> ## Documentation Index
> Fetch the complete documentation index at: https://docs.uselim.com/llms.txt
> Use this file to discover all available pages before exploring further.

# Japanese Compliance

> How lim handles Japanese regulatory requirements: Electronic Bookkeeping Act, Invoice System, consumption tax, and e-Tax.

# Japanese Compliance

lim is built for Japanese regulatory compliance from the ground up. This page covers how lim handles the key compliance requirements that affect every company operating in Japan.

## Electronic Bookkeeping Act (電子帳簿保存法)

The Electronic Bookkeeping Act (電帳法, den-cho-ho) governs how companies store accounting records electronically. Since January 2024, all companies receiving electronic transaction data (invoices, receipts, bank statements) must store them in a compliant electronic format.

### Requirements

The law has three categories:

| Category                           | What it covers                          | lim's approach                                                                          |
| ---------------------------------- | --------------------------------------- | --------------------------------------------------------------------------------------- |
| **Electronic books** (電子帳簿)        | Accounting books created electronically | All journal entries are stored with full audit trail, timestamps, and immutable history |
| **Scanner storage** (スキャナ保存)       | Paper documents scanned to digital      | Receipt/invoice uploads via `lim add --file` with timestamp and resolution metadata     |
| **Electronic transactions** (電子取引) | Digitally received invoices, receipts   | Original files stored with tamper-evident hashing                                       |

### How lim Complies

**Search requirements** -- The law requires that electronic records be searchable by date, amount, and counterparty. lim's journal entries are natively searchable by all three:

```bash theme={null}
# Search by date range
lim journals list --from 2026-01-01 --to 2026-03-31

# Search by counterparty (via memo/label)
lim journals list --search "AWS"

# All searches work via API too
GET /v1/companies/:id/journal-entries?from=2026-01-01&to=2026-03-31
```

**Tamper prevention** -- Every journal entry is audit-logged in the `event` table. Changes create new events rather than overwriting existing records. The full history is always recoverable.

**Timestamp requirements** -- All records include server-side UTC timestamps (`created_at`, `updated_at`) that cannot be modified by users.

**Document storage** -- Files attached via `lim add --file` are stored with:

* Original filename and MIME type
* SHA-256 hash for integrity verification
* Upload timestamp
* Resolution metadata for images (to prove they meet minimum DPI requirements)

<Tip>
  lim's audit log (`event` table) satisfies the Electronic Bookkeeping Act's requirement for "proper
  record-keeping" (正当な記録) because every change is traceable to a specific user, timestamp, and
  source event.
</Tip>

## Qualified Invoice System (インボイス制度)

The Qualified Invoice System (適格請求書等保存方式) took effect in October 2023. It requires businesses to issue and receive tax-qualified invoices to claim input VAT (仮払消費税) deductions.

### Key Concepts

* **Qualified Invoice Issuer** (適格請求書発行事業者) -- A business registered with the tax authority. Has a registration number starting with `T`.
* **Qualified Invoice** (適格請求書) -- An invoice that includes the issuer's registration number, tax rate breakdown, and tax amount.
* **Input VAT deduction** -- Only purchases supported by qualified invoices can deduct input VAT.

### How lim Handles It

**Invoice registration tracking** -- When creating invoices or recording purchases, lim tracks:

* Whether the counterparty is a qualified invoice issuer
* The qualified invoice registration number (`T` + 13-digit corporate number)
* Tax rate breakdown (10% standard / 8% reduced)

**Transitional measures** -- From October 2023 through September 2029, purchases from non-qualified issuers can still partially deduct input VAT:

| Period              | Deductible portion |
| ------------------- | ------------------ |
| Oct 2023 - Sep 2026 | 80%                |
| Oct 2026 - Sep 2029 | 50%                |
| Oct 2029 onward     | 0%                 |

lim automatically applies the correct transitional rate based on the transaction date and the counterparty's qualification status.

```bash theme={null}
# View consumption tax with transitional adjustments
lim reports tax --from 2026-04-01 --to 2027-03-31
```

**Tax code management** -- lim's tax code system distinguishes between:

* Qualified invoice purchases (full VAT deduction)
* Non-qualified purchases (transitional rate)
* Tax-exempt transactions
* Export transactions (zero-rated)

## Consumption Tax (消費税)

Japan's consumption tax is a value-added tax applied at two rates:

| Rate               | Applies to                                                                  |
| ------------------ | --------------------------------------------------------------------------- |
| **10%** (standard) | Most goods and services                                                     |
| **8%** (reduced)   | Food, beverages (excluding alcohol and dining out), newspaper subscriptions |

### Tax Calculation Methods

lim supports both calculation methods:

**Standard method** (原則課税) -- Actual input VAT is deducted from output VAT:

```
Tax payable = Output VAT (売上消費税) - Input VAT (仕入消費税)
```

**Simplified method** (簡易課税) -- Available to businesses with taxable sales under 50 million yen. Input VAT is estimated using deemed purchase ratios by industry:

| Industry         | Deemed purchase ratio |
| ---------------- | --------------------- |
| 1. Wholesale     | 90%                   |
| 2. Retail        | 80%                   |
| 3. Manufacturing | 70%                   |
| 4. Other         | 60%                   |
| 5. Services      | 50%                   |
| 6. Real estate   | 40%                   |

```bash theme={null}
# Standard method
lim reports tax --from 2026-04-01 --to 2027-03-31 --method standard

# Simplified method (service industry)
lim reports tax --from 2026-04-01 --to 2027-03-31 --method simplified --industry 5
```

### Input VAT Allocation (課税売上割合)

When a company has both taxable and non-taxable sales, input VAT must be allocated. lim supports three allocation methods:

| Method                      | When to use                                                                                           |
| --------------------------- | ----------------------------------------------------------------------------------------------------- |
| **Individual** (個別対応方式)     | Each purchase is classified as related to taxable sales, non-taxable sales, or common                 |
| **Proportional** (一括比例配分方式) | All input VAT is multiplied by the taxable sales ratio                                                |
| **Lump sum** (全額控除)         | When taxable sales ratio is 95% or more and taxable sales are 500M yen or less — deduct all input VAT |

```bash theme={null}
lim reports tax --from 2026-04-01 --to 2027-03-31 --allocation individual
```

## e-Tax Integration

lim can generate e-Tax compatible XML files for electronic filing of consumption tax returns.

```bash theme={null}
# Generate e-Tax XML
lim reports tax --from 2026-04-01 --to 2027-03-31 --xml \
  --corporate-number 1234567890123 \
  --company-name "My Startup Inc."
```

The generated XML follows the National Tax Agency's (国税庁) XML schema and can be submitted directly through the e-Tax system or via tax agent software.

### What's Included in the XML

* Consumption tax return (消費税申告書)
* Tax rate breakdown (standard 10% / reduced 8%)
* Input/output VAT summary
* Filing metadata (company info, filing date, tax office)

### Account Details Export

For accountant review and tax filing preparation, lim can export detailed account-level data:

```bash theme={null}
# JSON format
lim reports account-details --from 2026-04-01 --to 2027-03-31

# CSV format (for Excel/accountant tools)
lim reports account-details --from 2026-04-01 --to 2027-03-31 --format csv
```

<Warning>
  e-Tax XML generation is provided as a convenience tool. Always have a qualified tax accountant
  (税理士) review the output before filing. lim is not a substitute for professional tax advice.
</Warning>

## Withholding Tax (源泉徴収)

Certain payments in Japan require withholding tax at source:

| Payment type                                     | Withholding rate                            |
| ------------------------------------------------ | ------------------------------------------- |
| Professional fees (tax accountant, lawyer, etc.) | 10.21% (up to 1M yen), 20.42% (over 1M yen) |
| Writer/designer fees                             | 10.21%                                      |
| Dividends                                        | 20.42%                                      |
| Employee salary                                  | Progressive rate per tax table              |

lim automatically calculates withholding tax when applicable:

```bash theme={null}
lim add "Tax accountant fee 100000 yen bank transfer"
```

```
✅ Professional fees     100,000 / Checking account      89,790
   Withholding tax payable                               10,210
```

## Period Close (決算)

lim supports both monthly close (月次決算) and annual close (年次決算):

```bash theme={null}
# Close a fiscal period
lim periods close --period 2026-03

# View period status
lim periods list
```

When a period is closed:

* No new entries can be posted to dates within that period
* A snapshot of all account balances is recorded
* The period status changes to `closed`

Closing can be reversed by an admin if corrections are needed.