Customs Audit Support

Post-Import Clearance Audit (Customs Audit) is a tax-related audit conducted by Customs Officers, which aims to confirm after the fact whether the declarations made to customs over the past several years have been proper.

After a notice of audit has been given, customs officials visit the importing company to conduct an on-site audit. The customs officers will check the customs books and documents to see if there are any errors in the declaration. If there is a shortfall in the amount of tax due, you will be required to file an amended tax return. If you file an amended tax return after an audit, you will be required to pay a penalty (such as an additional tax on under-declaration or delinquent tax).

When an opportunity arises for a Customs Audit (or you wish to prepare for a future audit), please contact us so that we can assist you in responding appropriately. We will interview you beforehand, examine your books and customs clearance documents, etc., and provide you with advice on identifying issues to be addressed in the Customs Audit, considering countermeasures, and dealing with the inspector.

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Common Issues Identified in Customs Audits

There tends to be a lot of remarks about Customs Valuation (Import Declaration Value)

Cases

Customs Valuation（Import Declaration Value）	Imported by under valued Invoice (inappropriately low valued Invoice) Missing of inclusion of payments other than the invoice price - Failure to add price adjustments (e.g. Transfer Price Adjustment, etc.) - Failure to add Development Costs (R&D) paid by the importer - Failure to declare the cost of materials provided without charge - Failure to declare certain royalties
HS Code	Incorrect HS code classification (Incorrect applicable tax rate)
Free Trade Agreement	Failure to meet certain FTA rules of origin, then denial of FTA preferential tariff rates

Reference: The result of Customs Audit, Ministry of Finance - Japan

Documents required for Customs Audit

Customs-related books and records (including those described in invoice and import/export permits)
Customs clearance related documents (Import): Invoices, Itemized statement on freight charges, itemized statement on insurance premiums, itemized statement on packaging
Price list for each imported goods
Manufacturer/vendor's invoices, documents pertaining to trade with the shipper that had been produced by either the manufacturer or the vendor
General ledger, Auxiliary ledger, Auxiliary books, transfer slips, other accounting related documents, Documents regarding Corporate Tax Return in Japan, Documents regarding Consumption Tax Return in Japan
Order related documents, Contracts, Internal documents of approval on the shipment, other trade related documents
Electronic records pertaining to transaction information such as e-mail
Company profile, company organization chart, list of overseas transactions (company name, products handled, etc.)