Customs Duty System in Japan

At the time of importation, the following taxes are generally imposed:

Customs Duty

Customs duty is calculated based on the tariff rate applied to the import declaration value. Tariff rates differ by HS code. Tariff rates can be checked on the Japan Customs website: Japan Customs Duty Tariff Rates. The importer is responsible for paying the tariff on the declared value.

Customs Duty = Customs Import Value x Duty Rate

The basic concept of Customs Valuation is in line with WTO standards. The Customs value of imported goods shall be the transaction value, that is, the price actually paid or payable by the buyer, plus additional costs, for instance, freight (to the imported port), insurance, and some sort of royalty paid by the importer to the exporter, etc.

On the one hand, the duty rate is determined by the HS code. A major way of reducing the duty rate is to utilize FTA. In recent years, thanks to the Japanese Government’s strategy to expand free trade, the number of FTAs involving Japan has steadily increased. This creates significant cost-saving opportunities.

Japan Consumption Tax (JCT) 

JCT is set at a fixed rate of 10%. JCT is calculated as 10% of the total import declaration value plus customs duty. For more detailed information about JCT, please visit our webpage: Consumption Tax.

Regarding JCT, if your company is a JCT registered entity, you have the option to deduct the input-JCT (import JCT) from the output-JCT (the amount collected from customers, equivalent to 10% of the sales price) during periodic JCT tax filing. Therefore, in this case, the import JCT is not considered as a cost of goods but rather a matter of cash flow management.

*Note: Deduction of import JCT for JCT Tax filing is only available to the Importer of Record (IOR). Thus, becoming an IOR through an ACP is crucial.

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