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This article applies to selling in: Japan

Qualified Invoice Retention System (starting on Oct 1, 2023) – FAQ

The information contained here originates from various sources of government agencies such as the National Tax Agency (at the time of reference). We use the word “seller” and introduce specific examples on Amazon to make it easier for sellers to understand, but it may not apply to all sellers and all cases. Providing these contents or examples cannot be considered as Amazon’s provision of tax advice. Check with your tax advisor tax accountant for more details.

What is Qualified Invoice Retention System?

The Qualified Invoice Retention System enables business customers to obtain a Japanese Consumption Tax (“JCT”) input credit if they present a qualified invoice. Once the reform comes into effect, only sellers who hold a JCT Number will be eligible to issue these qualified invoices to them. Read our JCT handout (English or Chinese) or click this official help page (Japanese National Tax Agency website, in Japanese) to learn about this System.

Is it mandatory to input the JCT Number in order to sell on Amazon?

If you are a tax obligated business and going to be registered invoice issuer, it is mandatory to provide us the JCT Number. On the other hand, if you do not have obligation to pay consumption tax in Japan, it is optional to acquire the JCT number and provide us the number. However, invoices without the number lead to an increased tax liability for customers who need to declare input tax credit, so they may elect sellers who can issue qualified invoices. Such customers are:

  • Amazon Business customers: as a seller on Amazon.co.jp, your products are also visible to and can be purchased by customers using Amazon Business. Learn more about your sales on Amazon Business here.
  • Some customers on Amazon.co.jp: customers who purchase products for company use may ask for the qualified invoice for a business purpose.
Decide whether you are going to obtain the JCT number or not based on the impact on your business.

What is the definition of a tax obligated seller, and a non-tax obligated seller?

You are a tax obligated seller if:

  • your taxable sales inside Japan during base period are 10 million JPY or more
  • your taxable sales inside Japan during base period is 10 million JPY or less, but the taxable sales for the specified period (first half of the previous fiscal year) is 10 million JPY or more
  • your registered capital is 10 million JPY or more

* As a general rule, the base period refers to the year beginning two years before the tax year concerned. The base year varies depending on the type of your business:

  • You are a sole proprietorship: your base year runs from January to December.
  • You are a corporation: your corporation decides the starting month of your base year.

There are other special cases where the sellers will be obligated even though they do not apply to the conditions above. Refer to the National Tax Agency Official website (Japanese) or check with your external tax advisor whether you have obligation or not.

On the other hand, if you do not apply to all of the cases mentioned above, you will be regarded as a JCT non-obligated seller in general. However, make sure to check with your external tax advisor.

How do I check my taxable sales amounts on Amazon.co.jp?

Check your taxable sales amounts from: Seller Central > Report > Payments >Statement View. Note that both B2C and B2B orders are taxable sales. Sales in Japan outside Amazon.co.jp are also subject to taxable sales, so check that as well.

Can I get the JCT number even though I am a non-tax obligated seller?

Yes, even though you are a non-tax obligated seller, if you choose to change your status to tax obligated, you can get the JCT number. To learn about the detailed process for requesting your JCT Number, go to National Tax Agency guidance (in Japanese) or consult your or our external tax advisor (support available in Chinese or English ).

As a new seller, should I register for the JCT number?

If you are a new seller and do not have any taxable sales outside of Amazon in Japan, you may be a JCT exempt business. A newly established business that falls under a JCT exempt may select to register as a JCT taxpayer but is not required under the JCT law. Note that only a JCT registered business with a valid JCT number are able to issue qualified invoices to business customers required for business customers to receive the tax credit claim. If you need to issue qualified invoices to a business customer, we suggest that you obtain a JCT number promptly. Check with your tax agent or professional, such as a tax accountant for further advice on JCT number registration.

As a seller established outside Japan, do I need to get the JCT number?

Regardless of where you are established, if you are a JCT obligated seller, and want to be a registered invoice issuer, you need to get the JCT number. The obligation status will be determined not by where you are established, but by the annual taxable sales in Japan. If you do not have a physical presence in Japan, you will need to find a tax advisor or consultant that will register your entity on your behalf. Once registered as a JCT tax payer, you will be able to apply for a JCT number. We recommend you to get guidance from your or our external tax advisor (support available in Chinese or English).

What happens if I do not have a JCT Number when the JCT reform policy become effective? Can I still sell on Amazon without the JCT Number? Any other impact?

Sellers without JCT number can continue to sell on Amazon even after the JCT Reform comes into effect. However, if you are a business/sole proprietor, you will need qualified invoices with JCT number in order to claim input JCT credit. By submitting your JCT number to Amazon, you may increase sales from your business customers.

Should the JCT number be the number acquired by the seller registered in the Seller Central account?

Yes, the invoice that will be issued by Amazon on behalf of the seller will be using the JCT number input by the seller and the seller’s name registered in this page. If the seller who acquired the JCT number and the seller’s name in the account does not match, the number input in the Seller Central will be invalid, so make sure to input the correct number acquired by the seller registered in the Seller Central account.

Can we input the JCT number even after October 1, 2023?

Yes, you can. However, if you do not provide us the JCT number, we will not be able to issue qualified invoices for your products when the new system will come into effect. If you are going to be a registered invoice issuer, we recommend you to input the JCT number before October 1, 2023.

Do I need to pay tax on past sales if I register as a tax payer in Japan to get the JCT number?

If you already have a tax obligation before JCT registration, you might need to pay tax on past sales. For instance, if your taxable sales during the base period exceed 10 million JPY, or your taxable sales during base period do not exceed 10 million JPY but exceed 10 million JPY during the first half of the previous base year, you will be a taxable business. Check with your tax advisor about the tax on the past sales.

Can I also claim JCT input? As a seller, what items are deductible?

You must keep qualified invoices when purchasing in Japan to claim input JCT deduction. For example, you can deduct the JCT amount you paid for Amazon FBA service fee. In this case, you must keep the invoice that Amazon provides you in Seller Central. Also, if you are an overseas seller, you will be able to deduct the import consumption tax paid through the custom process. You must pay the import consumption tax with your corporate ID (法人番号), and keep the payment record (import authorization notice) you will receive from the custom. Consult with your tax agent or professional such as a tax accountant to help you claim JCT refund if applicable.

What is the relationship between JCT and tax paying under Japan Custom?

If you are an overseas seller, once your inbound goods go through Japan custom, you must pay import JCT and custom duties (tax rates vary depending on the product category). Refer to this help page for more details on custom duties. Sellers must pay import JCT (“Input JCT”) at custom and collect sales JCT (“Output JCT”) from customers. When sellers pay tax to the tax office, JCT filing amount equals to “Output JCT-Input JCT”. We recommend that you keep import JCT invoice to claim for tax deduction. Consult with your tax advisers for more details.

Can I request my carriers to use my corporate ID (法人番号) to pay import JCT so I can keep qualified invoice to claim JCT deduction?

Yes, when JCT reform policy becomes effective, we assume more and more carriers will accept to use sellers’ own corporate ID (法人番号) to pay import JCT. Once you have your business number, talk to the shipping carrier you are using.

Will Amazon deduct the JCT directly from sales amount?

No. Amazon just provides the Store and sellers are responsible for collecting JCT from customers and filing JCT returns to the Japan tax authorities. The net amount of output and input JCT will be paid (or refunded). Consult your tax advisor for more details.

If I am a business exempted from JCT, how the listing price will be displayed on Amazon Business product detail page?

Regardless of your JCT obligation status, the appropriate JCT amount must be set for products listed on Amazon depending on the product category. Based on your sales tax rate settings, Amazon Business product detail page will display both tax-inclusive and tax- exclusive prices.

Other questions regarding to the Qualified Invoice Retention System

For more information regarding the Qualified Invoice Retention System, go to the links below:

Related help page

Qualified Invoice Retention System (Starting from Oct 1, 2023) overview

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