ACP Import under VMI- Vendor Managed Inventory | ACP JAPAN - Atorney for Customs Procedures

We have been receiving an increasing number of requests from new customers (parts/materials manufacturers outside Japan) in the automotive and machinery parts industries.

The background of the increase in needs is that the Japanese end-customer, a manufacturer of finished goods, has requested to switch to VMI (Vendor Managed Inventory), which means that the inventory management is done by the vendor (supplier) side.

Before using the VMI scheme, when trading between an overseas parts/materials manufacturer (seller) and a Japanese finished goods manufacturer (buyer), the buyer would act as the importer and import the goods, and the buyer would manage the goods as its own inventory.

After switching to the VMI scheme, the parts/materials manufacturer (seller) outside Japan imports the goods themselves, manage the inventory near the customer in Japan, and deliver the goods to the buyer’s factory just in time (JIT) when the finished goods manufacturer (buyer) wants the goods.

In this way, the buyer avoids the cumbersome of managing inventory but still can have the seller deliver the required quantity at the required time. Furthermore, since the buyer is not the importer, it is relieved of various responsibilities required of importers (for example, it is no longer necessary to keep import-related documents and books, or to respond to customs post-clearance audits as required by law).

On the other hand, the foreign parts/materials manufacturer (seller) has to use an Attorney for Customs Procedures (ACP) for the seller to act as the importer. In addition, as a response to national taxation, since sales in Japan (taxable sales under the Consumption Tax Law) will occur, it is necessary to appoint a Tax Representative (of JCT – Japan Consumption Tax) to register as a taxable business operator for consumption tax and to perform periodic tax filing duties.

Considering the invoice system for consumption tax, the use of a tax representative is also essential for B2B transactions, as the seller must become a registered business in order to be able to deduct purchases when filing consumption tax returns on the buyer’s side.

Switching to the VMI method (example)

Before introducing of VMI program

Foreign parts/materials manufacturer (seller) → Sales → Japanese finished goods manufacturer (buyer)

Inventory control on the Japanese side: Buyer
Importer: Buyer
Seller’s sales subject to consumption tax in Japan: No

After introducing of VMI program

Foreign parts/materials manufacturer (Seller) → Sales → Japanese finished goods manufacturer (Buyer)

Inventory control in Japan: Seller
Importer: Seller … ACP – Attorney for Customs Procedure is required (for Customs purpose)
Sales subject to consumption tax in Japan on the seller’s side: Yes … JCT Tax Representative is required (for National Taxation purpose)

Our ACP Service: The Best Solution for the Japan Importer of Record (IOR)

Attorney for Customs Procedures (ACP) is the best solution for addressing the issue of Japan IOR – Importer of Record. Below is an outline of our primary services and a diagram illustrating the operational structure of the ACP service. Upon successful ACP registration, a foreign entity can become the Japan IOR – Importer of Record.

Basic Scope of Services:

Consultation with the Japan Customs Office for successful ACP registration.
Liaising with stakeholders, including Logistics Forwarding Companies and the Customs Offices, on behalf of non-resident clients (i.e., non-resident Japan IOR) to ensure the secure importation of goods.
Assistance in preparing the necessary documentation for 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

Reform in the Japanese Customs System (Mandatory Use of ACP; IOR services Prohibited)

Due to the increasing occurrence of cases where foreign entities attempt to import goods by falsely designating third parties such as forwarders or customs agents as importers, starting from October 1, 2023, a system reform has been implemented to address this issue. Foreign entities can no longer utilize a Japanese company as their IOR, or Importer of Record. As a result, sellers are now required to act as the IOR (Importer of Record) themselves and must use the ACP (Attorney for Customs Procedures) service, a mandatory stipulation.

Japan Customs: Revision of Import Declaration Items and Attorney for Customs Procedure (ACP) System

Japan Customs Notice – Available in English, Chinese, Korean, and Japanese.

English: Announcement from Japan Customs | Directive to use ACP – Attorney for Customs Procedure

Our Customers – Japan IOR / Attorney for Customs Procedures (ACP) Service

All our clients have successfully become Japan Importer of Record (IOR) and imported goods into Japan under our guidance.

Why choose us?

Customs and International Trade Professionals – Our CEO, Mr. Sawada, is a Certified Customs Specialist in Japan. With years of experience providing services in the Trade & Customs field, his leadership at KPMG and the establishment of his own company, SK Advisory, ensures our commitment to excellence and high-quality service.
Full Adherence to Japanese Customs Law – Our top priority is to maintain full compliance with Japanese Customs Law and safely import / export our clients’ goods into / from Japan. We meticulously manage all import compliance aspects, including Japan Importer of Record (IOR) matter, HS code classification and the correct Customs Valuation of goods entering Japan. We support to complete all the necessary shipping documents, such as Invoice, Packing List and BL, on behald of non-resident / foreign Japan IOR.
Reputable and Reliable Partner -The growing demand for our Attorney for Customs Procedures (ACP) services is testament to our quality. We proudly serve clients globally, registering over 50 ACP customers annually. Our consistent track record underscores our reliability and credibility. For a detailed list of our clientele, please visit our “Experiences” section. Our unwavering commitment ensures all our clients successfully acquire Japan IOR status and import goods seamlessly into Japan.
Recognized ACP Service Provider on Amazon SPN SPN (Service Provider Network) – We are a certified ACP service provider within Amazon’s Service Provider Network (SPN), listed under the Trade Compliance category. Many international Amazon Sellers have successfully become Japan Importers of Record (IOR) through our ACP services.

How the Japanese New Invoice System affects? – Advantage of using ACP –

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.

Since the seller becomes a taxable entity, the seller is obligated to file JCT tax returns on a regular basis.

For the case of a non-resident entity, when you import and sell to customers in Japan
(1) Pay import JCT to a customs office, 10% of the import customs value when you import
(2) Collect JCT from a customer in Japan, 10% of the sales price when you sell
(3) Submit JCT tax return to a tax office periodically
(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 import consumption tax at the time of tax filing. 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 import consumption tax. Therefore, you have to pay all the amount of (2) to a tax office.

On the other hand, if you import with ACP, means that you became an IMPORTER thus you can deduct the import consumption tax, when you do JCT tax return. Therefore, you only need to pay the difference amount (2) – (1) to a tax office.

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.