Web Articles Electronic Bookkeeping
2021/12/06
Is Time Stamping Necessary under the Revised Electronic Bookkeeping Law? Necessary?
Time stamping" is defined in the Electronic Bookkeeping Act as a requirement for digitizing and storing paper receipts, etc. Many of you may have heard that time stamping will no longer be required under the revised law that will take effect in January 2022.
In this article, we will explain in an easy-to-understand manner, in light of the revised requirements, in which cases time stamps will no longer be required, and in which cases they will be necessary.
Table of Contents
What is time stamping?
A time stamp is a combination of a "hash value" (*1) and "time information" that certifies the existence of electronic data at a certain time. In the Electronic Bookkeeping Act, it serves to ensure the reliability of data and prevent falsification.
When a document is rewritten, the rewrite leaves a trace, and information such as who wrote the document can be deduced from the handwriting.
When stored electronically, however, there is less information that can be used to confirm changes, such as handwriting and deterioration, as is the case with documents.
By adding a time stamp to such electronic data, which is difficult to detect changes or tampering, a third party can verify the data.
1: Hash values are generated by calculation. Therefore, by comparing the hash value of the time stamp with the hash value generated from the target data, it is possible to determine whether or not the data has been changed since the time the time stamp was issued.
Since it is almost impossible to identify the original data from the hash value due to the huge amount of calculations required, and since the generated hash value also changes if the data changes even slightly, it is difficult to disguise, and the time stamp can be a reliable proof of existence of the data.
Has the law changed so that time stamps are no longer required?
In the 2021 tax reform, the requirements for time stamps were relaxed, making them "unnecessary" if the following conditions are met
The following conditions must be met in order for a time stamp to be "required": - "A system that can confirm the fact that corrections or deletions have been made and their contents (including a system that cannot make corrections or deletions). The new provision allows a system that can confirm the fact that a correction or deletion has been made and the contents of the correction or deletion ( including systems that cannot make corrections or deletions) to be used in place of the time stamping."
*Some excerpts from the Tax Reform Proposal
If you are interested in the details of the amendment, please click here.
Benefits of Time Stamps No Longer Needed
The relaxed requirements for time stamping will reduce the operational burden in complying with the Electronic Books and Records Preservation Act.
Before the amendment, it was necessary to check the period of time until time stamps were granted, request a third party to grant time stamps if they were not granted within a certain period of time, and conduct batch verification. After the revision, the time stamping period has been greatly relaxed and unified, and the flow is no longer split.
Before: Before the revision, time stamps were required.
On the other hand, after the revision, if the conditions are met and time stamps are no longer required, there is no need to worry about the period until the time stamps are assigned, and batch verification is no longer required, so employees can comply with the Electronic Bookkeeping Act with less workload.
After: Operation without time stamps]
As described above, the revised law has lowered the hurdles to complying with the Electronic Bookkeeping Act, providing a major boost to companies that have been considering complying with the law to get a head start.
It is not too late! Prepare for the impending legal changes that are about to take effect.
While this article has discussed time stamps, there are other requirements that must be met in order to comply with the Electronic Bookkeeping Act. In addition to considering operations to prevent tampering and other illegal activities, it is necessary to confirm that the system or service that stores the data has sufficient functions to meet the requirements of the law.
Our company, Works Applications, continues to provide Electronic Book Maintenance, which is compliant with the Electronic Bookkeeping Act, as well as other useful information, so please take advantage of this service if you are interested.
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