling something they pay taxes on those sales.
- Dylan16807 3y ago
  > I have no sympathy for Japanese folks who are against this, they need to get into the 20th century. We shouldn't demand much paperwork from people that are making almost no money. I have lots of sympathy. > If they're selling something they pay taxes on those sales. But they're supposed to be exempt. Registering requires them to pay this tax even though they shouldn't have to.
wrp 3y ago
There's a funny Japanese movie about small business tax shenanigans, A Taxing Woman (1987). Several of Nobuko Miyamoto's movies take a humorous look at Japanese business. Perhaps the best of those is Supermarket Woman (1996).
justusw 3y ago
The common advice is to negotiate prices excl tax, and that advice has been there for quite a while. Even before the new invoice system you could have your revenue taxed if it exceeds a certain amount (10mil JPY) for a certain amount of years. What is surprising to me is how low the business side skills of most freelancers are. E.g., they don’t have a grasp of double entry bookkeeping, despite doing the blue tax declaration (青色申告). And as soon as there is a complicated payable or receivable scenario, the simple data entry freee and the like provide breaks down. In my opinion the general skill level is pretty low. To me it is no wonder that the tax agency organizes tax lawyer led study groups, we need more of that. Again, no surprise that people freak out over this system, but it‘s been years in the making. And the fact that sole entrepreneurs have been able to “pocket in“ the VAT so to say has always felt like a massive ripoff to me. This is especially so because the tax burden is even higher for me as a corporation here. Being from Germany, having proper rules for VAT deduction appears as the most normal thing to me.
scotty79 3y ago
> new tax regulation decades in the making will go into effect In Poland new sweeping tax regulation was hammered in a year, introduced in autumn and went into force with the beginning of new year. It was of course full of errors and unanticipated effects and all tax advisors and accounting services companies were just winging it for the first year.

142 points by mikhael 3y ago

RedShift1 3y ago

Only 10%? Cries in 21% VAT.

realPubkey 3y ago
10% increase, not 10% in total.
- croes 3y ago
  >The government had introduced a reduced consumption tax rate of 8% for certain products like food and newspapers, besides the standard 10%
closewith 3y ago
23% in Ireland.
- hirako2000 3y ago
  Norway, Sweden and Denmark takes 25%. Hungary shamelessly demands 27%
  - CafeRacer 3y ago
    Latvia is more like 33%... not even thinking about France.
    - jacquesm 3y ago
      VAT, not income tax.
    - seszett 3y ago
      France increased VAT from 19.6% to 20% in 2014, I think it is supposed to increase again to 22% in 2024.
    - deleted 3y ago
      [deleted]
    - ComputerGuru 3y ago
      Latvia seems to be up to 21%? https://www.avalara.com/vatlive/en/country-guides/europe/latvia/latvian-vat-rates.html https://www.avalara.com/vatlive/en/country-guides/europe/lat...
naillo 3y ago
10% increase, not just 10%
- croes 3y ago
  >The government had introduced a reduced consumption tax rate of 8% for certain products like food and newspapers, besides the standard 10%
- Ekaros 3y ago
  Technically 9%... As it is 10% tax, so it is not from 1, but 0.9091
e61133e3 3y ago
27% in Hungary
- f1shy 3y ago
  Whaaaat? Are other taxes lower or non existing?! That is crazy!
croes 3y ago
But the average wage in Japan is only $39,319
- miohtama 3y ago
  And small businesses have median wages below average.
  - croes 3y ago
    I suspect that the small companies in Japan and Europe are below average by the same factor. In the end it depends on the cost of living and the rents.
- askonomm 3y ago
  Average wage in Estonia is way less than that (and I would imagine most of EU's average wage is less than that), at 21,420.78 USD, but we have 20% VAT.
  - croes 3y ago
    What are your costs of living?
    - morjom 3y ago
      https://www.numbeo.com/cost-of-living/in/Tallinn https://www.numbeo.com/cost-of-living/in/Tallinn
gunapologist99 3y ago
The people voted for these taxes (or they voted for the people who voted for them). Interestingly, however, increased govt revenue is not correlated with long-term increased economic output or GNP. (Of course, govt revenue will increase temporarily whenever taxes increase.) Most of the highest tax nations have mediocre national output.

chrisandchris 3y ago

> Small businesses that were previously tax-exempt may need to register or risk losing clients — but if they do register, they will have to pay an additional 10% in taxes. I can understand, and in Switzerland you are tax-excempt if you are (each year) under 100k revenue. However, you won't be able to get the tax others have on their bill back then (input tax). Besides that, taxes for revenue exist because a country (shall) provide value to you (like safety or administrative stuff, like debt collection). And this stuff must be paid too.

martin-adams 3y ago

This sounds just like the VAT rules in the UK. What I don’t understand is why a company buying the services of a freelancer who isn’t consumption tax registered would be an issue in Japan. In the UK it’s very common to buy services from non-VAT registered businesses. You don’t claim the VAT back because no VAT was added to the invoice.

konschubert 3y ago
It seems that in Japan, customers of small businesses could claim the VAT back even though the small business did not pay VAT. It was a subsidy that is being removed.

konschubert 3y ago

I don’t get it. We have the same system in Germany. If you’re a small business, you don’t pay VAT for the invoices you wrote, and your business customers cannot deduct any VAT when they buy from you. If you’re a big business, you pay vat and your biz customers deduct that vat again from their own vat payments. It’s all good and fair, no? I guess that before, the VAT-paying customers were subtracting 10% of their payments to small companies from their VAT payments, as if the small companies had already paid VAT? That was effectively a Japan-specific subsidy of small businesses with a hard cutoff at 10k. I suppose that’s why people are complaining: they would like to keep their subsidies.

miohtama 3y ago
In Finland and AFAIK all Nordics, all invoices must be VAT inclusive. If you are selling up until 15k EUR year you can do it VAT free, which is too small to be considered a professional business. Alternatively if you are selling services outside the EU (freelancing internationally). It sounds like it was indeed subsidy for small businesses. I don’t know about Japan, but in some countries like Italy there is a problem of small inefficient businesses. Whether such direct or indirect subsidies are good or not for the economy as whole, to keep these small businesses around, is a good question which may not have a definite answer. Internationally it may reduce competitiveness, but it may be good for local and rural area employment, which increases the quality of life for a very small national cost. Also there is cost for maintaining the records and adminstration: for 15k EUR/year this cost would be significant % for the actual value adding activity.
- Zanfa 3y ago
  > In Finland and AFAIK all Nordics, all invoices must be VAT inclusive. If you are selling up until 15k EUR year you can do it VAT free, which is too small to be considered a professional business. Alternatively if you are selling services outside the EU (freelancing internationally). There's also VAT reverse charge for invoices when selling goods & services between EU countries where you don't include VAT on the invoice.
  - 3y ago

aidog 3y ago

My animator friend is very upset about this because she will lose 10% of her income. I'm not sure if the anger is directed into the right direction, but I agree that it is not really a good change. I'm not looking forward to the effort and to publish my adress either. Inflation this year is absolutely brutal with some groceries almost twice as expensive. As a freelancer I can invoice a client with consumption tax on the invoice, but not pay the consumption tax, yet the client can get the consumption tax he paid to me back. I wouldn't be suprised if criminals managed to get money from the government through fake invoices.

ComputerGuru 3y ago
> As a freelancer I can invoice a client with consumption tax on the invoice, but not pay the consumption tax, yet the client can get the consumption tax he paid to me back. And this is legal (not just in the sense that it’s technically allowed but also that you’re not technically required to file something at the end of the year and pay the difference [0])? Because you’re saying the government pays 10% of the purchase price in this scenario (crediting large businesses for 10% of the paid price, and that amount goes straight to you). > I wouldn't be suprised if criminals managed to get money from the government through fake invoices. If it really works that way, then there’s absolutely zero chance this wasn’t being milked for every ¥1! [0] eg in the USA, residents of states that charge sales tax are legally not charged sales tax on purchases made in another state (with exceptions) but they’re technically required to track those purchases and pay the sales tax themselves at the end of the year. Enforcement is approximately zero, though.
- jt2190 3y ago
  > they’re technically required to track those purchases and pay the sales tax themselves at the end of the year. Enforcement is approximately zero, though. That’s called “use tax”: https://en.m.wikipedia.org/wiki/Use_tax https://en.m.wikipedia.org/wiki/Use_tax
- aidog 3y ago
  Yes, legal as long as we're below a certain revenue (10million yen, I believe). It's the filing of those records that the freelancers do not want to do.

yayr 3y ago

I assume that a rate of 10% VAT is rather low in comparison internationally (e.g. EU is around 20 %). Also for typical business customers it should be identical to purchase something for a net amount of x or for a net amount of x plus taxes. They can deduct the taxes anyway and the net amount is identical. That is why usually you can display prices to business customers without VAT. So as I understand it, it is a change, but not with any real business effects unless one of the parties had incorrect taxes before... Which would mean that this party before was subsidised by other taxpayers. https://taxfoundation.org/data/all/eu/value-added-tax-2023-vat-rates-europe/#:~:text=The%20EU%27s%20average%20standard%20VAT,way%20of%20raising%20tax%20revenue https://taxfoundation.org/data/all/eu/value-added-tax-2023-v....

rjmalagon 3y ago

Minor inconvenience vs Mexico electronic invoice hell. Our VAT is 16%, for everyone except a select group of small business, of a now discontinued tax regimen. We must issue a dual cryptographic signed XML invoice (by the emitter and the tax authority) with individualized items with ID codes from a tax authority catalog of recognized products and services, that includes tampons (53131615) to warships (25111708) to radical ecological organizations (94131701). Every invoice needs to be sent to the tax authority servers to get the second signature, without it the invoice is not valid. Without it is not possible to deduct to VAT payments, or (monthly) tax filling in general. No internet, no invoice software, no computers, equals no invoice and no invoice is almost tax fraud. A fiscal invoice is only emitted when a customer asks for it, but businesses are obliged to emit a "general public invoice" with all the sales where customers don't ask for a fiscal invoice.

twic 3y ago
> warships (25111708) That's 3366113 in the US and Canada: https://www23.statcan.gc.ca/imdb/p3VD.pl?Function=getVD&TVD=139830&CVD=139832&CPV=3366113&CST=01012004&CLV=2&MLV=2 https://www23.statcan.gc.ca/imdb/p3VD.pl?Function=getVD&TVD=...
isilofi 3y ago
Try to vacation in Italy: Consumers are obliged to get an invoice, businesses are obliged to provide one. Including cryptographic signatures (but without the big-list-of-article-numbers and centralized signatures craziness). The financial police are allowed to stop customers within a certain distance of a business and ask for the invoice for their purchase. If the customer cannot provide one, the customer and the business are fined heavily. That's why the business owner will get very angry with you when you (as a clueless tourist) immediately chuck the invoice in the bin, because why would you keep the invoice for a pack of gum...
- Topfi 3y ago
  > the customer [... is] fined heavily. Sorry, but do you have a source for that claim? Cause I have yet to witness the Guardia di Finanza charging a customer in any way whatsoever.

anigbrowl 3y ago

What is the rationale* for VAT? I have never, ever understood this. If you are an individual, you pay income tax on your earnings. Why should you be taxed on your spending as well? * 'We want to use the money for worthy purposes' isn't a rationale. A rationale is a reason people should pay.

causi 3y ago
It all seems rather geared towards funneling money upward instead of downward. Individuals pay taxes on gross income, while businesses only pay taxes on net profit. A poor person makes a big purchase in the form of a new computer or television and pays sales tax, while a rich person makes a big purchase in the form of stock, pays no taxes, and then when he sells it he only pays taxes if he sells it at a gain and if he sells it at a loss he gets to subtract the loss from his income for the year. Fucking imagine if you bought a car and when you resold it you could subtract the depreciation from your income taxes. No wonder the French decided public decapitation was the only solution.
- gruez 3y ago
  >A poor person makes a big purchase in the form of a new computer or television and pays sales tax Because if you're buying it for personal use it's presumably for consumption, and if you're buying it for business use it's for business use. In the latter case you don't want to tax it because that would hurt businesses with low margins and give vertically integrated businesses an edge. There's definitely abuse of this with small businesses, where someone buys a pickup truck for "business use" but uses it for personal use, but that should be fixed with better enforcement of the tax code, not changing the tax regime entirely. >while a rich person makes a big purchase in the form of stock Because VAT/sales tax are consumption taxes, not a transaction tax. Stocks aren't consumed, so they aren't taxed. >Fucking imagine if you bought a car and when you resold it you could subtract the depreciation from your income taxes. So what are you advocating for? Abolition of all consumption taxes?
  - causi 3y ago
    For the application of sales tax to all purchases including stock and the abolition of capital gains tax. give vertically integrated businesses an edge Why is that bad? Vertical integration allows the more efficient use of resources.

kazinator 3y ago

It sounds very similar to the GST (goods and services tax) wee have in Canada, which was introduced by Brian Mulroney in the 1980s. Small operators are exempt from collecting GST. What that means is that if a small operator is your supplier, then when you purchase something from them, you don't have a GST receipt. Thus, you cannot claim the "input credit" on that purchase to recover any GST. I'm not entirely understanding the situation in Japan from the article's description, but it sounds an awful lot as if the people exploiting the small-time suppliers (freelancers making less than 10M 円) must have been fraudulently claiming that they paid the tax to those small-time suppliers, and using that to claim offset credits to reduce how much of that same tax which they collected from their customers they remit to the government. The freelancers will look 10% more expensive, because the corporations which exploit them can't use a loophole to hold on to tax dollars. "Please sign my petition so that my employers, who won't give me a full time job but keep me around as a disposable contract worker, can keep stealing tax money, so that I look cheaper to them, and consequently have a job so I can continue to barely make ends meet."

notpushkin 3y ago

https://archive.md/UV1WR https://archive.md/UV1WR

traspler 3y ago

I thought one of the reasons many smaller creators were afraid of it was the publication of their personal information when they register and that leading to potential harassment or if what you are creating is socially spicy it could lead to unwanted attention.

ilikeitdark 3y ago

Come to Spain...which must have one of the worse freelance systems in the free world.

sugarkjube 3y ago

> Historically, businesses with annual sales of under ¥10 million ($67,500) have been exempt from the consumption tax. This isn’t going away. Tax-exempt businesses technically can continue as they were. > Small businesses that were previously tax-exempt may need to register or risk losing clients — but if they do register, they will have to pay an additional 10% in taxes. Not sure what is going on. Either nothing changes and things are seriously misrepresented, either, more likely, a major tax evasion loophole is being closed off. > they will have to pay an additional 10% in taxes. Sounds more like large corporations can not deduct taxes any more that never were paid. I have the feeling the government is closing a tax loophole for big corporations, and those now 1) try to push that cost towards their freelancers/suppliers and 2) in order to justify this practice, started a marketing campaign that the "poor freelancers" are being targeted by the government. Business as usual imho.

numpad0 3y ago
It seems there are two major talking point: one is that it’s simple 10% cost penalty for previously exempted small businesses, that isn’t necessarily easy to reflect on prices. Another is that the requisite bureaucratic processing is apparently cumbersome. So “everyone” is trying to get registered, push 10% price hike, and prepare all the forms, all at once, and realizing that it’s a bit complicated to do right now, just now. And are complaining just now.
rtpg 3y ago
Big business sells stuff to consumers. They collect consumption tax from consumers. That consumption tax gets sent to the gov't. This is the same as its always been. Big business buys stuff from other businesses. When buying things, they are paying 10% in consumption tax. With this change, the consumption tax they pay to other businesses can be deducted from the consumption tax they send to the gov't from their sales to consumers (making consumption tax be a value added tax, and avoiding deeper value chains from being "consumption taxed" over and and over and over again). In order to support this, invoices have extra details (notably a tax number), to avoid VAT fraud. However, businesses also sometimes bought things from freelancers and the like, who mostly did not charge consumption tax. A freelancer with an existing business relation might send a 100k JPY invoice to a business, and the business pays it. But with this change, the business might say "hey, you're supposed to charge consumption tax right?" And would pressure a freelancer to charge 100k JPY (tax inclusive), effectively reducing the amount the freelancer get (since the consumption tax would need to be sent), _but also reducing the cost to the business_ since the 10% of paid tax reduces the amount of collected tax sent to the government, and they only really are paying like 91k JPY. Now really really, freelancers should be like "We are going to charge consumption tax so are increasing the tax inclusive amount by 10%. Please deduct things correctly" to businesses. B2B interactions are already basically marketed at tax exclusive rates. And hey, the business can deduct. But freelancers are bad at negotiating, and "please pay me more" is an argument that many freelancers are bad at doing this. On the business side, many businesses use freelancers specifically for cynical reasons and are very comfortable pushing for freelancers to offer to take the tax hit. I think it's important that in this model, the amount of consumption tax given to the gov't doesn't actually increase. The amount of consumption tax collected by the freelancer is deducted by the business from its collections. This is totally advantageous to "real businesses". I don't want to comment too much on the ethical/moral nature of it, because I'm fortunate enough to be exempt from this stuff for "clients being abroad" reasons. But it's a bit of a mess. EDIT: also, if you register into the tax system you gotta do a lot of paperwork. People not in the consumption tax system were basically just having to report their income on a single line, and paying income tax. There's a lot of good software to track this stuff, but taxes in Japan for a freelancer was basically easy enough to entirely do on paper by just adding up invoices and dividing, up until now.

Dalewyn 3y ago

Speaking as a Japanese-American who has some insight to what's going on: This is just Japanese resisting external demands to get with the times. Sending out invoices and paying sales tax to the government as a business is just a part of conducting business in the rest of the world; most of the Japanese resisting this are doing so because they are annoyed at the extra workload keeping track of numbers (they don't know what an invoice even is) and because literally nobody likes paying taxes. As for why the Japanese government is pursuing this, the simple answer is they need more taxes coming in to offset deficit spending. It's also worth noting the big businesses aren't complaining, because they already handle invoices simply as a part of doing business anyway. In particular, any business with international customers need to handle invoices, regardless of size, because the rest of the world demands invoices. I have no sympathy for Japanese folks who are against this, they need to get into the 20th century. If they're selling something they pay taxes on those sales.

Dylan16807 3y ago
> I have no sympathy for Japanese folks who are against this, they need to get into the 20th century. We shouldn't demand much paperwork from people that are making almost no money. I have lots of sympathy. > If they're selling something they pay taxes on those sales. But they're supposed to be exempt. Registering requires them to pay this tax even though they shouldn't have to.

wrp 3y ago

There's a funny Japanese movie about small business tax shenanigans, A Taxing Woman (1987). Several of Nobuko Miyamoto's movies take a humorous look at Japanese business. Perhaps the best of those is Supermarket Woman (1996).

justusw 3y ago

The common advice is to negotiate prices excl tax, and that advice has been there for quite a while. Even before the new invoice system you could have your revenue taxed if it exceeds a certain amount (10mil JPY) for a certain amount of years. What is surprising to me is how low the business side skills of most freelancers are. E.g., they don’t have a grasp of double entry bookkeeping, despite doing the blue tax declaration (青色申告). And as soon as there is a complicated payable or receivable scenario, the simple data entry freee and the like provide breaks down. In my opinion the general skill level is pretty low. To me it is no wonder that the tax agency organizes tax lawyer led study groups, we need more of that. Again, no surprise that people freak out over this system, but it‘s been years in the making. And the fact that sole entrepreneurs have been able to “pocket in“ the VAT so to say has always felt like a massive ripoff to me. This is especially so because the tax burden is even higher for me as a corporation here. Being from Germany, having proper rules for VAT deduction appears as the most normal thing to me.

scotty79 3y ago

> new tax regulation decades in the making will go into effect In Poland new sweeping tax regulation was hammered in a year, introduced in autumn and went into force with the beginning of new year. It was of course full of errors and unanticipated effects and all tax advisors and accounting services companies were just winging it for the first year.