Amazon Japan VAT is here! Upload your tax number before October next year

Yesterday, Amazon Japan released an important notice, stating that from October 1 next year, the Japan Consumption Tax Compliance Invoice Retention System (JCT) issued by the Japanese government will officially take effect. Sellers selling on Amazon Japan must register their tax numbers in accordance with regulations and upload them to the backend.

The JCT policy requires sellers on e-commerce platforms to provide corresponding JCT tax numbers. Consumers can use the seller's JCT tax number to apply for tax deductions after purchasing products. Amazon's current requirement for sellers is that they must upload the tax number before October 1 next year. As for invoices, Amazon can automatically generate them for consumers to download, similar to Europe's VCS service.

Unlike VAT, the tax levied by JCT is consumption tax. When we talked about the Japanese site before, we mentioned that the Japanese site currently defaults to 10% consumption tax. That is to say, when sellers set the price, the Japanese site will directly determine it as a tax-inclusive price, and will automatically deduct the corresponding tax when calculating the profit after the transaction. Therefore, sellers do not need to transmit the consumption tax number to sell goods, and the 10% deduction is applied anyway.

The Japanese tax reform this time is actually to enforce the retention of invoices, so that buyers who need tax deductions can use invoices to deduct their own taxes. Generally, this deduction project is used by enterprises and sole proprietorship customers, and has little to do with ordinary consumers. Therefore, the significance of the Japanese JCT tax reform this time is more about tax compliance similar to VAT.

Like VAT, this tax reform in Japan also defines the scope of sellers who meet the requirements and need to upload JCT tax numbers.

The JCT tax number is a tax number issued by the Japanese tax authorities to the applicant company. When any of the following conditions are met, the seller needs to become a JCT tax entity and is obliged to register the tax number and pay taxes in accordance with regulations:

●The seller's taxable sales during the base period exceeded 10 million yen.

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

●The seller’s registered capital is 10 million yen or more.

There is a clearer picture that you can look at to understand which of the above situations require JCT registration.

The official explanation of the base period is that the base period is divided according to different types of sellers. If the seller is a sole proprietorship, the base year is from January to December of the natural year. If it is an ordinary company, the base year depends on the country of registration of the company. For Japanese companies, the base year is usually from April to March of the following year. The base year for Chinese companies is still from January to December.

To summarize, if you are a seller with annual sales of more than 10 million yen, then you are definitely within the scope of registering a JCT tax number. If you did not have it last year, but have more than 10 million in the first half of this year, you are still within the scope. Sellers who have never had 10 million in annual sales are no longer within the scope of JCT. Note that this does not mean that these sellers do not need to pay consumption tax, but that they do not need to register a JCT tax number. Consumption tax will still be withheld according to the old rules. Moreover, these sellers who do not need to register a JCT tax number cannot implement the tax reform function (automatically providing invoices for corporate buyers to deduct taxes).