Consumption Tax in Japan

Consumption Tax

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.

Taxable Entity

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.

Tax-exempt Entity

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?

The new invoice system for Japanese consumption tax will start October 2023.  To issue a qualified invoice, you need to be a taxable entity. Your Japanese customer can’t claim input tax credits unless the sellers to issue such qualified invoices.

However, if your customers are just consumers, not business entity, then it wouldn’t have to issue such qualified invoices, so in such cases you wouldn’t have to registrer as taxable entity, as long as your company is satisfying the requirements for exempt entity.

Tax Representative (Tax Agent)

If you are a taxable entity, you will need to appoint a Tax Representative separately from the ACP. The Tax Representative will file tax returns with the tax office and receive tax refunds on behalf of the non-resident entities.
We are a one-stop service provider of both ACP and Tax Representative services. If you need support with consumption tax issues, please feel free to contact us.

YouTube Video – Consumption Tax (VAT) in Japan when import by non-resident entity, and how to deduct/refund later

 

 


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”.   —–

 

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[Knowledge Pages]

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

Amazon won’t become an IOR

Customs Valuation System in Japan

Customs Valuation When You Import By ACP

Consumption Tax in Japan

IOR and ACP

ACP’s Limitation

ACP’s Qualification

ACP’s registration

 

[Recent Updates]

ACP Japan Became Amazon’s SPN Provider as Qualified ACP Service Provider

IOR Service

 

Import into Japan by ACP – Atorney for Customs Procedure