Customs Valuation
Primary determination method
First of all, “Customs Valuation” refers to the method of determining the Import Declaration Value of imported goods.
As a general rule, if the import is made based on the “Import Transaction”※1 between an overseas seller and a buyer in Japan, in many cases we can use the primary 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.
Under the primary determination method, the Customs value of the imported goods is the transaction price paid by the buyer (CIF basis).
What you have to pay as Customs Duty and Consumption Tax, are calculated by multiplying this Customs Value by the tariff rate and consumption tax rate.
Exceptional determination method (e.g. when to use ACP)
On the other hand, if the non-resident company imports goods into Japan without having a sales transaction, you can’t use the primary method. You can’t simply use an Invoice Value.
It is required to apply the Exceptional Determination Method to calculate the Customs Value.
Regardless of whether an ACP or IOR service provider you use, if there is no buy/sell transaction, you should calculate the customs value based on the Exceptional determination method.
In the exceptional determination method, there are several methods you can consider using.
If you already imported goods that meets the identical or similar conditions of the import goods, you can use the “transaction value of identical or similar goods method”.
If you are able to identify the sales price and costs incurred in Japan, you can use the “domestic selling price method”.
If the exporter is a manufacturer and able to provide production costs, it may be possible to use the production cost method.
If any of the methods cannot be applied, lastly, we use “Other methods”.
In the practical scene, actually most of the cases we use this “Other methods” which is a determination method in a flexible way through considering the previously mentioned all the calculation methods.
Avoid any trouble caused by Customs Valuation issues
Recently, we observed many troubles due to the inappropriate setting of the Customs Value.
In the worst-case but often, the goods cannot pass the clearance. In the end, consignee paid a huge amounts of detention fees and finally shipped back.
We SK Advisory can help set an appropriate Customs Value. We can support having consultations with Japan Customs on behalf of clients, so as to avoid any problems occurring later on.
For Amazon’s FBA business, there is a recommended calculation formula of the declaration value. If you’d like to know about it, please feel free to contact us!
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.
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
References
Japan Customs – Customs Valuation System in Japan
Amazon, in seller central website released the guideline of Customs Valuation.
Main Trade Procedures and Customs Valuation (English)
Main Trade Procedures and Customs Valuation (Chinese)
Main Trade Procedures and Customs Valuation (Japanese)
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.
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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.
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Guidance by Amazon
According to the seller central website in Amazon, there is a guidance by Amazon that 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”. —–
Our ACP Service (Attorney for Customs Procedures)