“The amount of money we have to pay is not so significant, so the burden is the amount of paperwork required”

Can’t stamp them out

The problem with Japan’s revenue stamps


Text by Gavin Blair

Even in a nation with a somewhat infamous reputation for bureaucracy, one of Japan’s more anachronistic practices is the continued, widespread use of revenue stamps. Shunyu-inshi are still required for around 20 kinds of transactions, including contracts and receipts, as well as procedures such as visa renewals. The Stamp Tax, as it is also known, is a way of raising revenue for the government, though in many cases the sums involved are relatively modest, making them more of an administrative burden than a fiscal one for most businesses.

Revenue stamps first came into use in Europe in the 17th century, predating postage stamps, and were levied on items from alcohol and playing cards to hunting licences and business contracts. However, they have largely fallen out of use over the years, except in the case of stamp duty on property purchases.

The Ministry of Finance in Japan currently issues 19 denominations of revenue stamps, ranging from ¥200 to ¥100,000. This was reduced from 31 in July 2018, when those valued from ¥1 to ¥120 were taken out of circulation. Transactions for amounts between ¥10,000 and ¥500,000 require a ¥200 stamp, which increases in stages up to contracts for more than ¥5 billion, requiring ¥600,000 in stamps.



Meanwhile, ryoshusho (official receipts) for purchases over ¥50,000 at shops and restaurants should also have a ¥200 stamp affixed, with the amounts increasing in stages similar to those for contracts, but topping out at ¥200,000 in stamps for receipts for more than ¥1 billion. The minimum amount for a ryoshusho was increased from ¥30,000 in 2014 and not all establishments are scrupulous about issuing them.

To further complicate matters, prefectural governments and other local authorities issue their own versions of stamps for certain payments, and separate stamps are also used for the shaken vehicle inspection system.

“For any paper contract we conclude we have to pay the stamp tax — and actually put a stamp on the paper. And the amount varies depending on the category of contract, so we have to identify which type it is,” explains Masayuki Ishibashi, head of accounting at Mercedes-Benz Japan. “The amount of money we have to pay is not so significant, so the burden is the amount of paperwork required.”

Updating contracts with its dealers, to which it sells vehicles wholesale, as well as those signed with third parties such as advertisers, are still mostly done on paper and, therefore, require revenue stamps, according to Ishibashi.

Mercedes-Benz Japan currently has to keep 10 denominations of revenue stamps in stock and last year used around 1,400 of them, amounting to a total of ¥3 million paid in taxes.

The handling of something that can easily be converted into cash entails both “cumbersome administration processes” and some risk, points out Hans-Peter Musahl, partner at Ernst & Young Tax Co.

“Fraud happens rarely in Japan, but it is not unknown,” notes Musahl.

Indeed, in late 2015 alone, nearly 200 cases of forged revenue stamps were uncovered at post offices, convenience stores and other shops. During the same period, Japan Post found 78,500 forged stamps had been used across at least nine prefectures.

However, both Musahl and his colleague Armand Huber, director of tax technology and transformation, see continued use of the stamps as symptomatic of wider issues. The need for revenue stamps can be eliminated simply by using electronic contracts, while digitisation overall has been shown to boost productivity. But a combination of inertia and a conservative and deferential corporate culture is often a barrier to such shifts.

“Japanese organisations do things very differently to elsewhere; in Japan, the customer is not king but god,” says Huber. “They do everything to meet their expectations. Standardisation is hard because of this.”

Many large foreign-affiliated companies are staffed with people who have come from Japanese firms and bring the corporate culture with them, notes Musahl, who suggests much of the impetus to streamline procedures comes from global headquarters.

One area where digitisation has made inroads is in filing tax returns, with the e-Tax online system for both corporations and individuals launched in 2004.

Hiroko Koido, head of tax accountants TGN Soleil’s Hatchobori office, says almost all of her clients, which include foreign and local individuals and companies, have now switched to online filing.

“It’s made a big difference in reducing the amount of paperwork we need to do. And from next March, all bigger companies, those with capital of over ¥100 million, will have to file through e-Tax,” Koido notes.

Koido says her office now only needs revenue stamps for some smaller transactions, including on receipts for her clients who pay their fees via bank transfer and want a paper record.

But, according to Ernst & Young Tax Co.’s Huber, filing with the tax authorities is only one part of the equation; collecting the raw data from the client can still involve large amounts of paperwork. This has already been made more efficient by using software like robotic process automation, he notes.

“Optical character recognition and other technology solutions can help to put that into a digital work stream,” explains Huber. “The ideal vision is end-to-end digitisation from clients to tax authorities, with a series of checking processes in between.”

Digitisation is also crucial in implementing some of the policies laid out in the government’s work-style reform bill, as it facilitates employees working remotely, adds Musahl. And while at the office, having all files stored digitally allows for hot-desking, something Ernst & Young Tax Co. began introducing in early 2018.

As for revenue stamps, there are no indications the government is planning to axe them any time soon. In the reorganisation it carried out last July, stamps with enhanced security features, including metallic strips, were newly launched.  

“The ideal vision is
end-to-end digitisation from clients to tax authorities”