Japan Consumption Tax (JCT)

As early as May 12, we wrote an article "Amazon Seller Attention! Japan Consumption Tax (JCT)” introduces who should register, the consequences of not registering, etc. There are still many friends who don’t know much about it, and they have privately messaged us and asked: What is JCT? What impact will it have on the company? What should be done?

Ladies and gentlemen, don't worry, today I have compiled the latest JCT dry goods that sellers on Amazon Japan must master, so that you can deal with it easily and understand the new regulations in seconds!

screenshot of amazon notification

Table of contents

1. What is the Japan Consumption Tax (JCT) compliant invoice retention system?

2. So what has changed in Japan's consumption tax JCT policy?

3. What impact will this policy change have on sellers?

4. How should sellers judge whether they have JCT tax liability?

5. How do sellers achieve JCT compliance and provide compliance invoices?

6. And FAQs for sellers

What exactly is the Japan Consumption Tax (JCT) compliant invoice retention system?

Japanese Consumption Tax, also known as Japanese Consumption Tax, is simply: JCT, which is a tax that consumers pay when purchasing goods.

Japan's consumption tax system, which has been implemented since 1989, officially announced the adjustment of the tax rate to 10% in 2019. The consumption tax is a kind of circulation tax, which is ultimately borne by the buyer. for example:

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When an individual consumer makes a purchase:

When a product sells for 100 yen, and the consumption tax is 10%, then it is 10 yen, so the final price to be paid by individual consumers is 110 yen (including tax).

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When a company purchases:

When the price sold by the seller to the enterprise is 110 yen (tax included), and since the enterprise can use the compliant invoice issued by the seller to apply for the JCT input deduction to the Japanese tax agency, it is quite suitable for the enterprise. to save 10 yen.

So what exactly has the policy changed?

From the perspective of individual consumers, if the purpose of corporate procurement is not included, there is no change

From the perspective of corporate buyers, the following changes will be made:

Before October 1, 2023:

Buyers who need tax deduction can enjoy JCT input deduction even if the JCT registration number is not displayed on the invoice.

Beginning on October 1, 2023:

Buyers who need tax deduction need to provide a compliant invoice with the seller's JCT registration number before they can apply for JCT input deduction. If the invoice does not meet the new system requirements, the buyer's tax will not be deductible.

Sellers with JCT tax obligations need to apply for a JCT registration number with the Japanese tax agency before the regulations take effect, so that they can issue compliant invoices to buyers who need tax withholding after the regulations take effect.

Impact on sellers

As an important online e-commerce website in Japan, Amazon has not only individual consumers shopping on Amazon Japan, but also a large-scale corporate purchasing behavior. And sellers who open a Japanese station will sell to both individual consumers and enterprises at the same time.

According to Amazon data, as of November 2021, more than 90% of Amazon's Chinese sellers have received orders from overseas corporate buyers.

You can view the orders of enterprise buyers through the following path: Seller Central > Orders > Manage Orders > Check [Enterprise Buyers] in "All Orders"

In addition, Amazon Japan has several big promotions for corporate buyers every year. In order to provide business buyers with a good shopping experience, the Amazon business website will also be changed at that time.

When buyers browse products, they will see JCT related marks on the product detail page. If the mark is displayed, the seller of the item is able to provide a compliant invoice with a JCT registration number.

as the picture shows

It is foreseeable that after the invoice retention system takes effect, companies that need tax deduction may pay more attention when purchasing goods and choose sellers who can issue compliant invoices with JCT registration numbers.
Therefore, for sellers on Amazon Japan, it is more important and urgent to register for the Japanese consumption tax number before the new regulations take effect, and obtain the qualification to issue invoices that meet consumption tax compliance.

How can a seller determine if there is a JCT tax liability?

You are obligated to become a JCT taxable entity and pay taxes as required if your company meets any of the following conditions:

1. The seller's taxable sales during the base period exceeds 10 million yen.

2. The seller's taxable sales in the base period did not exceed 10 million yen, but the taxable sales in the first half of the previous base year exceeded 10 million yen.

3. The registered capital of the company is more than 10 million yen.

If the seller does not have JCT tax liability temporarily, he can also apply to become a JCT tax entity and apply for a JCT registration number to become an invoicer capable of issuing compliant invoices to attract more corporate orders. Once the seller has applied to become an invoicer capable of issuing compliant invoices, the seller will need to start JCT tax filing.

(Source: Amazon)

How to achieve JCT compliance and provide compliant invoices

1

Apply for a JCT registration number

If your business address is not in Japan, you can turn to us to help you with tax compliance.

The JCT registration period is 8-12 weeks , please reserve sufficient time in advance.

Materials required to apply for a JCT registration number:

Note the above information is for reference only. It does not constitute any tax, legal or other professional advice and should not be used as such. If you have any questions or require further details, you should consult your professional advisor.

2

After obtaining the JCT registration number

Submit on Seller Central by following the path below

Submission path: Seller background -> Settings -> Account information -> Tax information -> Consumption tax settings -> Add "JCT registration number" -> Click "Save Settings"

If you don't know anything, you can private message us, we will answer for you

3

After the submission is successful, Amazon will

information to issue compliance invoices on behalf of buyers

Currently, consumer invoices are issued by Amazon.co.jp on behalf of the seller and have the seller's name on it. Once the compliant invoice retention system takes effect, Amazon.co.jp will display the JCT registration number submitted by the seller in Seller Central in advance on the invoice to ensure that the buyer gets the tax deductible invoice.

Notice:

To ensure the accuracy of the number, Amazon will begin verifying that the registration number you enter matches the registration number officially published by the Japanese National Tax Agency on this website from the end of 2022 . If not, the registration number will be set to "invalid" status, so please enter the correct Japanese consumption tax registration number and keep an eye on the page for updated status.

4

JCT filing and payment

Focus! ! Just providing Amazon with a JCT registration number does not mean that all compliance processes are completed, and you also need to make regular declarations and payments to the Japanese National Tax Agency.