When a non-resident entity uses the Attorney for Customs Procedure (ACP) to import, the non-resident entity becomes the Importer in Japan. In this case, the non-resident entity is required to pay (1) Customs Duties and (2) Japanese Consumption Tax (JCT, = VAT), at the time of import.
(1) With regards to Customs Duties, it is very simple for the non-resident entity to just make payment.
(2) As for Consumption Tax, the non-resident entity is required to pay 10% of the Customs Value of goods at the time of import. After that, if the non-resident entity sells goods to Customers in Japan, the non-resident entity receives 10% of the sales price as Consumption Tax from the Customer in Japan.
In principle, the consumption tax the non-resident entity received must be paid to the Tax Office. Whether you are a taxable entity or a tax-exempt entity makes a big difference in how you handle it.
If you are a taxable entity, you must pay the difference between the consumption tax you received from the customers in Japan and the consumption tax you paid at the time of import.
But please be careful that only the IMPORTER can deduct the import consumption tax. In other words, if another IOR service provider became the IMPORTER at the time of import, basically it would not be possible to deduct the import consumption tax. On the other hand, if you import using ACP, means that you became an IMPORTER thus you can deduct the import consumption tax. This is one of the major advantages to use ACP service, not IOR service. You can avoid a separate entity becoming an IMPORTER.
If you are a tax-exempt entity, you don’t have to pay any consumption tax received from your customers to the Tax Office. Therefore, you just pay import consumption tax at the timing of import, and you just collect consumption tax from the customers.
How to determine Taxable Entity / Tax-exempt Entity
Determining whether your company is a taxable entity or tax-exempt entity is complicated to explain all here, please contact us individually we can support the determination.
Roughly speaking, if you are a new established entity and have a capital of 10 million yen or more, it would be a taxable entity. Also, if your annual sales in Japan exceed 10 million yen, you will be a taxable entity from two fiscal years later.
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.
Tax Representative (Tax Agent)
YouTube Video – Consumption Tax (VAT) in Japan when import by non-resident entity, and how to deduct/refund later
- 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.
We’re a reliable ACP service provider for Amazon FBA’s seller
In recent, we’ve been supporting many import projects of goods related to the Amazon-FBA program. If you are looking for a reliable ACP service provider, please let us know.
Guidance by Amazon
According to the seller central website in Amazon, there is guidance by Amazon that a non-resident entity needs to appoint an ACP or IOR. You may check on this “Non-resident requirements”. Also, you can check the document developed by Amazon “Understand ACP and IOR guidance”. —–