Does Amazon Japan require JCT?In-depth interpretation of Japan's new consumption tax invoice regulation

Do I need to register for JCT to be an Amazon Japan site?In-depth interpretation of Japan's new consumption tax invoice regulations

August 11, 2022

Table of Contents
1/ Compliance Invoice Retention System (JCT) Reform
1.1 Influence the competitiveness of orders for the purpose of enterprise procurement
1.2 2022 Q4 Amazon Registration Number Verification
2/ Quickly determine whether there is a JCT registration obligation
3/ Take you to know the advantages of registering for JCT (including being obligated & unobligated to still consider registering)
4/ What should the seller do?What support will Amazon provide?
Seller FAQ
6/ More Resources Collection

🔺 What impact will this compliance invoice retention system reform have on sellers?

For individual consumers

If the purpose of the company's procurement is not included, there is no change.

For business buyers

① Before October 1, 2023, buyers requiring a tax deduction can enjoy the JCT input deduction even if the JCT registration number is not shown on the invoice.
② Beginning October 1, 2023, buyers requiring tax deductions will need to provide a compliant invoice with the seller's JCT registration number before they can apply for the JCT input deduction. If the invoice does not meet the requirements of the new system, the buyer's tax amount will not be deducted.

🔺 In other words, for sellers, the effects and matters to be aware of are:

Order competitiveness for the purpose of corporate procurement

For corporate procurement with tax deduction requirements, sellers who have applied for a JCT registration number and who can issue compliant invoices may be selected for corporate procurement and apply for JCT input deductions. More than 90% of Amazon Chinese sellers have received orders from overseas business buyers, so this policy reform has attracted the attention of many sellers.

2022 Q4 Amazon JCT registration number verification

According to the requirements of the National Tax Agency of Japan, sellers are required to apply for registration by March 31, 2023. Starting in Q4 2022 , Amazon will verify that the JCT registration number you entered matches the registration number officially published by the Japan National Tax Agency on this website. If it doesn't match, the registration number will be set to an “invalid” state, so please pay attention to the registration time in advance!

If your company meets any of the following conditions, you are obligated to become a JCT tax entity and pay taxes as required:

● Your taxable sales amount in “base year 2” exceeds 10 million yen;
● Your taxable sales in “base year 2” do not exceed 10 million yen, but your taxable sales in the first half of “base year 1” exceed 10 million yen;
● Your company's registered capital is 10 million yen or more.

🔺 What is the “base year”?

For example, in 2022:

As of 2022, the tax year the company needs to calculate is 2021, and sellers need to refer to the sales threshold values for the two base years (i.e. 2019 or 2020) to determine whether tax obligations arise.

If the seller's account sales exceed the threshold in 2019 or the first 6 months of 2020, they will need to become a tax entity to register, file, and pay taxes in the 2021 tax year. For details, please refer to the summary table for sellers with tax obligations.

🔺 What does the “base year start month” depend on?

The starting month of the base year depends on the type of company you have: ① sole proprietory/sole proprietorship; ② joint venture.

For details, please refer to 👉 Policy|How should Amazon cross-border e-commerce sellers deal with the new Japanese Consumption Tax (JCT) invoice regulations

🔺 Tips: How do I check my taxable sales?

Seller Central > Data Reports > Payments > Payments > All Settlements. Check out their sales with tax included.

(You can view it by clicking this link in Seller Central)

Note:

Sales from B2C and B2B orders are taxable sales, and sales in Japan through channels other than Amazon.co.jp are also taxable sales, so be sure to take this situation into account. Taxable sales = sales including tax/1.1. The Japanese consumption tax rate is 10%.

Common Seller Mistakes

Myth 1

⭕ Can sellers who do not have JCT tax obligations become a JCT tax entity to obtain a JCT registration number?

ANS: Yes.

In addition to the 3 mandatory registration situations mentioned above, you can also choose voluntary registration.

If you do not have a JCT tax obligation for the time being, you can also apply to become a JCT tax entity and apply for a JCT registration number to be an invoicing person who can issue compliant invoices to attract more business orders. Once the seller has applied to be an invoicer capable of issuing compliant invoices, the seller is required to begin filing a JCT tax return.

Myth 2

⭕ Think the Chinese company is not in Japan and has no registered tax ID and tax obligation?

ANS: No.

The obligation status will be determined not by where you are established, but by the annual taxable sales in Japan. Whether it is a local company or an overseas company, an overseas company with sales in Japan, once it exceeds the sales threshold of a Japanese duty-free company and becomes a seller subject to Japan's JCT tax obligation, it is mandatory to register and report consumption tax in Japan.

Myth 3

⭕ Since import consumption tax has been backcalculated during the import customs clearance process, is it necessary to pay the consumption tax repeatedly after JCT compliance?

ANS: Not required.

Once Chinese sellers are randomly checked and reverse calculated by Japanese customs during the customs clearance process, they will be forced to levy import consumption tax (Import JCT) and import tariffs (for applicable categories). The import consumption tax payable by the seller due to the inverse calculation is input consumption tax, while the consumption tax collected by the seller from the buyer during the sales process is output consumption tax. The actual “consumption tax = export consumption tax - input consumption tax” that the seller should actually pay, that is, the compliant seller can apply for deduction of the import consumption tax already paid in the reverse customs calculation. Tax supplements/refunds may occur.

🔺 There is currently no obligation to register, but there are registration requirements:

There is no obligation to register, but if you wish to become a qualified invoice registrar, then you need to register with JCT.

Advantage 1

Apply for a JCT registration number to become an invoicing agent that can issue compliant invoices to attract more corporate orders. As of November 2021, more than 90% of Amazon Chinese sellers have received orders from overseas business buyers.

Tips:

You can view orders from business buyers through the following path: Seller Central > Orders > Manage Orders > Check “Business Buyers” in All Orders

Advantage 2

It is foreseeable that after the invoice retention system comes into effect, companies with tax deduction requirements may be more careful when purchasing products and choose to buy products sold by sellers that can issue compliant invoices with JCT registration numbers.

🔺 Registration obligations already exist:

Advantage 1

To attract more business purchase orders with tax deductions: Once the compliant invoice retention system is in effect, Amazon.co.jp will show the JCT registration number submitted by the seller in advance in Seller Central on the invoice to ensure that your buyers receive an invoice that can be deducted from tax. Businesses that can anticipate tax deduction requirements may be more careful when purchasing products and choose sellers who can issue compliant invoices with a JCT registration number.

Advantage 2

You can apply for the JCT input deduction in compliance: After you are in compliance, if you can provide a compliant bill to apply for a tax deduction, then when the tax agent makes the JCT return for you, you can simultaneously file the export declaration and input tax deduction.

Reminder:

If you do not submit your JCT registration number to Amazon, customers who are required to issue a compliant invoice may stop purchasing your products after the reform is implemented because they will not be able to obtain a compliant invoice to claim tax credits. Sellers may face situations such as chargebacks, loss of buyers, etc., and adverse effects.

You will need to apply for a JCT registration number and submit it in Seller Central. Once the compliant invoice retention system takes effect, the seller's JCT registration number will need to be displayed on the invoice to ensure that the invoices obtained by your buyers are eligible for tax deductions.

Apply for a JCT registration number

Submit a JCT registration application through a tax service provider and obtain a JCT registration number.

Upload through Seller Central

Click this link to upload to Seller Central
Submission path: Seller Central > Settings > Account Information > Tax Information > Consumption Tax Settings > Add “JCT Registration Number” > Click “Save Settings” (Click to view the detailed tutorial 👉 Submit JCT Registration Number in 4 steps)

If your business address is not in Japan, you need to find an external tax service provider (tax representative) to help you complete tax compliance matters. You can help you through a third-party tax service provider on the Amazon Service Provider Network (SPN). Once you have submitted your application, it will take approximately 3 months to obtain your JCT registration number. Please allow plenty of time in advance.

🔍 After Japan's consumption tax reform policy comes into effect, what happens if I don't have a Japanese consumption tax registration number?Can I still sell on Amazon without the JCT Number?Any other impact?

Once the regulations come into effect, sellers who have not uploaded a JCT registration number will be able to continue selling on Amazon. Please be aware, however, that if you do not submit your JCT registration number to Amazon, customers who are required to issue compliant invoices may not buy your products after the reform is implemented because they will not be able to claim tax credits. Submitting your Japanese consumption tax registration number to Amazon is an opportunity to help you increase the number of purchases made by business customers.

🔍 Can I apply for a Japanese consumption tax input credit?As a seller, what items are deductible?

When purchasing products in Japan, you must keep a compliance invoice in order to claim the Japanese consumption tax credit. For example, you can deduct:

① The amount of Japanese consumption tax you paid for Amazon Logistics services. You must keep the invoice from Amazon Seller Central;
② If you are an overseas seller, you can deduct the import consumption tax paid during the customs clearance process. You must use your business number (corporate number) to pay import consumption tax and keep a record of the payment you have received from customs (import authorization notice).
Consult with your tax agent or professional such as a tax accountant to help you claim JCT refund if applicable.

🔍 What is the relationship between Japanese consumption tax and taxes collected by Japanese customs?

If you are an overseas seller, once your inbound goods go through Japan custom, you must pay import JCT and custom duties (tax rates vary depending on the product category). Please refer to the tariff details help page. (Click this link to view it in Seller Central)

The seller must pay the import Japanese consumption tax (“Import Japanese Consumption Tax”) at the time of customs clearance and collect the Japanese consumption tax on the relevant order (“Export Japan Consumption Tax”).

When the seller pays the tax to the tax office, the amount of the Japanese consumption tax return is “Export Japan Consumption Tax - Input Japan Consumption Tax”. We recommend that you keep import JCT invoice to claim for tax deduction.

🔍 Can I require my carrier to use my company number (corporate number) to pay the imported Japanese consumption tax so that I can keep the compliance invoice to claim the Japanese consumption tax deduction?

Yes, when JCT reform policy becomes effective, we assume more and more carriers will accept to use sellers’ own corporate ID (法人番号) to pay import JCT. Once you have your business number, talk to the shipping carrier you are using.

🔍 Should the Japanese consumption tax registration number be the registration number obtained by the seller and registered in the Seller Central account?

Yes, invoices issued by Amazon on behalf of the seller will use the Japanese consumption tax registration number entered by the seller and the seller name registered on this page (click this link to view in Seller Central). If the name of the seller who obtained the Japan GST registration number does not match the seller name in the relevant account, the registration number entered in Seller Central will be set as invalid. Therefore, make sure that you enter the correct registration number and that the applicant for this registration number is a seller registered in your Seller Central account.

🔍 If I register as a taxpayer in Japan to obtain a Japanese consumption tax registration number, do I have to pay taxes on past sales?

If you already have a tax obligation before JCT registration, you might need to pay tax on past sales.

For example, if your taxable sales amount exceeds 10 million yen during the base period, or if your taxable sales did not exceed 10 million yen in the base period but exceeded 10 million yen in the first half of the previous base year, then your business is a taxable business. Check with your tax advisor about the tax on the past sales.