Recently, many companies register JCT (Japanese Consumption Tax) because the new invoice system for JCT will start in October 2023. The concept of the new invoice system is very similar to the EU’s VAT invoice system.
Your Japanese customer can’t claim input tax credits unless the sellers(suppliers) issue a qualified invoice that is written a JCT number. To issue a qualified invoice, sellers(suppliers) need to be a taxable entity and get a JCT number.
Before the Invoice system is introduced (before Oct 2023):
- A company that paid consideration of goods or services (=Company-B) is able to deduct Input JCT of the consideration regardless of whether the vendor (issuer of invoice, =Company-A) is a JCT-taxable or Non JCT-taxable company.
- There is no way to confirm whether the vendor (=Company-A) is JCT-taxable or Non JCT-taxable company.
After the Invoice system is introduced (after Oct 2023):
- A company that paid consideration of goods or services (=Company-B) is able to deduct Input JCT of the consideration only if the vendor (Company-A) has its invoice registration number.
- Company-B requests Company-A to issue the qualified invoice. If Company-A cannot submit qualified invoice, Company-B will no longer want to buy from Company-A.
**If Company-A only sells to consumers (not business entities), it may not require for Company-A to issuethe qualified invoice since normally consumers would not tend to do tax return.
Once the Comapny-A (Seller/Supplier) obtains the JCT invoice registration number, which means this company becomes a taxable entity that is obligated to file JCT tax returns on a regular basis.
For the case of a non-resident entity (Company-A), when Company-A imports and sells to customers in Japan, following 3 steps are the standard procedure.
(1) Pay import JCT to a customs office, 10% of the import customs value when Company-A imports.
<PAY TO CUSTOMS OFFICE>
(2) Obtain JCT from a customer in Japan, 10% of the sales price when Company-A sells
(3) Submit JCT tax return
(3-1) If you paid (1) as IOR = Importer, which means you appoint ACP, then you’re required to pay only the difference amount (2) – (1)
(3-2) If you paid (1) but you were not IOR = Importer, then you’re required to pay all the amount of (2). You can’t deduct (1).
Please be careful that only the IMPORTER can deduct the input JCT (import consumption tax) at the time of tax filing mentioned above (3). In other words, if another IOR service provider became the IMPORTER when you import, basically it would not be possible for the non-resident entity to deduct the input JCT (import consumption tax). Therefore, you have to pay all the amount of (2) to a tax office (mentioned above (3-2).
On the other hand, if you import with ACP, means that you became an IMPORTER thus you can deduct the input JCT (import consumption tax), when you do JCT tax return mentioned above (3). Therefore, you only need to pay the difference amount (2) – (1) to a tax office (mentioned above (3-1).
This is one of the significant advantages to use ACP service, not IOR service.
For this reason, we strongly recommend using ACP so that you can become IOR.
Our ACP service (basic service line-up)
The following are our basic scope of works and diagram showing the operational structure of the ACP service. Once ACP registration is done, the non-resident entity can be IOR – Importer of Record in Japan.
Basic scope of works:
- The works of ACP registration at a Japan Customs Office.
- Facilitate consultation with Japan Customs Office to obtain the ACP approval
- Communication with stakeholders such as Logistics providers and the Customs Office on behalf of a non-resident client (IOR), to ensure the goods can be safely imported.
- Support of preparation of the documentation for the import clearance.
- Support of calculation of Customs Value (Customs Valuation Formula), in accordance with appropriate compliance under the Japan Tariff Customs Law.
- Documents keeping, required under article 95 – Japan Customs Law
- Professional of Customs and International Trade – The CEO, as a Certified Customs Specialist in Japan – Mr. Sawada has been providing consulting services in the Trade & Customs area for many years. He was in a management position at KPMG, then started with his own company – SK Advisory to continue the customs-related services to the international clients.
- Fully compliance in accordance with Japanese Customs Law – Maintaining the service quality with full compliance with Japanese Customs Law. ACP Japan is capable to manage all the necessary import compliance issues, including the classification of HS code, and setting of the appropriate Customs Valuation of the import goods to Japan.
- Experienced and credible partner – As ACP Japan has been providing ACP services to many clients as demand has increased, you can totally rely on us as a credible partner. We registers 40+ ACP customers every year, the customers from around the world. In this way, all customers successfully became non-resident IOR – Importer of Record in Japan. You can see a list of our customers in here “Experiences”.
- Qualified ACP service provider in Amazon SPN (Service Provider Network) – ACP Japan has officially become a qualified ACP service provider in Amazon’s Service Provider Network (SPN) under the Compliance category.
What is ACP? – Attorney for Customs Procedures
Steps of using ACP, how foreign entity can import into Japan by ACP
What is IOR? – Importer of Record
Customs Valuation System in Japan
Customs Valuation When You Import By ACP
ACP Japan Became Amazon’s SPN Provider as Qualified ACP Service Provider