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Top Page > List > Dialogue with Mr.Kato (Japan Digital Agency) Part 1 (2021.10.20 wed)

2021.10.20 wed

Dialogue with Mr.Kato (Japan Digital Agency) Part 1

Atsuya Sugawara - Good afternoon, it’s been a long time since we had a dinner organized by a common friend, already 4 or 5 years have passed! At that time, you Mr.Kato worked for MOF while I worked for a biotech company. It is unbelievable that we meet again here to have a dialogue about e-invoice.

Hiroyuki Kato - I‘m also happy to see you again. I never thought that you were listening to my presentation at Exchange Summit 2021 in Vienna. I’m sure that you are an expert in biotechnology, so, I’m also surprised to hear that you are now in the world of “e-invoice”. Could you let me know what made you work at QMS International?

- During my days in biotech business, traceability with valid certificates was getting more important. Most of the companies archive all the documents and certificates in electronic format, however, we had to struggle with a lot of ‘repeated’ manual or paper works, therefore I would like to draw on such experience for more efficient solutions.
January 2020, by chance, I watched a news on TV in Switzerland, saying that the Swiss government is committing to support especially healthcare and blockchain startups in order to recover the economy damaged by the Corona pandemic, and I had a pop-up idea to utilize the blockchain to change such manual and repeated work ambient. After a year of research, I got to know that, in Tessin (south Switzerland) where I live and work, there is an NPO called ‘Quadrans Foundation’ which has an opensource blockchain platform, so I contacted them. After various discussion with them as well as with Foodchain S.p.A, an Italian application/software company using Quadrans Blockchain, we decided to establish a new company QMS International aiming to elaborate their use cases of Europe (mainly in Italy) towards more international market and application.
A lot of my friends asked me, ‘why do you now change your career!’ with surprise (and criticism), however, I personally don’t think to change my business at all because I simply commit to promote ‘public goods’, for our better life, without feeling ‘I work for the IT industry’, therefore I could catch it up rather easily and quickly. Quadrans Blockchain is designed for industry, not for fintech, with the special algorithm which makes the transaction fee low and stable, this is my strong conviction to step in, even if it is true that Blockchain and e-invoicing are not my field.
How about you, Mr.Kato, working for the Digital agency now, seeming to be out of your field too?

HK - It’s a quite interesting story. I also tell you my story. I have been working for Digital Agency from this September 1st. The Agency has newly launched this September, so, I’m one of its initial members.My main role in the Agency is to lead the “E-Invoice project in Japan”. Actually, we started the project together with EIPA last summer. Its first step was to make decision to create our country specification based on Peppol. Our Minister for Digital Transformation made its decision last December. After that, it’s going as planned. Currently, we have succeeded in publishing the first draft of our country specification on the website of Open Peppol.
Anyway, as you know, my background is “Tax”. I have more than 6 years working experience in making policy of Japanese Consumption Tax system. In fact, when I was working at Tax Bureau Ministry of Finance, I myself made the details of a “Qualified Invoice Based method” which is an input tax credit system similar to that in EU VAT and will be implemented from October 1st, 2023. Therefore, I’m sure that I can leverage my knowledge and experiences as a Consumption Tax expert.
AS - My impression and experience says that the Japanese ‘back office work/tasks’ is based on ‘hard copy exchange’, including invoicing. What was the main drive to start promoting ‘e-invoice’ in such strong ‘hard copy exchange’ culture?

HK - It’s said that the pandemic of COVID-19 exposed and highlighted the limitations and inefficiencies of paper-based processes, including invoicing, in back-office operations of Japanese businesses. Many of the processes they had been relying on brake down and at the same time, the momentum to promote “DX” in back-office operations would be heightened.
In the term, Japanese businesses get to realize that “a standardized e-invoice” would become one option to improve their efficiencies in back-office operations. I think the fact that businesses themselves start to consider the utilize of a standardized e-invoice would be very important to expand its use.

AS - With regards to e-invoice, we QMS international use our parent company’s Peppol account (Triplo M’s S.A.) and we have developed a product connecting Peppol node to Quadrans Blockchain, so that our user can enjoy a lot of advantages typically brought by the blockchain nature, including automation of back office operations, without interfering Peppol transmission layer.
We participated in Exchange Summit in Vienna (Sep 2021) for the first time, and we have learnt a lot about the current situation in Europe, future direction as well as the positioning of our country ‘Japan’. You Mr.Kato mentioned clearly the intention of Japan ‘e-invoice’ is for B2B focus, it encourages a lot of foreign companies to be interested in entering into Japanese market, as QMS International is one of them.

HK - As I have already explained, in Japan, the initiative for e-invoice is driven by not only Japanese Government but also Japanese businesses. Therefore, our priority is to expand the use of B2B e-invoice. Of course, I know that we have to start the work for making a specification for B2G e-invoice, but it would be second priority at this time.
Just make sure, “the B2B e-invoice”, in this term, means “B2B Tax compliant e-invoice”. So, now, we are making our country specification by extending the Peppol standard specification, so that it would be complied with Consumption tax law in Japan.
By the way, an e-invoice without tax compliant could rather lead to inefficiencies since businesses must issue or receive another document to meet the tax requirements. I’m sure it is an extra/double work.
AS - Indeed. By the way, please let me have your answer to 2 main questions raised in Exchange Summit in Vienna, one is ‘e-invoice will be mandatory in Japan’ and the other is ‘what is the goal/aim of Japanese e-invoice project’.

HK - Note that, Japanese laws and regulations don’t require businesses to issue an e-invoice. This means that issuance of e-invoice is not mandatory in Japan. Even Consumption Tax law allows a registered taxable business to issue a Qualified Invoice in paper.
I would like to state here that the goal of our project would not just to expand the use of B2B Tax compliant e-invoice but to boost digitalization and improve productivities and efficiencies in back-office operations of businesses. Therefore, if the current paper-based process can increase efficiencies more, it would be an option to continue to rely on such processes. In such a case, it would be not necessary to utilize the B2B Tax compliant e-invoice. I think businesses should well understand the benefits of utilizing B2B Tax compliant e-invoice first to make appropriate business decisions.

AS - Thank you very much, Mr.Kato, we believe that the digitalization is key for future in any aspect. For the next session, we talk more about Japanese standard of e-invoicing and it’s principals.