What Is the Electronic Bookkeeping Preservation Act?
The Electronic Bookkeeping Preservation Act (Act No. 25 of 1998, hereinafter the "e-Bookkeeping Act") governs the electronic storage of national tax-related books and documents. The Act establishes three categories of electronic preservation:
| Category | Scope | Statutory Basis |
|---|---|---|
| Electronic Books/Documents | Self-created books and documents | Article 4(1)-(3) |
| Scanner Storage | Scanned copies of paper-received documents | Article 4(3) |
| E-Transaction Data Storage | Transaction information exchanged electronically | Article 7 |
Among these, e-transaction data storage (Article 7) became fully mandatory from January 1, 2024, requiring compliance from all businesses.
End of the Grace Period and Full Implementation
The obligation to electronically retain e-transaction data was introduced in the FY2021 tax reform. However, because many businesses were unprepared, transitional measures were implemented:
| Period | Measure |
|---|---|
| January 2022 – December 2023 | Grace period: Paper storage permitted where unavoidable circumstances existed |
| January 2024 onward | Full mandate: E-transaction data must be stored in electronic form |
From January 2024, all transaction information exchanged electronically — including PDF invoices attached to emails, receipts via cloud services, and EDI transaction data — may no longer be preserved solely in printed paper form.
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Try for free →Retention Requirements for E-Transaction Data
Under Article 7 of the e-Bookkeeping Act and Article 4 of the Enforcement Regulations, electronic retention must satisfy the following requirements:
Ensuring Authenticity (Enforcement Regulations, Article 4(1))
One of the following measures must be implemented:
| Measure | Description |
|---|---|
| Timestamp affixation | Affix a qualified timestamp promptly after receiving the transaction data (Article 4(1)(ii)) |
| Correction/deletion history | Store data in a system that records the fact and content of any corrections or deletions (Article 4(1)(iii)) |
| Internal control procedures | Establish and operate rules preventing unjustified corrections or deletions (Article 4(1)(iv)) |
For SMEs, establishing internal control procedures (option iv) is considered the most cost-effective approach. The National Tax Agency provides templates on its website that businesses can adapt.
Search Requirements (Enforcement Regulations, Article 4(1)(vi))
Stored electronic data must be searchable by the following fields:
- Transaction date
- Transaction amount
- Counterparty name
However, businesses with base-period revenue of ¥50 million or less (raised from ¥10 million in the FY2023 tax reform), or businesses that can comply with tax officials' download requests, are exempt from the search requirements (Article 4(1)(vi), parenthetical).
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SME Compliance Status and Challenges in 2026
Two years after full implementation, many SMEs continue to face the following challenges:
Delayed Compliance
According to a Japan Chamber of Commerce and Industry survey, approximately 30% of SMEs reported "insufficient compliance" as of 2025. Key hurdles include:
- Manual file management burden for businesses without cloud accounting software
- Dual management when counterparties send a mix of paper and electronic invoices
- Cost sensitivity regarding timestamp services (several thousand yen per month)
- Increased administrative burden from simultaneous compliance with the qualified invoice system (Invoice System)
Recommended Practical Approaches
| Approach | Cost | Best Suited For |
|---|---|---|
| Internal procedures + folder management | Free | Small businesses with low transaction volume |
| Cloud accounting software | From ¥1,000/month | SMEs generally |
| Document management system | From ¥5,000/month | Mid-sized companies with high transaction volume |
Risks of Non-Compliance
Failure to meet the requirements of Article 7 carries the following risks:
Revocation of Blue-Form Tax Filing
If e-transaction data retention requirements are not met, the tax authority may determine that national tax-related books and documents have not been properly preserved, potentially resulting in revocation of blue-form filing approval (Income Tax Act, Article 150(1)(i); Corporation Tax Act, Article 127(1)(i)). Loss of blue-form status eliminates access to loss carryforward deductions and various special deductions, substantially increasing the tax burden.
Denial of Input Tax Credits
Under the Consumption Tax Act, input tax credits require the preservation of books and invoices (Article 30(7)). Failure to meet e-transaction data retention requirements may result in denial of input tax credits.
Aggravated Additional Tax
Under the FY2022 tax reform, where underreporting relates to e-transaction data, an additional 10% surcharge is imposed on top of the standard underreporting or heavy additional tax (e-Bookkeeping Act, Article 8(5)).
Key Action Items Going Forward
As of 2026, tax audits increasingly include examination of e-transaction data preservation practices. Businesses should pay particular attention to the following:
- Inventory of existing paper-only records: Verify that no e-transaction data received after January 2024 is stored only in paper form
- Draft or update internal control procedures: At minimum, establish rules and ensure company-wide awareness
- Build backup systems: Implement regular backups to guard against loss of electronic data
- Employee training: Enforce internal rules against deleting email-attached invoices and similar documents
- Coordinate with tax advisors: Periodically confirm that your retention methods meet legal requirements
