Customs Valuation in Japan – overall structure

Basically the import consumption tax and customs duties are imposed when import declaration is made, those are calculated through multiplying the import declaration price by the tariff rate. The determination of the import declaration price should be decided by importer under him/her responsibility.

The import declaration price (customs value) is determined by the following steps.

※Please note that, this article is drafted mainly aiming to make understandings as capturing big picture, therefore it does not describe details regarding Japan Customs Tariff Law.

 

Sale transaction exists between importer and exporter YES → [1] Principle determination method
  NO ↓
Already imported goods which meets the identical or similar conditions of the import goods YES → [2] Use of the transaction value of identical or similar goods method
  NO ↓
Able to identify the sales price and costs incurred in Japan YES → [3] Use of the domestic selling price method
  NO ↓   ↕  selectable [3] or [4]
Exporter is a manufacturer and able to provide production cost YES → [4] Use of the production cost method
  NO ↓
[5] Other methods

 

[1] Principle determination method

In principle, if the import is made based on the import transaction※1, we can use the principle determination method.

※1:Import transaction is a transaction that a buyer in Japan make a sale transaction with an overseas seller for shipping the goods to Japan, and the goods actually arrive in Japan.

 

The Customs Value is the transaction price paid by the buyer to the seller, plus the additional expenses.

Customs value  =  Transaction price  =  Actually paid or payable※2  +  Additional expenses※3

※2: The Customs value of imported goods shall be the transaction value, that is the price actually paid or payable by the buyer to or for the benefit of the seller for the imported goods relating to the import transaction.

※3:For instance, transportation fee, insurance fee, commissions.

 

The principle determination method cannot be used for the certain import cases, for instance if there is no sales transaction, goods are traded by free of charge, etc. In these cases, following alternative methods are applied for the determination of the Customs Value.

 

[2] Use of the transaction value of identical or similar goods method

(1)Overview

If you already imported the identical or similar goods, the customs value can be determined by using those goods if conditions raised by following can meet.

Conditions of being identical goods

  1. The imported goods should have exported approximately within one month before or after the export date of the targeting import goods.
  2. The imported goods should have produced in the same country as the targeting import goods.
  3. The imported goods should have an identical shape, quality and value as the targeting import goods.

Conditions of being similar goods

  1. Same requirement as previously mentioned 1.2. in identical goods.
  2. The imported goods has similarity in terms of shape, component and functions. And it should be interchangeable with the targeting import goods.

 

(2)Documents need to prepare

  • The materials to prove the identity and similarity. e.g. specification document, photos.
  • The customs clearance documents related to the referenced identical / similar goods, such as invoice, import permissions.

 

[3] Use of the domestic selling price method

(1)Overview

In case customs value cannot be determined by the previous methods, the determination method [3] using of the domestic selling price or [4] using of the production cost can be applied. Upon request by importer, the priority of between [3] and [4] are selectable.

If we look at the [3] use of the domestic selling price method, the calculation is made by follows.

Customs value = Domestic selling price※4 - (general expenses required for the domestic sales of identical / similar goods, domestic transportation costs, and paid taxes & customs duties etc.)

 

(2)Documents need to prepare

  • The evidence to prove the domestic selling price
  • The materials to prove the domestic expenses (Invoice receipt from logistic companies, invoice receipt to confirm the paid taxes & customs duties)

 

[4] Use of the production cost method

(1)Overview

When the manufacturing cost of the imported goods can be identified, the customs value can be determined by follows.

Customs value = Production cost of the import goods + (general profits and expenses of export sales of identical / similar goods and the transportation costs until arrival at the port in Japan) 

 

(2)Documents need to prepare

  • The evidence to prove the manufacturing cost, such as accounting ledger of the producer
  • The materials to prove the profit and expenses added to the production costs, such as  invoices

 

[5] Other methods

(1)Overview

If the methods mentioned previously cannot be used, Other methods will be applied.

Practically, in many cases, we apply this other methods.

 

As an example, we’d like to introduce one of the other methods which is applying to Amazon FBA’s case, that overseas seller ship and import their goods to Japan.

Customs value = Selling prices in average※5 - Deductible costs (e.g. FBA fee, Referral fees)※6 

※5:Average of the selling prices is basically for the goods soled in past 30days on Amazon’s website.

※6:The deductible costs incurred after the arrival of the imported goods in Japan can be considered as deductible costs.

 

(2)Documents need to prepare

  • The materials to prove the selling prices in average, and deductible costs you use for the calculation.

 

Please find the explanatory materials regarding customs value for Amazon-FBA’s overseas sellers :   Main Trade Procedures and Customs Valuation(English)

 

Please feel free to contact us if you would like to discuss anything regarding your customs valuation issues.

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