Peppol in Japan
In recent blog posts, we have talked extensively about Peppol and its expansion outside of Europe, to Singapore, Australia, and New Zealand. We are really pleased that the adoption of the Peppol network at a government level is now taking place in Japan, with the recent establishment of the Digital Agency, which has become the 17th Peppol Authority to date.
Peppol Japan brings a promise of digitalization, reduced inefficiencies, and increased trade for Japan’s largely paper-based public service agencies, as well as the private companies that trade with them. In this blog post, we will look at Japan’s involvement with the Peppol network, and how public sector organizations, private companies, and the service providers that provide Peppol e-invoicing can benefit from Galaxy Gateway, our competition-beating infrastructure.
Japan Joins OpenPeppol
Covid-19 and the limitation of face-to-face interactions seem to have given Japan the push it needed to promote e-invoicing for all organizations within the country. As of 2020, 90% of all invoices worldwide were still processed manually, so despite currently being behind Nordic countries, who are the leaders in terms of e-invoicing penetration, Japan is still ahead of many others in terms of adoption.
Japan e-invoicing status
Despite being technologically advanced in many areas, the transacting of electronic documentation has not been a priority until recently. Japan has reportedly been slow to digitize due to the hierarchical tradition that prevails in business and a preference for the use of Hanko seals, which are used for signing contracts, conducting administrative procedures, and formalizing business transactions. Providing a hanko seal requires face-to-face interaction, which is why in an effort to minimize Covid transmission, ministries were encouraged to end the practice for 96% of administrative procedures.
According to figures from the Japan Times, which utilizes data obtained by the Japan Research Institute, a government regulatory panel, and the OECD:
- Less than 12 percent of administrative work in the country is conducted online.
- The cost of staying with a largely paper-based economy is estimated to cost 323 million working hours per year, or USD $8 billion.
- Japan is the lowest-ranked among 31 countries in regard to online procedures. Just 5.4% of citizens use digital applications at public offices, in comparison with the European countries of Denmark, Estonia and Iceland, where digital applications make up approximately 70 percent.
The ability to conduct e-invoicing that is interoperable with Japan’s tax system was seen as one significant way that the country could start to become more digitally progressive. The EIPA (E-invoice Promotion Association) was founded in July 2020, and was soon tasked with analyzing Peppol’s suitability as the national e-invoicing framework ahead of the planned October 2023 release of the country’s Qualified Invoice System. Now the EIPA is developing a national specification that will help align Peppol with country-specific standards, as is the case in Singapore, Australia, and New Zealand, where European tax codes are not applicable. The EIPA aims to enable operators to start using software that supports the local electronic invoicing standard by fall 2022.
Peppol Authority in Japan
The Japanese Government’s Digital Agency was brought into existence on September 1, 2021, tasked with overcoming inefficiency in public administration and helping all entities utilize the country’s digital infrastructure in the most beneficial way possible.
Soon after, on 14 September, Digital Agency became the official Peppol Authority for Japan, overseeing Access Point accreditation and the implementation of regional standards as it coordinates with OpenPeppol, Peppol’s global governing body.
According to the agency itself:
Until now, government ministries and agencies had individually created legal and regulatory systems for their own areas. This made it difficult for government employees to learn of the systems of other ministries or agencies or even the systems of another division in their own organization.
Peppol’s Business Interoperability Specifications (BIS) bring one framework to electronic document transactions, which is what makes the Peppol invoice so powerful. What’s more, it can be incorporated into the accounting system that an organization is currently using. There is no need to log in to another system, e-invoices through the Peppol network can be automatically sent, received, processed, and accessed from the software that is familiar to the user.
Peppol Expansion in Asia – Japan Joins Singapore
At the time of writing, there are 8 Japanese participants in the Peppol directory, compared to over 211,000 from the Norweigan public and private sectors; but undoubtedly this number will grow quickly as the network becomes the standard for the exchange of e-documentation. As is the case with countries such as Mexico, the United States, Canada, and South Africa, Peppol was already being utilized by a small number of private companies in Japan before the Peppol Authority was established. As demonstrated by past cases, while the Peppol network continues to grow, mass adoption is contingent on adoption and promotion by a country’s government as the national e-invoicing standard.
This is what has happened in Singapore, the other country in Asia that has adopted Peppol.
As a small nation, it was a no-brainer for Singapore to facilitate trade and make suppliers more competitive within the ASEAN region, by connecting to a network that allows the easy flow of documentation beyond borders. In May 2018, the Info-communications Media Development Authority (IMDA) became the first Peppol Authority outside of Europe, and began to utilize Peppol as part of its Invoice Now initiative, which had a stronger than expected uptake. Seeing the success of the Peppol invoice in Singapore, Australia, and New Zealand soon followed.
According to OpenPeppol, there are also Peppol participants from China. While the country is unlikely to adopt a foreign system wholesale, the growth of e-invoicing is undoubtedly being encouraged. The new Fapiao system involves an official invoice that is sent through China’s tax administration system. Both the invoice and the infrastructure used to send it are designed to create consistency and efficiency throughout the large and populous country. It was first piloted in a limited number of provinces for B2B companies, with a view to being rolled out further if successful.
Peppol facilitates trade in Japan – Galaxy Gateway facilitates Peppol
Peppol has been chosen in Japan precisely because it is a connect once, reach all network that both ensures interoperability with other countries’ standards while being able to incorporate country-specific requirements. In short, electronic documentation can be transacted securely, efficiently, and cheaply, both domestically and internationally, without having to create new integrations depending on where an entity is, or whether they are from public or private sectors.
Tickstar is excited to welcome Japan into the expanding network of Peppol countries and is fully equipped to serve anyone who wishes to leverage Peppol for their business.
As a Peppol infrastructure provider, our Galaxy Gateway service is tailored to:
- Public sector organizations and large private companies with their own custom ERP systems.
- ERP providers.
- Service providers and VAN operators.
Whether you will use Peppol directly or provide services as a Peppol Access Point provider to a growing list of clients, we have the expertise and support to get you Peppol ready in no time, with white labeled and shared instance Access Point accreditation.
By integrating Peppol into your software with Galaxy Gateway, you benefit from:
- Ongoing development and maintenance of your Peppol connection in line with the fast-changing requirements mandated by OpenPeppol.
- The ability to quickly scale, meaning you can grow to meet the demands of new clients without technical disruptions.
- Coverage for current and future certifications required to work with all Peppol Authorities around the world.
We also provide:
- Comprehensive onboarding and documentation so you can get started easily.
- Additional features such as Peppol document validation, Peppol Participant Lookup API, IP whitelisting for your business environment, and encryption at rest.
- New advanced features that the Tickstar Team develops and adds to Galaxy Gateway Services.
- Stunning support and error handling.
Working exclusively with Peppol for almost 10 years, we are the largest infrastructure provider in the world! We know what it takes to make Peppol work for you, so get in touch to ask our knowledgeable specialists any questions, get a detailed pricing breakdown, or request a demo!