Tax laws and regulations in Japan

Let me begin by saying that I am not a legal tax representative or Japanese tax agent. All information presented here is based off extensive research and contacts with advisors and government organisations that have particular expertise in selling in Japan (1-7).

A full reference list can be found here [at the end of this article]

There are two main tax areas to consider when shipping and selling in Japan. One is when you import goods in to Japan and the other is when you sell your goods in Japan. We’ll start with the former.

Japan import tax [AKA Consumption tax] and import duty

When you import your products to Japan they require the necessary paperwork in order to pass through customs and to calculate the import taxes and duty. This includes:

1. Bill of Lading (details needed to process the freight shipment and invoice)
2. Packing List (what is being shipped, quantity, weight, volume)
3. Commercial Invoice (value of the goods)

Your freight company will be able to help you out with all of these documents. A full list of requirements for importing into Japan can be found here (8).

You also need to pay import taxes and duty (plus in some cases other internal taxes [9]).

Import Tax [Consumption Tax] in Japan

Consumption Tax must be paid when your goods pass through customs in Japan, unless their value us under 10,000 Yen (approximately £70 or $90 at July 2017 exchange rates). At the time of writing (July 2017) it is set at 8%, although is it due to increase to 10%.

Again, this is something your shipping company can normally handle for you; otherwise you can appoint an agent to pay the Consumption Tax and submit the necessary paperwork.

Import Duty

For your goods to pass through customs you also need to pay import duty. This is worked out as a % of the customs value of your goods. It can range from 0% to 30%, but as standard it is normally around 5%. Below is a simplified tariff schedule taken from the Japan Customs website (10).

• • Alcoholic Beverages

– Wine: 70 yen/l
– Some of Distilled alcoholic beverages: 20 yen/l
– Sake, Some of other alcoholic beverages: 30 yen/l

• Tomato Ketchup, Ice Cream, Dropped furskins, Article of apparel, etc.: 20%
• Coffee, Tea excluding Black Tea, Gelatine, Clues, Tanned or Dressed furskins excluding Dropped furskins, etc.: 15%
• Vegetables and fruits for food, Seaweeds, etc.: 10%
• Tableware, Furniture, Toys, Games, etc.: 3%
• Rubber, Paper, etc.: Free
• Other Products: 5%.

 

Again, your shipping company can normally arrange the import duty to be paid, but they will need to know the correct category for your product in order to pay the correct duty costs. For this a 9 or 10 digit code Tariff Code or HS Duty Code is used. Alternatively, you can designate a proxy (attorney) / agent to the Director-General of Customs to arrange all the customs payments for you.

Taxes on Sales on Amazon Japan

The most confusion when it comes to taxes in Japan is that of sales tax. This is especially true for foreign sellers who have a company overseas but store their products in Japan (Point of Sale in Japan) and sell to Japanese people, as you do when you use FBA in Japan.

The confusion lies in whether or not you need to register / file for Japanese Consumption Tax (similar to VAT in the UK [11]), which would mean you would need to add 8% on to your sale price (i.e. you customers would pay 8% more). You then pay this extra 8% to the Japanese government (along with filing all the necessary paperwork). This would of course require a qualified professional or organisation to do this on your behalf.

What if you self-fulfill your Amazon orders to Japan?

If you sell on Amazon Japan but post your orders directly from another country (Merchant Fulfilment on Amazon Japan) then you do not need to worry about consumption taxes (both on imports or on sales) or import duties (4). See the process of posting something to Japan from the UK here.

Any products under 10,000 Yen (approximately £70 or $90 at July 2017 exchange rates) requires no customs tax to be paid. Any more than this then the receiver of the delivery (i.e. the customer in Japan) will be asked to pay necessary taxes (12).

Do Amazon Japan sellers pay Consumption Tax on sales?

As of 2021 this section is out of date.

From our research (1-24) it appears that if you store your products in Japan (i.e. in an Amazon warehouse in Japan) and sell to Japanese people you are treated the same as if you were a Japanese registered company. Again, we are not Japan tax experts and we have no legal qualifications in tax; however, from several conversations with agencies who deal with tax in Japan this is the advice they give (2, 5) :

If sales are below 10 Million Yen (approximately £68,000 or $88,000 at July 2017 exchange rates) then you do not need register for Consumption Tax in Japan. I.E. You do not need to worry about paying additional taxes and can focus on just making sales.

Once you reach the 10 Million Yen level you will need to seek professional tax advice (5).

2022 Update

The Japanese tax authorities have changed the process for how they tax overseas businesses who sell via e-commerce platforms in Japan.

Many overseas businesses who sell online in Japan were not paying taxes properly and Japan has been missing out on sales tax revenue from overseas businesses. They have closed that gap and introduced a new system to deal with Foreign Onlines Sellers.

In the past, an overseas business paid consumption tax ( equivalent of US sales tax or  EU VAT) and import duties based on the bill of lading only. 

But now it’s different.

When you import goods into Japan to sell online you now have to declare your sale price.

For Amazon specifically, The tax authorities charge you consumption tax on the retail value minus Amazon’s costs. (Pick & Pack fee + referral fee commission).

Example

	Manufacturing Cost per Item	Sale Price	No. of units imported	Shipping Cost	Amazon’s fees per product sold	Duty (4%)	Consumption Tax (10%)	Total	Equivalent rate paid of Retail value
Old System (2019):	$10	$40	1,000	$3,000	$7.00	$520	$1,000	$1,520	2.50%
New System (2022):	$10	$40	1,000	$3,000	$7.00	$520	$3,300	$3,820	8.25%

 

https://docs.google.com/spreadsheets/d/1NfeDT93iz-MFXNlHMn4PIX3BEMVd-MNLC5TjXTfQomM/

Summary

It depends on your costs, but if you calculate a tax fee of around 8% of your retail value then your estimate should be about right.

Thinking of declaring a cheap sale price on Amazon and then put it up when they arrive?

The tax authorities are checking Amazon listings regularly. If they uncover that you are trying to deceive them, then you may have trouble with future imports.

For overseas sellers, it’s disappointing that costs have increased. But it’s a fairer system with both domestic and foreign sellers now paying roughly the same amount of tax.

The import process in detail

When your products arrive at customs you have to fill in a spreadsheet containing the following fields:

• Product Name
• Category
• Quantity
• HS Code
• AMazon ASIN
• Amazon Sale price
• Amazon Product Page Link
• Amazon FBA Pick & Pack Fee
• Amazon Commission
• Revenue per item
• Total Revenue
• Hazardous Material?

Here is an Example:

 

In addition to filling the spreadsheet customs usually ask for confirmation of AMazon’s fees. They want to see screenshots of the FBA Fee simulator page like this:

 

Once the goods clear customs you get an invoice in Japanese which your importer pays on your behalf. You then pay them once the fee is confirmed. 

Here is such an invoice with confidential details erased:

Summary of Taxes for Overseas Amazon Japan Sellers

Taxes are confusing at the best of times, never mind when you are selling in a foreign country where you cannot understand the language and have no experience in sales.

In this article, we have covered the important aspects when it comes to overseas sellers on Amazon Japan. We are not tax agents or legal advisers; however we have contacted experts in this field and researched extensively on the topic. To the best of our knowledge the information provided is accurate at the time of writing (July 2017); however, if you are ever in doubt please check with tax professionals in Japan or an Amazon Seller Tax specialist like https://skywalktax.jp/en/

The conclusion is:

• If you self-fulfil from outside of Japan you don’t pay taxes if the product value is under ¥10,000
• If you self-fulfil from outside of Japan and the product is worth over ¥10,000 the customer will pay taxes when it arrives.
• If using FBA you will pay at the point of import unless you file for taxes through and official route in Japan and use a Japanese accountant.

References & Useful Links

1. www.exporttojapan.co.uk
2. www.ebiz-japan.com/
3. www.eubusinessinjapan.eu
4. www.j-wire.info/
5. eu-japan.eu/
6. www.bluewheele.com
7. www.jetro.go.jp/en/
8. www.customs.go.jp/english/summary/import.htm
9. www.customs.go.jp/english/summary/tariff.htm#Other_Internal_Taxes
10. www.customs.go.jp/english/summary/tariff.htm
11. www.gov.uk/topic/business-tax/vat
12. www.parcelhero.com/blog/expert-shipping-advice/guide-sending-parcel-japan
13. www.customs.go.jp/english/c-answer_e/imtsukan/1204_e.htm
14. www.nta.go.jp/taxanswer/shohi/6101.htm
15. services.amazon.com/global-selling/taxes-regulations.html
16. www.gov.uk/government/world-location-news/how-to-sell-through-amazon-japan
17. services.amazon.co.jp/services/out-of-country/en/local-laws.html
18. www.eubusinessinjapan.eu/issues/financial-issues/taxes-accounting/consumption-taxes/consumption-tax
19. www.eubusinessinjapan.eu/issues/financial-issues/taxes-accounting/consumption-taxes/foreign-business-and-consumption-tax
20. mywifequitherjob.com/how-to-sell-on-amazon-in-the-uk-canada-europe-japan/
21. ecommdo.com/podcast-04/
22. www.jetro.go.jp/en/invest/setting_up/laws/section3/page6.html
23. blog.gaijinpot.com/consumption-tax-increase-japan/
24. japanconsult.com/taxes-in-japan-for-corporations/
25. www.nta.go.jp/foreign_language/consumption_tax/04.htm