Freelancers Aren't Happy With Japan's New Invoice System (japantimes.co.jp) 33
An anonymous reader quotes a report from the Japan Times: From Oct. 1, a new tax regulation decades in the making will go into effect -- and hundreds of thousands of workers in Japan are angry. The Qualified Invoicing System, which requires taxable businesses to issue invoices containing tax information for transactions, has generated a full-fledged movement against it. A petition on Change.org to halt the regulation has received nearly 450,000 signatures. The social movement [...] has held regular demonstrations and conferences advocating against the law, alongside significant protest from the world of pop culture: Animators, filmmakers, voice actors, manga artists and V-tubers of all stripes have joined together against it.
While the law is complex, the reason it's hated is not: It's effectively a tax increase. While the system was created to ensure that businesses will properly pay consumption tax, for many freelancers and small businesses the result will amount to a 10% increase in taxes -- a high enough jump to potentially devastate creatives who already make a living by the narrowest of margins. [...] Those who have already registered as taxable businesses or sole proprietors with sales of over 10 million yen are required to register for the system. Small freelancers and tax-exempt businesses, however, will need to consider carefully what to do. "Tax compliance will be the biggest issue for freelancers," [says Fumiko Mizoguchi, indirect tax service country leader at Deloitte]. "If freelancers agree to issue qualified invoices, they should offer the counter-suggestion that their prices will increase 10% as a result."
Meanwhile, the protest movement is steady on the ground in Tokyo. Voiction, which has been meeting with legislators to try to halt the law, plans on continuing to fight through the rest of the year and beyond. [Voice actress Yuhko Kaida] explains that the government could still decide to allow small businesses to not file 2023's consumption tax in March 2024, when taxes are due. "If we have the willpower, we can stop this law," Kaida says. "Then we can reduce the damage to people's lives."
While the law is complex, the reason it's hated is not: It's effectively a tax increase. While the system was created to ensure that businesses will properly pay consumption tax, for many freelancers and small businesses the result will amount to a 10% increase in taxes -- a high enough jump to potentially devastate creatives who already make a living by the narrowest of margins. [...] Those who have already registered as taxable businesses or sole proprietors with sales of over 10 million yen are required to register for the system. Small freelancers and tax-exempt businesses, however, will need to consider carefully what to do. "Tax compliance will be the biggest issue for freelancers," [says Fumiko Mizoguchi, indirect tax service country leader at Deloitte]. "If freelancers agree to issue qualified invoices, they should offer the counter-suggestion that their prices will increase 10% as a result."
Meanwhile, the protest movement is steady on the ground in Tokyo. Voiction, which has been meeting with legislators to try to halt the law, plans on continuing to fight through the rest of the year and beyond. [Voice actress Yuhko Kaida] explains that the government could still decide to allow small businesses to not file 2023's consumption tax in March 2024, when taxes are due. "If we have the willpower, we can stop this law," Kaida says. "Then we can reduce the damage to people's lives."
So they aren't paying taxes now? (Score:1)
So these small outfits aren't paying sales taxes now and will have to start collecting and paying them in the future?
If so, then that's just putting everyone on an equal footing when conducting business.
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"But, but, but.... wah! Dont wanna pay taxes like everyone else! Me special!"
Everyone should pay their god damned taxes. If they want lower taxes, they should vote for the lower tax candidate. Crying that they need to be special is ridiculous when everyone else pays.
Raise your rates 10% and move on.
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Everyone should pay their god damned taxes. If they want lower taxes, they should vote for the lower tax candidate.
That's just it. These business are fighting against paying taxes they don't owe under Japan's tax law.
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They do now.
Did they vote for the raise-taxes candidates? At least some of them did.
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I'm not a Japanese tax expert; I'm going out on a limb assuming g you're not a Japanese CPA either but the article makes it sound like yes they will owe 10% that previously has been owed but wasn't collected because they weren't required to track or report.
So, it seems they owed it but there was no enforcement or collection mechanism. Until now.
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As far as I can tell, they only really need to issue qualified invoices if they are selling to other businesses that use the qualified invoice to claim back the tax they paid.
This raises the question of does this matter? The article claims business purchasers give preference to qualified invoice providers because they can claim the tax credit on the paid tax. But to get this credit they need to pay the extra tax to begin with. If they went with a non registered provider they wouldn't pay the tax in the f
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Jfc, if you're going to cry about how American tax dollars are spent then at least be aware that the discretionary budget is tiny compared to the pre-allocated "mandatory" spending on everything else where congress has never seen a permanent new expenditure they didn't like.
Once enacted those pussies won't even vote to lower the _rate of increase_ on countless stupid duplicative programs much less cancel anything.
so they are going to fuck over the uber driver tha (Score:3)
so they are going to fuck over the uber driver that has no control over the rates get?
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gig workers / not real contractors should not be (Score:2)
gig workers / not real contractors should not be taxed as there own business when they don't have the control of there own business.
Re:So they aren't paying taxes now? (Score:4, Interesting)
So these small outfits aren't paying sales taxes now and will have to start collecting and paying them in the future?
If so, then that's just putting everyone on an equal footing when conducting business.
I don't think Slashdot has a lot of Japanese users, and it might be too hard to appreciate this story without additional information that might only be in Japanese.
It sound like this "freelancer" segment in Japan has been cheating on taxes, and that this was understood and accepted. Perhaps there are economic issues that made them feel that this "cheating" was socially fair. Maybe some other sociatal/business segments that were involved agreed that it was fair. But now (for some reason) the government is cracking down on it. Maybe the enforcement is going to induce additional negative economic factors and impacts even beyond the tax, per se.
The implication of this article is that the taxes are a bad thing. We all hate paying taxes, but I wonder what might be the broader social and economic implications for the freelancers, their role in society, and for the rest of the country.
Without Japanese experts to supply context, I doubt Slashdot will be able to appreciate this story.
Re:So they aren't paying taxes now? (Score:5, Informative)
So these small outfits aren't paying sales taxes now and will have to start collecting and paying them in the future? If so, then that's just putting everyone on an equal footing when conducting business.
Yes, and no. Per the article, business with sales under $67k are tax-exempt. They're not avoiding their taxes, they just don't earn enough to be required to pay. The problem is that purchasers will need qualified invoices for their own tax credits, and only registered taxable business can provide them. That means business that don't earn enough sales to be required to pay taxes will have to pay taxes anyway, or risk losing customers.
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If the tax was not collected by the small supplier, there's no tax credit to be claimed by the large company.
If the tax is collected by the small supplier, then the tax credit can be claimed by the large company.
So if the small supplier collects the tax, then the large company can claim the tax credit and the small supplier remits the tax collected to the government (or claims it against his own tax credit from his suppliers).
Either way, it looks like a wash to me. The small supplier either collects and re
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I don't understand this (Score:2)
creatives who already make a living by the narrowest of margins
The (profit) margin is the sales minus expenses. What expenses do "creatives" incur in the production of their goods/services? If you figure the cost of ink or paints and paper, I doubt anyone sells their work for just a bit more than those inputs. Not like a builder, who has lumber, nails and paint to deduct.
I suspect that a lot of the wailing is coming from professions which don't have significant costs to deduct. I.e, the "creatives". Being one myself (an engineer), I can sympathize on one level. I'd li
Re:I don't understand this (Score:4, Informative)
It's a consumption tax not an income tax, so it's likely more those paying for services, like a photographer renting a studio now has another 10% to that cost, plus paying the modeling agency another 10%, plus model fees, plus 10% on lighting/equipment rental, etc.
A camgirl now has to pay another 10% on the room/broadcasting system she rents, contrast with one who now pays 10% more for her computer/camera/lights but now owns those and works from home who doesn't have additional tax--but her income doesn't change.
Obviously time is the biggest cost, but there's no accounting for that so it's not taxed.
It's only for payments, things consumed; not a tax of what is added to society (an income tax), these types of taxes often impact lower income folk more as they are a greater proportion of their budgets.
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Sounds like it's a different system than here in various US states. The supplier of a good or service collects the consumption or sales tax on behalf of the state. Where I live (WA State), it's actually called a "use tax". If you don't get charged it by your supplier, you are responsible for reporting and paying it.
For private consumers: Yeah, right. I'm going to sent the state a check for the crap I bought in Oregon (no sales tax). But businesses (including freelancers) get audited. And to cover their *ss
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It's effectively a value-add tax. You offset any sales tax you paid on business expenses against the sales tax you collect. For example, suppose I spend JPY770,000 on supplies and services (70,000 of which is sales tax), and sell goods for JPY1,100,000 (100,000 of which is sales tax), I pay JPY30,000 in sales tax to the government, because I offset the sales tax I paid against the sales tax I collected. It's basically the same as the systems in Australia (GST), New Zealand (GST) and UK (VAT).
What's happe
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Most states already pre-set an amount for this tax. Changing it to zero is a great way to get audited. It represents a general average of the untaxed revenue that wasn't collected.
So you likely don't need to send any more money as you already did - the state pre-calculated some amount.
Now, changing it to zero will likely get you audited, and it's probably too much work to alter it to some o
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...I can sympathize on one level. I'd like to deduct the cost of the "fuel" I require to produce my product. Caviar, filet mignon, Dom Perignon, etc. But I don't think the IRS would buy that like they would the fuel for the corporate jet or the gold fixtures in the executive washrooms.
The rather ridiculous gold-plated examples you've ironically provided, tends to confirm you could be quite wrong about your deductions.
You're not making yourself mere "lunch". You're running a small restaurant out of your kitchen with a very exclusive client list.
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Step 2: Get audited by the IRS.
Step 3: Go directly to jail. Do not pass go, do not deduct $200 for fraudulent expense claims.
That's exactly the kind of tax evasion scam that the IRS watches for and has automated systems to detect.
News: Dog bites man! (Score:2)
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No, they're complaining that while their income is low enough that they don't owe taxes, in order to issue the paperwork their customers need they will have to pay the taxes anyway.
Think of it as, you're a contractor. You submit a bill to your customer. In order to submit that bill you have to pay the taxes on the amount, right then, and you can't use the standard deduction to offset it. At best, you can get a refund at the end of the year, at worst you're just out the money, but either way what you have to
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I'm not sure of tax rates in Japan, but that sure sounds like you're not required to do this if you don't have enough revenue to be taxable.
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True. But if you don't register, you can't use the system to issue invoices to other businesses who _do_ make enough to be required to register, can you?
Inconsequential (Score:2)
Signatures have plateaued at ~550K. That seems like a lot until you learn that native Japanese population is ~121M.