Does Amazon Japan require VAT? What are the consequences of not registering?

More and more merchants are opening stores on the Amazon platform. For Amazon merchants, they must solve many problems after opening a store. So does Amazon Japan require VAT? Let's learn about it in the following content.

Does Amazon Japan require VAT?

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According to the "Compliance Invoice Retention System", starting from October 1, 2023, sellers on the Japanese site will need to have a Japanese Consumption Tax Registration Number ("JCT Registration Number") on their compliance invoices so that buyers can apply for JCT input tax deductions and view the amount of tax they are exempted from.

After the reform takes effect, invoices issued by Amazon will need to show the seller's JCT registration number so that buyers can make tax deductions.

The JCT registration number is a number issued by the Japanese tax agency to sellers with JCT tax entities (sellers who pay JCT). If any of the following conditions are met, the seller will need to become a JCT tax entity and is obliged to pay taxes as required:

1. The seller’s taxable sales during the base period exceed 10 million yen.

2. The seller’s taxable sales during the 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.

3. If the appeal conditions are not met, but the seller has registered a Japanese company and the company's registered capital is 10 million yen or more (including 10 million), JCT registration is required regardless of the sales volume.

It is important to note that the basis period is the two basis years preceding the taxable period. The month in which the basis year begins depends on the type of business the seller is in:

Sole Proprietorship: The base year is from January to December.

Company: The starting month of the base year depends on the seller's company. For Japanese companies, the base year is usually April to March of the following year.

For Chinese companies, the base year is usually January to December.

What are the consequences of not registering on Amazon Japan?

If sellers on the Japanese site do not register for JCT and submit it to Amazon, then after the reform on October 1, 2023, sellers will not be able to issue compliant invoices to buyers. In this way, buyers will not be able to apply for tax deductions and will not be able to purchase the seller's products, which will have a direct impact such as a decline in sales.

In short, Amazon Japan requires VAT. In the Amazon platform, these are the latest relevant regulations. Therefore, sellers who meet the registration requirements must obtain a JCT registration number before October 1, 2023.

Recommended reading:

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