How do I know if I am obligated to register？

The Japanese Consumption Tax, or JCT for short, is a turnover tax that consumers pay when they buy goods.How do I know if I am obligated to register

Specific comparison of sales in the base period and special period:

Base period	Special Period(first 6 months)	Tax payment period
Taxable sales were less than 10 million yen	Meet the following two requirements: 1) Taxable sales exceed 10 million yen 2) The salary of employees in Japan exceeds 10 million yen	The seller has a JCT tax liability
	Taxable sales exceed 10 million yen, but the salary of employees in Japan does not exceed 10 million yen	The seller has no JCT tax liability
Taxable sales exceed 10 million yen	--------	The seller has a JCT tax liability
A new company less than 2 years old with a registered capital of more than 10 million yen (no base period)		The seller has a JCT tax liability from the first Japanese sale

 

Base period: The year before the tax deadline shall be the base period.

The starting month of the base year depends on your company's accounting period:

1.Individual (industrial and commercial) : Base year from January to December;

2.For Chinese companies: the base year is from January to December;

3.For Japanese companies: the base year is April to March;

4.Hong Kong companies: The base year is April to March, but some are July to June.

 

Special period: The first 6 months of the tax period of the previous year is a special period. When the base period does not exceed 10 million yen, but the sales of the first 6 months of the second year and the daily salary of the employees exceed 10 million yen.

 

Registered capital: A new company with a registered capital of more than 10 million yen and less than 2 years of establishment starts sales in Japan. Since there is no base period, it has JCT tax liability from the first sales in Japan.

 

When do I start to declare after registration?

1) If the taxable annual sales in the base period exceed the threshold of 10 million yen, it is obliged to become a JCT tax entity 2 years later, or if it does not meet the tax obligations, it will voluntarily become a JCT tax entity and declare tax from the beginning of the tax period;

 

For example: sales of more than 10 million yen in Japan in 2021, the tax period is from January 1, 2023 to December 31, 2023, and the sales for January-December 2023 are reported by February 28, 2024.

 

2) For enterprises that voluntarily become tax-free entities, that is, the sales volume in Japan in 2021 and before 2021 is no more than 10 million yen, and the sellers that sell in Japan after 2021 (the registered capital is less than 10 million yen or the registered date is two years ago), if the JCT is registered in 2023, The tax period begins on October 1, 2023, and sales from October 1, 2023 to December 31, 2023 are filed by February 28, 2024.

For example: annual sales in 2021 and before are less than 10 million yen, even under the February 2023 JCT, the tax period begins on October 1, 2023.

 

In principle, the tax collection period of Japan's consumption tax shall be declared once a year, and the deadline for tax declaration shall be within two months from the deadline date of tax payment. However, from the next year, the interim declaration and tax payment system will be implemented according to the sales tax of the previous tax period:

 

Fixed sales tax for the previous tax period	Below 480,000 yen	Above 480,000 yen to below 4 million yen	Above 4 million yen to below 48 million yen	More than 48,000 yen
Interim declaration frequency	In principle, no Interim declaration, but any interim declaration system may be applied	yearly	Three times a year	11 times a year
Deadline for filing provisional returns and payments		Within two months from the end date of the tax period covered by each provisional filing		(See Figure 1)
Intermediate tax payable		The last tax period 6/12 of the fixed sales tax	The last tax period 3/12 of the fixed sales tax	The last tax period 1/12 of the fixed sales tax
Total number of declarations in a year	A tax return	One tax return, one provisional return	1 tax return 3 temporary returns	11 tax returns

  

 

Figure 1:The provisional filing and payment deadlines for the 11 times per year are as follows:

Individual enterprise	company
January to March -- end of May	One month after the tax period begins -- two months from the date the tax period begins
April to November -- two months after the end of the interim filing period	10 months after one month -- two months after the end of the interim filing period

 

How to choose the most cost-effective declaration method?

Japan's consumption tax declaration is divided into simple declaration and principle declaration two kinds.

 

The simple tax system is a tax system in which the National Tax Agency of Japan takes into account the tax burden of small and medium-sized enterprises and deducts input consumption tax based on the output tax multiplied by the recognized deduction rate through the choice of enterprises.

 

By default, the tax declaration method chosen by the Japanese Tax Bureau for sellers is declaration in principle. Sellers who meet the requirement of simple declaration need to apply for simple declaration to the tax bureau through the tax representative in advance.

 

Suggestions:

 

E-commerce enterprises that meet the conditions and choose simple declaration should try their best to choose simple declaration.

 

Because of the choice of simple declaration, the tax that e-commerce enterprises need to pay is only 20% of the standard declaration tax, which is less tax. At the same time, they need to consider fewer affairs, so they can have more energy to focus on operation:

 

1) Just use the previous customs clearance method, and do not need to consider the registration of ACP and other independent customs clearance matters;

 

2) There is no need to advance the payment of high import JCT for compliance reverse operation clearance (the declared value of compliance reverse operation clearance is usually higher than the declared value of inclusive tax, and the tax will generally be higher);

 

• There is no need to save and prepare incoming JCT bills. The deduction shall be made in accordance with the determined deduction coefficient (80% for retail industry), and all bills shall not be deducted.

 

simple tax application

What are the requirements for simple tax application?

An enterprise applying for a brief declaration must simultaneously meet the following conditions:

 

1. Taxable sales in the base period or the previous tax year are less than 50 million yen;
2. The Notice of Excise Tax Simple Tax Option should be submitted to the Commissioner of Taxation in charge of the tax place the day before the tax period.

 

In addition, new sellers or sellers without statutory registration obligations who submit this notice before the start of the tax period may apply the simple tax system from that tax period.

 

Companies that receive the simple return must apply for the standard return within two years unless they cease operations or their sales exceed 50 million yen, and they must voluntarily apply for the standard return at least one day in advance from the beginning of the next tax period.

 

What is the deduction rate of simple tax system?

The use of simple tax system, different from the standard declaration by the bill of input deduction of the traditional way of accounting, simple declaration allows enterprises to declare according to the consumption tax multiplied by a recognized deduction rate as input deduction.

 

According to the tax bureau, the deduction rates of different business categories are different. The deduction rates of business classification and identification are as follows: 

Business class	The rate of deduction recognized
Type I business (wholesale)	90%
Category II operations (retail, agriculture, forestry and fisheries (food and beverage transfer operations only)	80%
Category III operations (agriculture, forestry and fisheries (excluding those related to food and beverage transfers), mining, construction, manufacturing, electricity, gas, heating and water)	70%
Business in Category IV (Business in Category I, Business in Category II, Business in Category III, Business in Category V and business other than Business in Category VI)	60%
Category V (transport and telecommunications, finance and insurance, services (excluding restaurants)	50%
Category 6 Business (Real Estate)	40%

Amazon and other e-commerce enterprises belong to the retail business, and the deduction rate is determined to be 80%.

 

After registering JCT, do I have to change to use my own company for customs clearance?

After registration of JCT, you can continue to use the original customs clearance mode, that is, we now commonly used double clearance tax mode.

 

Follow the original mode of double clearance tax:

For sellers who declare simply, there is no impact;

For sellers with standard declaration, the input consumption tax paid in import cannot be deducted at the time of JCT declaration.

 

Therefore, sellers who use standard declaration will consider registering ACP more and clearing customs with their own legal entity number, so that they can issue input invoices that can be deducted in compliance.

 

Do I need to pay the tax voluntarily?

For our overseas enterprises, if your sales in Japan exceed the tax-free threshold (10 million yen), you need to register, declare and pay consumption tax as a tax entity in the fiscal year after two years.

 

At present, for the sellers' historical tax issues, for enterprises with long-term compliance plans, the sellers can choose to proactively disclose the declaration of historical sales, choose to make up the tax during the declaration window or actively cooperate with the tax bureau to make up the tax when required.

 

However, the current situation, in view of overseas enterprises in import clearance link compliance clearance method is to use compliance reverse operation clearance, and the Japanese tax Bureau is still in the promotion period of JCT registration, temporarily will not take the initiative to check taxes, there may be some favorable policies for overseas enterprises will be introduced later on the tax, we wait for the news.

 

In addition, it is worth mentioning that according to the current policy, the general tax investigation in Japan only lasts for 3 years (some cases considered by the tax bureau as having major suspicions may be investigated for 5 years). Therefore, if the tax report is filed continuously for more than 3 years, it may not be pursued in the early stage.

 

What is the difference between JCT tax number and corporate designation?

Generally, when Chinese cross-border sellers apply for Japan JCT registration number, they will first receive the corporate designation issued by the Japan National Tax Agency, which means that their enterprises have completed the registration with the Japan National Tax Agency. After about two weeks, they will receive the JCT registration number, which will represent them to complete the registration with the Japan Tax Agency.

 

The corporate designation is the exclusive registration code of the enterprise, which is generally composed of 13 digits.

 

The JCT number is the Japan Excise tax invoice number, which usually consists of the letter T+13 digits.