Related-Party Transactions in Japan – Part 3

Electronic Records: Don't Forget Emails and PDFs

In our previous articles, we explained what related-party transactions are and why supporting documents are important.

This week, we focus on one more important point:

How should these documents be kept?

Electronic records are also tax records

Today, many business transactions are handled electronically.

Examples include:

• emails,

• PDF contracts,

• electronic invoices,

• cloud-based documents,

• online approvals.

These records may be important evidence during a tax audit.

Simply printing documents may not be enough

In Japan, electronic transaction data is generally required to be retained in electronic form.

For example:

• a contract received by email,

• a PDF invoice,

• or documents stored in cloud systems

may need to be kept electronically rather than only as paper copies.

Why this matters for foreign-owned businesses

Many foreign-owned companies communicate with:

• overseas parent companies,

• group companies,

• or foreign service providers

mainly through email and electronic files.

As a result, important tax records may exist only in digital form.

Deleting emails or losing electronic files could create problems later.

Practical advice

Make sure your company:

• keeps important emails,

• stores PDF contracts and invoices safely,

• and maintains an organized electronic filing system.

Good record management can save significant time during a tax audit.

Key takeaway

For related-party transactions, keeping documents is important—but keeping electronic records properly is equally important.

Emails, PDFs, and other digital files may be just as important as traditional contracts and invoices.