Introduction
When foreign-invested companies conduct business in Japan, they are required to address various tax obligations, including corporate tax, consumption tax, withholding income tax, and resident tax. Among these, the preparation of payment slips may seem simple at first glance, but there are specific formats and rules unique to Japan, and errors can lead to delays in payment processing and tax risks. This article organizes the basic structure of payment slips, how to fill them out, points to note by tax type, and practical points for practitioners in foreign-invested companies in Japan.
1. Basic Structure and Role of Payment Slips
In Japan, it is still common to use a paper form called a "payment slip" to make payments at financial institutions or tax offices. A payment slip is not just a payment voucher; it is an important information medium that identifies the tax type, taxable period, taxpayer information, and more.
A payment slip typically consists of the following elements.
Name of the taxpayer or corporate name
Address or location
Tax type number
Tax amount
Taxable period or target period
Reference number (a number assigned by the tax office)
For foreign-invested companies, it is common to make payments under the name of the Japanese corporation or permanent establishment (PE), and payments under the name of the parent company are generally not permitted.
2. Types of Payment Slips by Main Tax Type
Payment slips differ in format by tax type, so it is necessary to use the correct format according to the applicable tax type.
For corporate tax and local corporate tax, payment slips based on final tax returns or interim tax returns are used. These can be obtained through the tax office or electronic filing system.
For consumption tax, payment slips based on the final tax return for each tax period are used. Particularly for foreign-affiliated companies, the calculation of tax amounts becomes complicated due to the taxable sales ratio and the impact of the invoice system, making it important to confirm the consistency with the payment amount.
For withholding income tax, the "Income Tax Withholding Calculation Statement for Salary Income, Retirement Income, etc." serves as the payment slip. This must be submitted and paid monthly or semi-annually based on special deadlines.
For resident tax (special collection), payments are made using payment slips sent by each municipality. Since the formats and payment deadlines differ by municipality, companies with multiple locations tend to face increased management burdens.
3. Practical Considerations in Creating Payment Slips
When creating payment slips, simple transcription errors can lead to significant problems, so special attention is needed to the following points.
First, errors in tax item numbers are fatal. They are processed as different tax items, which poses a risk of being treated as unpaid.
Next, there are mistakes in the description of the tax period. Especially in cases of changes in the fiscal year or the first year, it is easy to misidentify the target period.
Additionally, a unique issue for foreign-affiliated companies is the inconsistency between payment processing within the group and the taxpayer. Even if the actual payer and the taxpayer are different, the payment slip must always be recorded in the name of the taxpayer.
Furthermore, since payment in yen is the principle, companies managing foreign currency should also pay attention to the timing of foreign exchange conversion.
4. Progress in Electronic Payment and Digitalization
In recent years, the use of electronic payments has expanded in place of paper payment slips. Specifically, direct payments using e-Tax and Pay-easy payments through internet banking are representative.
For foreign-affiliated companies, the introduction of electronic payments is effective from the perspective of fund management with the headquarters. There are also significant benefits in terms of storing payment data and internal controls.
However, even when using electronic payments, input errors in payment information pose risks similar to those with paper, so establishing approval flows and check systems is essential.
5. Confirmation Points in Tax Audits
In tax audits, the consistency between the payment amount and the declaration content is emphasized more than the payment slip itself. However, copies of payment slips and electronic payment records are important evidence.
The following points are particularly subject to confirmation.
Was the payment made properly within the deadline?
Do the tax calculations and payment amounts match?
Is there any omission in the payment of withholding income tax?
In the case of foreign-affiliated companies, the handling of withholding tax related to cost allocation with overseas headquarters and expatriate salaries tends to be a focus of confirmation.
Summary
Creating payment slips is not just a clerical task but a fundamental process that supports tax compliance in Japan. For foreign-affiliated companies, it is an area where misunderstandings are likely to arise due to differences in language and systems, making it essential to understand the formats for each tax item and establish internal controls.
Additionally, while it is possible to improve efficiency through the use of electronic payments, accurate data entry and the establishment of a review system are prerequisites. In practice, it is desirable to engage in continuous process improvement in collaboration with professionals such as tax accountants.
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