As competition in European and North American markets intensifies, many e-commerce sellers are turning their attention to Japan's promising marketplace. However, new regulatory changes are reshaping the landscape for cross-border sellers on Amazon Japan.
The platform recently issued a crucial notice: starting October 1, 2023, sellers must register for a Japanese Consumption Tax (JCT) number. This development has sparked significant discussion within the e-commerce community, raising questions about compliance requirements and operational impacts.
Understanding JCT: Japan's Value-Added Tax System
JCT (Japanese Consumption Tax) functions similarly to value-added tax (VAT) systems in other countries. It's applied when consumers purchase goods, with business buyers able to deduct paid JCT from their tax obligations.
Possessing a JCT registration number makes sellers more attractive to business purchasers who require tax deductions. Conversely, sellers without proper registration risk losing orders from buyers who cannot claim these tax benefits.
Registration Requirements: Who Must Comply?
Japanese tax authorities mandate JCT registration for sellers meeting any of these criteria:
- Taxable sales exceeding ¥10 million during the base period (typically the previous two fiscal years)
- Sales surpassing ¥10 million in the first half of the previous base year, even if annual totals fall below the threshold
- Companies with registered capital exceeding ¥10 million
Certain exceptions may apply, and professional tax consultation is recommended for complex cases.
Exemption Conditions
Sellers may be exempt from JCT obligations if they meet either of these conditions:
- Annual sales below ¥10 million
- Registered capital under ¥10 million
Registration Process and Documentation
The Japanese National Tax Agency began accepting JCT applications in October 2021. Sellers should prepare these materials:
- Business license (unified certificate scan)
- Company representative's passport copy
- Power of attorney with legal representative's signature
- Completed application form
- Annual sales records
- Amazon store account information screenshots
The registration process typically takes 6-8 weeks, with annual filing requirements due within two months after the taxable period ends.
Consequences of Non-Compliance
While Amazon Japan currently doesn't suspend unregistered sellers' accounts (unlike European VAT enforcement), non-registration carries business risks:
- Potential loss of orders from tax-deductible buyers
- Disadvantage in B2B transactions
- Future regulatory uncertainty as Japanese authorities may strengthen enforcement
Cost Considerations
JCT registration doesn't inherently increase sellers' costs. For qualified business buyers, registered sellers become more attractive due to tax deduction benefits. While professional registration services involve fees, these are typically offset by maintaining access to important market segments.
As Japan's e-commerce regulations evolve, proactive JCT compliance positions sellers for sustainable growth in this valuable market. The October deadline approaches, and early preparation helps avoid operational disruptions while maintaining competitive advantage.