Recently, many sellers have received the Japan JCT consumption tax notification officially pushed by Amazon. From October 1, 2023, the Japanese station seller's compliance invoice needs to have the Japan consumption tax registration number ("JCT registration number").
01What is Japan Consumption Tax?
JCT stands for Japanese Consumption Tax, which is the abbreviation of Japanese Consumption Tax. Japan Consumption Tax (JCT) is a tax that consumers pay when purchasing goods. The JCT amount is deducted from their tax, that is, the JCT can be deducted from the input, reducing their tax amount.
02What impact will this reform have on sellers?
At present, even if the seller's JCT registration number is not displayed on the invoice, the seller can enjoy the JCT input deduction, but from October 1, 2023, after the reform takes effect, the seller's JCT registration number needs to be displayed on the invoice issued by Amazon, so that your customers In other words, if your customer needs tax deduction, you must have a JCT registration number, so that the invoice you issue is a "compliant invoice".
03Which sellers need to register for JCT tax number?
If you meet any of the following conditions, you need to register a JCT tax number to become a taxpayer, and you are obliged to pay tax as required:
1. The seller's taxable sales during the base period exceeds 10 million yen.
2. Or 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. If your company has a registered capital of more than 10 million yen, it needs to be registered regardless of the sales volume.
(Source: Japan National Tax Agency)
The base period is the two base years preceding the tax period. The starting month of the base year depends on your company type:
①Sole proprietorship: Your base year is from January to December.
②Company: The starting month of your base year depends on your company.
For Japanese companies, your base year is usually April to March of the following year.
For Chinese companies, your base year is usually January to December.
04What is the impact of not registering a JCT registration number ?
The JCT registration number that will come into effect in Japan will have the most direct impact on sellers:
Without the JCT registration number, the seller cannot issue a compliant invoice to the buyer, and the buyer cannot apply for tax deduction, then the buyer will no longer buy your products, which will directly lead to negative effects such as a decline in sales.
It is recommended that sellers register the JCT registration number before October 1, 2023. All qualified cross-border sellers must pay attention!
05How to register and declare?
Japan's consumption tax implements a local tax agency system, and sellers can contact a third-party company to handle it. The following information is required when registering with JCT:
1) Scanned copy of the front and back of the legal person ID card (clear, complete without cropping, no watermark, no occlusion)
2) Scanned copy of business license (clear, complete without cropping, no watermark, no occlusion)
3) Company name, company address, product sales platform name
4) Store link (you must be able to see the store background information when the store link is opened) or screenshot
5) Application data form (related to the customer information, which will be synchronized in the future)
6) Sign the letter of authorization
7) Other relevant documents that need to be provided during the application process, etc.
Note: If there is a subsidiary in Japan, the detailed address of the subsidiary, legal person information, shareholder information, etc.
Time limit for registration: 2-3 months, mainly based on the current level of case representation by the tax bureau
Reporting cycle: usually annual report
Filing deadline: within 2 months from the day following the end of the taxable period
If the seller pays tax late, a penalty of 2.5% to 8.8% will be imposed as a "late payment penalty", depending on the number of days from the day after the statutory payment deadline to the payment date.
(Source: Japan Internal Revenue Service)
Japanese consumption tax is the sum of consumption tax + local consumption tax. Generally, it is 10% as standard and 8% after reducing the tax rate. However, the low 8% tax rate is only applicable to food, beverages, newspapers, etc.
The JCT Japanese consumption tax is equivalent to the VAT value-added tax. The Japanese tax bureau began to conduct tax investigations on cross-border sellers as early as 2020. In addition, Amazon recently added new tools for product compliance operations. It can be seen that cross-border compliance has been fully rolled out, and now it is necessary for sellers to implement the real implementation to minimize the danger!