Amazon cross-border compliance policies and solutions for the Europe, Japan, Middle East, and Mexico Marketplaces!

Amazon cross-border compliance policies and solutions for Europe/Japan/Middle East/Mexico Marketplaces!

01/14/2023

Table of Contents
1/Overview of Compliance Policies for Major Marketplaces
2/Amazon official compliance tools make compliance easy
3/Amazon’s major compliance policies and solutions
Compliance Policies and Solutions for the Europe Marketplace
Japan Marketplace compliance policies and solutions
Middle East Marketplace Compliance Policies and Solutions
Mexico Marketplace compliance policies and solutions

To sell products overseas, you must comply with the laws and regulations of the destination country. Many sellers may find the compliance requirements across marketplaces complicated when expanding their business. To this end, Amazon continues to invest substantial resources to help sellers understand regulations and has introduced various compliance tools to help sellers achieve compliant operations while saving time, effort, worry, and money!

Here, we’ve put together the compliance requirements for major overseas Marketplaces and corresponding solutions shared at the Amazon cross-border selling summit to help you expand into global markets with confidence and seize unlimited new business opportunities!

01 Overview of compliance policies for major marketplaces

Overall, sellers need to pay attention to tax compliance and policy compliance. You can use the image below to get a clear view of the main compliance requirements for different marketplaces.

1.1 By compliance type

Sellers on almost all Marketplaces need to fulfill tax compliance obligations. Take Europe as an example: sellers need to register for a Value Added Tax (VAT) ID in the European countries where they store inventory.

Note: If sellers use Amazon COS (one-country tax ID, multi-country warehousing) in the future, they can enable local inventory in countries/regions that choose to join Pan-EU FBA without obtaining a VAT number in that country/region, saving time and costs.

1.2 By Marketplace

Among the many Marketplaces, while Europe has great potential, it also has a relatively high compliance threshold. In addition to tax compliance, sellers in the Europe Marketplace must also comply with:

● EU product safety regulations (GP) for selling CE-marked products;
● For Extended Producer Responsibility (EPR) policies implemented in Germany and France, sellers must register the corresponding Extended Producer Responsibility registration number based on the type and brand of products they sell, and submit it to Amazon. They can continue selling only after it has been verified;
● If you sell some specific categories in Europe (such as toys, jewelry, etc.), you also need to meet European product compliance requirements and conduct product safety testing.

02 Amazon official compliance tools help you comply with ease

Don’t worry about compliance across multiple Marketplaces. To help sellers meet the compliance requirements above, Amazon provides two practical compliance tools to help you effectively avoid pitfalls during the product selection and operations stages, and stay compliant smoothly!

“Compliance Reference” tool

During the product selection stage, you can use the “Compliance Knowledge Portal” tool to stay up to date on relevant compliance policies for listing new products and expanding into new categories, look up compliance requirements and solutions for high-risk product types sold on Amazon (such as children’s toys, hair dryers, lighting, and power banks), and get selected compliance service provider information to help you choose a compliance solution.
You only need to select the country of origin, destination country, and product type to view the corresponding compliance requirements. In 2023, the "Compliance Reference" tool will also add introductions to compliance policies such as "Extended Producer Responsibility (EPR)" and the "EU General Product Safety Regulation (GP)," and the available destination countries will also expand to more Marketplaces.

You can access the “Compliance Reference” tool at the following path: log in to Seller Central, click “Performance” > “Account Health” > “Manage Your Compliance,” and find products using 3 methods: “keyword/select product type/search by HS code.”

“Manage Your Compliance” tool

During operations, you can use the “Manage Your Compliance” tool to help you upload compliance documents, manage compliance matters for active listings in a comprehensive way, and resolve compliance issues in a timely manner, so you can easily meet compliance requirements. In 2023, the “Manage Your Compliance” tool will also add introductions to compliance policies such as “Extended Producer Responsibility (EPR)” and “EU Product Safety Regulation (GP),” connect to compliance service provider network integration, and enable online communication with service providers.

You can access the Manage Your Compliance tool at the following path: sign in to Seller Central, and click "Performance" > "Account Health" > "Manage Your Compliance."

03 Compliance Policies and Solutions for Major Amazon Marketplaces

According to Statista data, European e-commerce sales are expected to reach $550.8 billion by 2024, surpassing the United States. The compliance bar for the European Marketplace is also high. In summary, the European Marketplace has 4 core compliance requirements:

● Tax compliance: Sellers on EU and UK Marketplaces must both register for a European Value Added Tax (VAT) ID;
● Environmental compliance: sellers in the Germany and France Marketplaces must register for Extended Producer Responsibility (EPR) based on the type of products they sell;
● Business safety: EU Marketplace sellers must comply with EU Product Safety Regulations (GP);
● Product safety: EU Marketplace sellers must also comply with the General Product Safety Regulation (GPSR) in the EU.

European Value Added Tax (VAT)

1. What is European Value Added Tax (VAT) ✦✦

European Value Added Tax (VAT) is a tax charged by European countries on consumption spending. Commercial transactions, imports, and the movement of goods between European countries require payment of European VAT. It is collected by VAT-registered sellers for their sales within Europe and paid to national tax authorities through VAT returns.

2. When you need to register for European Value Added Tax (VAT) ✦✦

Registering for VAT is the first step for sellers to complete tax compliance. Not all sellers in European Marketplaces need to register for VAT. Sellers only need to remember:

● VAT registration is required wherever inventory is stored. In other words, seller-fulfilled sellers are not required to register for VAT, but sellers using Fulfillment by Amazon (FBA) or European overseas warehouses must register for VAT;
● If you sell products to business buyers, you must register for VAT.

🔘 Examples:
If your warehouse is in Germany and all products sold to other countries are shipped from German warehouses, then you only need to register for German VAT.

3. Steps to register for European Value Added Tax (VAT) ✦✦

Once the seller has completed VAT registration and obtained a VAT number, the compliance process is still not complete. The complete steps in the VAT compliance process are as follows:

Reminder: once there is an issue with your taxes, the tax authority will usually notify you by email or letter, so be sure to respond promptly and do not ignore it.

Extended Producer Responsibility (EPR)

1. Introduction to the specific requirements for Extended Producer Responsibility (EPR) ✦✦

In the EU, Extended Producer Responsibility (EPR) was introduced through various directives, especially the Waste Framework Directive, and each EU member state is required to incorporate these directives into its national regulations. Therefore, its implementation varies by country/region and also involves different product categories in different countries.

Germany Marketplace and France Marketplace sellers should note that Amazon measures for multiple product categories have already taken effect or will take effect soon:

● Germany Marketplace: a total of 3 product categories are involved, of which the German Packaging Act took effect on July 1, 2022, the Waste Electrical and Electronic Equipment Directive (WEEE) in Germany will take effect on July 1, 2023, and the Battery Act is not being collected for now, but affected sellers still need to complete compliance; after the measures take effect, if sellers do not upload a valid registration number to Amazon Seller Central, they will not be able to sell non-compliant products;
● France Marketplace: a total of 15 categories are involved. If you do not provide a valid registration number, Amazon will withhold and remit the corresponding EPR eco-fees on your behalf to a qualified Producer Responsibility Organization.

Note: In the coming years, EPR regulations for new product categories will gradually take effect across multiple Amazon Europe marketplaces, such as Germany’s Single-use Plastic Act, and product categories may also expand.

You can use the table below to learn about the specific EPR product categories:

The same product may require registration under different EPR categories. For example, for battery chargers with batteries sold to Germany, the EPR categories that need to be registered are: German Packaging Law, German WEEE, and German Battery Law.

You can copy the following link into your browser, log in to Amazon Seller Central, and view the help page:
https://sellercentral-europe.amazon.com/help/hub/reference/GYDCAK9ZR6VJH2X3

2. Extended Producer Responsibility (EPR) compliance workflow ✦✦

● Phase 1: registration, submission, and verification
Sellers need to complete a one-time registration process to obtain the EPR registration number for the relevant category. After you get the EPR registration number, upload it to the Amazon seller platform. Once verified by Amazon, you can sell on Amazon in compliance.

● Stage 2: report on time
Sellers must report their sales data in each applicable category to the appropriate producer responsibility organization within the applicable reporting period.

● Phase 3: fee payment and recycling
Based on the data reported by the seller in the previous stage, environmental payments must be made to the relevant producer responsibility organization to support the relevant producer responsibility organization to carry out the recycling of the product.

EU Product Safety Regulations (GP)

The new EU product safety regulation (known as the EU Market Surveillance Regulation (EU) 2019/1020) took effect on 07/16/2021. This new regulation requires CE-marked products (such as electrical appliances and toys) to have a person located within the EU serve as the product compliance contact (“Responsible Person”) to ensure product safety and protect consumers’ interests. If you sell CE-marked products in the EU without an EU Responsible Person, it is against the law.

If the products you sell are CE-marked and are manufactured outside the EU, then you need to ensure:

● Such products have a Responsible Person in the EU;
● Your CE-marked products have the responsible person’s contact information on them. This type of label can be affixed to the product, product packaging, package, or accompanying documents.

EU General Product Safety Regulation (GPSR)

As a derivative of the EU Product Safety Regulation (GP), the newly issued EU “General Product Safety Regulation” (GPSR) will take effect in 2024, further improving market surveillance of unsafe products within the EU, ensuring more effective recalls of unsafe products, increasing the transparency of product information, further protecting consumer rights and interests, and ensuring product safety and the traceability of obligations.

Amazon solutions for European compliance

❶ VAT solutions:
VAT service on Amazon (VISA) ✦✦

Amazon VAT Integration Service (VISA) is a tax solution developed by Amazon to help sellers complete VAT registration and reporting in one stop.

Service benefits

Safe and reliable
Service providers are strictly screened by Amazon, and Amazon oversees and advances the entire registration process, so you can have peace of mind throughout; pay monthly instead of making a one-time annual payment to help protect your cash flow!
Save time and effort
Get your tax ID in as little as 1 week to help you get ahead in the European market; tax data is generated automatically, with no manual work required; supports multiple filing types and transaction types, with one-stop filing for transactions across multiple platforms!
Compliance with peace of mind
Automatically capture and check each transaction and its accounting results to help ensure every transaction is more accurate and compliant, reducing the risk that a tax authority audit will affect your sales; when you register for a UK tax number, the grace period is automatically extended to 120 days after you submit the materials, with no additional application required!

Limited time deal

Start the service from 10/1/2022 to 4/30/2024, EU time to enjoy:
● Subscribe to the UK and Germany to get an instant 50% off filing fees;
● For 5, 6, and 7 filing countries/regions, discounts of 5%, 20%, and 30%, respectively, are offered.

❷ EPR solutions:
Amazon Extended Producer Responsibility service (ACES) ✦✦

Amazon Extended Producer Responsibility Service (ACES) is a compliance solution that can help you meet your extended producer responsibility requirements in Germany and France. This includes a one-time registration service and subsequent reporting services. Amazon works with extended producer responsibility service providers to help you more easily meet extended producer responsibility requirements and achieve compliance.

You can start the service by going to this path: sign in to Amazon Seller Central, and click “Data Reports” > “Manage Your Extended Producer Responsibility Compliance Tasks”.
You can also copy the following link to your browser and log in to Amazon Seller Central to learn more and begin registration now:
https://sellercentral-europe.amazon.com/ce-epr-registration/index.html#/sign-up?ref=EPR_WEEE_wechatpost_ACES

❸ Exclusive compliance package for new sellers in Europe:
Amazon Europe One-Stop Compliance Solution (CPL) ✦✦

Say goodbye to the scramble of European compliance—Amazon has launched “Amazon Europe One-Stop Compliance Solution,” an exclusive compliance package for new sellers in Europe, to solve all your European compliance challenges in one place, with discounts of up to 50% off, making it easy to achieve one-stop compliance in Europe at a lower cost!

With the introduction of the new Japanese Consumption Tax (JCT) policy—the Qualified Invoice Retention System, the Japanese government is further tightening its tax policies.

Interpretation of Japan's JCT New Deal

1. What Is the Qualified Invoice Retention System ✦✦

Effective October 1, 2023, the new policy “Compliance Invoice Retention System”, introduced by the Japan National Tax Agency for Japan Consumption Tax (JCT), will officially take effect. After the policy takes effect, customers who need tax deductions, such as business buyers, must provide a compliant invoice that includes the seller’s JCT registration number before they can claim an input tax deduction.
In summary, Chinese sellers on Amazon Japan need to apply for a JCT registration number to issue compliant invoices to business buyers that require invoice input tax credits.
Therefore, sellers need to complete the following steps:

● Determine whether you have JCT registration obligations or registration needs;
● Submit a JCT registration application to Japan’s National Tax Agency by March 31, 2023 to receive your JCT registration number before the new policy takes effect;
● After obtaining the JCT registration number, promptly upload it to the Amazon seller platform.

2. Advantages of registering for JCT ✦✦

● Complete tax compliance and protect account security
Sellers with JCT tax obligations are required to apply for a JCT registration number to issue compliant invoices for business buyers with tax deduction requirements. At the same time, for sellers who already have JCT tax obligations, registering for and filing JCT is one of the requirements for sellers to operate compliantly.

● Issue compliant invoices to ensure the competitiveness of business orders
After the Qualified Invoice Retention System takes effect, businesses that need tax deductions may pay closer attention when purchasing products and choose sellers who can issue compliant invoices with a JCT registration number. Therefore, for sellers on Amazon Japan, applying for a JCT registration number before the new regulations take effect to qualify to issue JCT-compliant invoices has become even more important and urgent.

● Compliant customs clearance tax refunds to reduce pressure on business cash flow
After JCT compliance, sellers can use JCT to report to the Japanese tax authority and claim a deduction for the input consumption tax paid during import customs clearance, with any overpayment refunded and any underpayment supplemented, helping reduce pressure on account cash flow.

● Eligible to apply for an Amazon Business exclusive promotional page
Register for JCT now, and you can also immediately apply for the Amazon Business exclusive promotional page, get additional traffic support, and increase ASIN sales!If you have applied for a JCT registration number, set business pricing or a 5% off Quantity Discounts offer, ensured that your inventory is sufficient, and have a rating of 3.5 or higher, you can submit the ASINs that need exposure through your account manager (up to 50).

Other compliance requirements for Japan

In addition to JCT compliance, Japan also has corresponding policy and regulatory requirements for products in different categories, mainly in Electric and Electronic Equipment and Toys. Sellers need to pay attention to relevant regulations and complete compliance matters in a timely manner.

Amazon solutions for Japan compliance

If the seller's company is established outside Japan (such as China), they need to find an external tax service provider (tax representative) to help complete tax compliance matters.

Amazon has launched the Amazon Service Provider Network (SPN)*, which uses a rigorous evaluation system to carefully select service providers and regularly assess them to ensure that their service quality remains at a high level, making it easier for you to quickly find reliable, high-quality, cost-effective, and reasonably priced third-party tax service providers for tax compliance support.

*Please note that Amazon provides these listings as an informational resource only. If you choose to use an SPN service provider, you will sign a contract directly with that service provider, and they will provide services that meet your needs. Amazon Service Provider Network does not certify or authorize service providers.

Limited-time offer for JCT registration ✦✦

6 tax agents offer early bird discounts to help you reduce the cost of compliance!Register for a limited time and enjoy a price 50% below the market price!Apply early and enjoy the offer!

Middle East Value Added Tax (VAT)

1. Middle East Value Added Tax (VAT) compliance requirements ✦✦

As required by local regulations in the United Arab Emirates and Saudi Arabia, if you store inventory locally and sell products to local residents in the United Arab Emirates or Saudi Arabia through Fulfillment by Amazon (FBA), then you have triggered tax obligations. You need to register for local VAT within 30 days of the first sale of an order fulfilled by Amazon (FBA).

*Note: If you sell only through Merchant Fulfilled Network (MFN), you do not need to register for a VAT number.

2. VAT comparison between the Saudi Arabia Marketplace and the United Arab Emirates Marketplace ✦✦

Please note: the registration fee section is based on Amazon service providers’ discounted 2022 rates. For the latest prices, and for tax ID registration, filing, and related matters, please contact the service provider.

The UAE tax authority’s official website provides services in English. Sellers can choose to view Amazon’s registration guide, go to the tax authority’s official website to complete free self-registration, or choose to appoint a tax agent for paid registration.

The Saudi tax authority’s official website only provides services in Arabic and requires a local mobile phone number to receive a verification code, so Amazon recommends that you use a tax agent to register.

3. Penalties for not registering Middle East Value Added Tax (VAT) ✦✦

The Saudi and UAE tax authorities have clear rules on fines for not registering VAT. If you do not register a VAT number, file returns, and make payments on time, you may incur fines. For example, in the UAE, if you do not register a VAT number within 30 days of the sale of your first Fulfillment by Amazon (FBA) order, the penalty will appear in your tax account. From a long-term business health perspective, registering for VAT in the Middle East can help sellers avoid unnecessary fines, so please complete the VAT compliance process promptly.

Amazon Solutions for Middle East Compliance

❶ Register for Middle East VAT:
Limited-time VAT registration offer for the Middle East Marketplace ✦✦

You can use the Amazon Service Provider Network (SPN)* to choose a tax agent to complete Middle East VAT registration. Multiple tax agents offer great discounts for Amazon sellers, with up to RMB 3,400 off!

*Please note that Amazon provides these listings as an informational resource only. If you choose to use an SPN service provider, you will sign a contract directly with that service provider, and the service provider will provide services to you. Amazon Service Provider Network does not certify or authorize service providers.

❷ No Middle East VAT registration required:
Amazon UAE Free Trade Zone FBA Program ✦✦

For sellers who want to test the waters in the Middle East Marketplace, Amazon has launched the Amazon UAE Free Trade Zone FBA program, so you can expand your Middle East business without registering for VAT!

Amazon has established a bonded warehouse in the UAE Free Trade Zone. After you join the program, you only need to ship products from your home country to the UAE bonded warehouse. Amazon will manage destination storage and deliver the products to buyers without triggering local VAT obligations, so you do not need to register for a VAT number.

Project advantages

● No need to register for VAT or pay taxes regularly, helping new sellers try to expand their business in the Middle East at a lower cost;
● Help sellers reduce product transportation and import duty costs;
● Last-mile delivery is handled by Fulfillment by Amazon (FBA), ensuring on-time delivery;
● Combined with the shipping advantages of Fulfillment by Amazon (FBA), sellers do not need to worry about return and exchange services, helping ensure a good shopping experience for customers in the Middle East.

How to Participate

All sellers who are not yet using Fulfillment by Amazon (FBA) (including self-registered sellers) are eligible to participate. You can contact your account manager.

For many sellers already enrolled in Fulfillment by Amazon (FBA) in the US marketplace, testing the waters in the Mexico marketplace is a good option. If you are a seller on the US Marketplace and want to sell your products in Mexico, Amazon recommends that you enroll in Remote Fulfillment Program (NARF). Amazon will help move your inventory from Fulfillment by Amazon (FBA) in the US and deliver it within Mexico, without triggering local tax obligations in Mexico!

*Remote Fulfillment Program (NARF) provides support in Chinese, and sellers can go to Amazon Seller Central to enable it themselves.

If sellers want to grow their Mexico Marketplace, deliver products to customers faster, and improve their products’ competitiveness, they need to register an RFC tax identification number to enable Mexico Fulfillment by Amazon (FBA) inventory and sales.

Mexico RFC Tax Compliance

1. What Is a Mexican RFC Tax Identification Number ✦✦

Since June 1, 2020, the Mexican government has introduced new tax reform regulations requiring Amazon, as the withholding agent for income tax and Value Added Tax on sellers’ total monthly sales, to pay taxes to the Mexican government. Mexico RFC Tax Identification Number (Número del Registro Federal de Contribuyentes RFC Tax Identification Number) will determine the monthly Value Added Tax and income tax withholding amounts calculated by Amazon.

2. Mexico RFC Tax Identification Number Compliance Requirements ✦✦

If you have enabled Fulfillment by Amazon (FBA) in the Mexico Marketplace, you must register for a Mexican RFC tax identification number. If the RFC tax identification number is not registered, and the order ships from Mexico (FBA warehouse, overseas warehouse) and is delivered to consumers in Mexico, Amazon will withhold and remit up to 36% in taxes (20% income tax ISR + 16% Value Added Tax IVA) to the Mexican government. And after you register an RFC tax identification number, you only need to pay 16% in taxes to your local tax office !

You can use the table below to view the tax withholding requirements for different types of sellers:

Note: The withholding tax certificate will be posted to your tax documents within the first 10 days of each month (go to “Mexican Tax Invoicing Options”).

Sellers creating their first Mexico Fulfillment by Amazon (FBA) shipment must also upload their RFC tax identification number to Amazon Seller Central to activate Fulfillment by Amazon (FBA).

Note: Orders delivered to Mexico through self-fulfillment from outside Mexico or through NARF shipped from the US are taxed during customs clearance and are not affected by Mexico’s new tax reform policy, so sellers do not need to apply for an RFC tax identification number.

3. Advantages of Registering a Mexican RFC Tax Identification Number ✦✦

Registering an RFC tax identification number has many advantages. Not only can it enable Fulfillment by Amazon (FBA) sales in Mexico, but it can also make your tax filing more flexible, with no tax withholding, which is better for cash flow management!

For more information, copy the following link into your browser, log in to Amazon Seller Central, and view the Mexico VAT FAQ:
https://sellercentral.amazon.com/help/hub/reference/GXGL7XPSTNVC3L4S

Amazon Solutions for Mexico Compliance

Amazon is actively expanding tax representative options to help sellers register for an RFC tax identification number, reduce tax withholding, and activate Fulfillment by Amazon (FBA). Currently, more than 10 service providers can provide tax services to sellers on Amazon Mexico. You can scan the QR code below to go to Amazon Service Provider Network (SPN)* for more details.

*Please note that Amazon provides these listings as an informational resource only. If you choose to use an SPN service provider, you will sign a contract directly with that service provider, and the service provider will provide services to you directly. The Amazon Service Provider Network does not provide certification or authorization for service providers.

New seller onboarding guide video

Before you start selling on Amazon, watch the registration guide video, prepare the required registration materials in advance, and learn the specific registration process to help you open your store smoothly!

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