We have to pay two types of taxes, Customs Duty and Import Consumption Duty, for the goods we ship to Japan and declare them at the Japanese Import Customs.
Let's first understand the difference between import tariffs, import excise tax and the excise tax we have to pay for JCT registration.
Difference between tariffs and excise taxes
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About Japan's tariff rate:
According to the relevant regulations of Japan Customs: When the total customs value of goods is 200,000 yen or less per import for small parcels, the simplified tariff schedule applies.
In the algorithm of tariff and import consumption tax, the duty-paid price is needed to calculate. How is the duty-paid price calculated?
Determination of Duty Paid Price
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There are three main methods of determining the import duty-paid price, which we have summarized below:
Basic Principle Approach
1, when there is a substantial transaction between the importer and exporter, (Substantial transaction: the Japanese buyers and overseas sellers to deal with behavior, the purchase of goods should arrive in Japan and also the actual arrival of Japan's trading conditions.) At present, most of the duty-paid double clearing logistics companies are using this principle of calculation of low declaration as the import duty-paid price;
2, exporters (overseas sellers) and importers (Japanese companies) there is a sales contract and payment behavior, which is the meaning of general trade.
This calculation method is not applicable to the import of goods from major e-commerce platforms using FBA warehouses/Japanese overseas warehouses.
[Basic principles approach]
The duty-paid price can be calculated as follows:
Transaction price valuation method for identical or similar goods / Calculated price valuation method
When the imported goods have the same or similar goods, the duty-paid price is calculated by taking the import price of the goods recognized as the same or similar goods as the duty-paid price of the imported goods being valued.
If the same or similar goods have never been imported, but the import declaration price can be determined by adding a certain cost to the manufacturing cost of the goods.
The method requires the seller (exporter) to be the manufacturer and to be able to prove the cost of production, which means that the seller needs to know the cost of production of the product and to have supporting materials to prove other additional costs, then this method can be used for valuation. However, this method can only be used if there is a real transaction between the importer and the manufacturer of the goods and the goods are imported into Japan.
This calculation method is also not applicable to the import of goods from FBA warehouse/Japanese overseas warehouse sellers sold on e-commerce platforms.
Reverse Price Estimation Method (Backwardation Method)
When the sales price in Japan and the cost incurred in Japan for goods exported to Japan are known and available for calculation, the inverse transportation method (inverse price valuation method) is used to calculate the duty-paid price.
This calculation method is applicable to the import of goods from FBA warehouse/Japanese Overseas Warehouse sellers selling on e-commerce platforms.
What is the Backward Mobility Algorithm?
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Inverse operation algorithm, means reverse calculation, also known as reverse price valuation method, abbreviated as inverse calculation.
After the implementation of Japan's backward-looking policy, tariffs and import excise duties were levied in a backward-looking manner.
How is the backcount calculated?
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Let's take a look at the official calculations:
Prerequisite: The selling price and the domestic costs to be deducted are known.
[Conditions of sales prices in Japan which can be used for calculation]
- The price at which the imported goods or their "identical or similar products" were sold in Japan during the period of import declaration, e.g., the price at which the goods were sold on Amazon.com.
- The price must be for sales to customers not specifically related to the seller (e.g., parent and subsidiary companies, group companies, affiliates)
- The price should be the price at the first point of sale in the country (not the resale price if the buyer resells further).
[Deductible cost in Japan] - expenses or profits and expenses related to the sale of the same or similar products in Japan.
- Domestic transportation and insurance fees incurred after arrival in Japan.
- Customs duty and import consumption tax paid on imports into Japan.
In accordance with the fees, we have organized them to make them easier to read and understand:
where ABCD is known or can be calculated directly;
1. E = Z x 10%.
2. F = Z x tariff rate;
3. Z=A-B-C-D-E-F
Substituting 1 and 2 into public notice 3, we can calculate Z.
Why costs incurred in China are not deductible
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This is because Japan has a consumption tax control system.
The excludable portion recognized by the Customs and Excise Department is all expenses incurred in Japan, while all expenses incurred in non-Japanese countries are not excludable.
For example, shipment handling charges, Amazon shipping charges, and shipping charges for transportation from Japan to Amazon are all charges incurred in Japan;
The transportation costs (air and sea) from China to Japan are not counted and are not deductible because they are traded in non-Japanese countries without consumption tax.
Why is Japan implementing reverse accounting?
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1. To close the loophole of tax evasion. According to the Japanese Customs Law of Meiji 43, Article 4, Section 3, Article 1, which states that there is no Japanese importer of the main body of the price will be regarded as uncertain. There is no way to determine where the money is going after the transaction is completed overseas for uncertain goods, so the only way to calculate the cost is to backtrack through the sales price.
2, in order to protect local traders, to avoid unfair competition. Japan's local traders need to pay taxes, and Amazon and other platforms sellers through Amazon to sell goods to Japan did not pay any taxes in Japan. The Japanese government imposes a reverse accounting and collects the full amount of the removal fee tax at the import level. The essence of this is that the Japanese government has front-loaded the collection of consumption tax.
3. Japan, under the impact of economic recession and epidemic, needs to make up for some of its deficits and increase government revenue through these means.
Tax rebates and compliance
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Import duties are not refundable;
Import consumption tax is an input consumption tax and can be offset against the offsetting consumption tax;
When a seller pays JCT tax to the tax office, the amount of Japanese consumption tax paid by the seller is derived from "Sales Consumption Tax - Imported Consumption Tax".
Therefore, when overseas sellers clear the customs in Japan, they need to entrust the ACP in Japan to clear the customs with their own corporate number and keep the consumption tax invoice of imported Japanese goods so that they can claim JCT tax deduction in the future.
However, it should be noted that there are some products overseas sellers can not be assigned ACP customs clearance, so overseas sellers can not get compliant invoices, it is recommended that eligible sellers choose to simplify the declaration or purchase goods sold locally by compliant Japanese importers.
Specifically, you can view our previous issue of the article introduction: the most complete I Japan customs clearance SOP process key points
JCT Registration No.
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Green Circle is an Amazon SPN tax service provider and one of the first batch of service providers in China to get the Japanese JCT certificate, with a team of 10 years of Japanese tax experts.
The JCT tax ID number that we register for our sellers will have two numbers: the corporate number and the JCT number.
The legal number pattern:
Sample JCT certificate:
Green Circle Japan JCT registration time leading industry, the fastest 2 weeks under the legal person number, can provide professional and personalized tax advice for Japanese sellers and friends, to answer your questions, and ensure that your tax compliance.
If you have any related needs, or have any questions about tax in Japan, please feel free to ask Ms. Green Circle on WeChat.
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