Tax Reform in 2021 in JTC Certificate
Content and Reason for Revision
The 2021 Tax Reform to the Consumption Tax Law tightened the document preservation requirements for export duty exemption for goods worth 200,000 yen or less. This revision’s background includes measures to prevent fraud and more reliably prove the fact of exports.
Revision details
The required documents for the certificate for export tax exemption differ depending on whether the value of the cargo is more than JPY200,000 or not.
Small cargo equal to or under 200,000 yen
- For EMS or parcel post:
- A document issued by Japan Post Co. to certify acceptance of mail.
- A copy of the shipping slip or other documents (the following information must be included):
- The name and address of the business that exported the product.
- Quantity and value by name and description.
- The name and address of the payee.
- Date of acceptance by Japan Post Co.
- For regular mail:
- A document issued by Japan Post Corporation evidencing acceptance of the mail (with the item’s name and the quantity and value of each item appended).
Cargoes exceeding 200,000 yen
- Customs procedures are required, and an “Export License” must be preserved. Customs clearance procedures are not performed automatically when using a post office and must be entrusted separately at the post office counter.
Thus, since the required proof documents differ depending on the value of the cargo, it is essential to prepare the appropriate documents and proceed with the procedures to obtain export tax exemption.
What are the price criteria?
The price standard is on a FOB basis.
The FOB price is considered the standard because it is required to be stated on the export license. Customs clearance fees are included, but overseas transportation fees are not.
Therefore, it is considered to be the base price of the unit.
Problems before the revision
Before the revision, the requirements are either of the following.
- To contain exporting data on the “ledger book.”
- To preserve certificates to prove the recipient’s received goods
Thus, there were cases of fraudulent applications for export tax exemption due to false ledger book entries. It is a relatively easy and arbitrary process to record in the books and document from the recipient.
For example, in the case of ledgers, it is easy to state that the goods are exports because the record are made by the person.
It is also relatively easy to receive the certificates from the recipient.
Those of us who have experienced import/export firsthand know this. They will often make a receipt for you if you tell them you want one, even if there is no good reason. Also, international correspondence is usually sent in PDF format. It is also possible that the document is fraudulent in that it is written down and used for secondary purposes.
Revised Requirements
In the case of parcel post and EMS, in addition to the “Acceptance Certificate issued by Japan Post Corporation,” the “Client’s Copy,” “International Parcel Receipt,” or “EMS Receipt” must be preserved.
In the case of regular mail, the Acceptance Certificate issued by Japan Post (with the item name, etc. appended) must also be preserved.
Undervalue Issues
Undervalue is the fraudulent practice of declaring a lower price than the actual transaction price at the time of importation to reduce customs duties and consumption taxes. This method is sometimes used to reduce the importer’s tax burden, but it is against the law and is subject to heavy penalties if discovered.
Although not directly related to the Consumption Tax Law, it is possible to speculate that the amendment may be made in connection with the Customs Law and other laws.
Why is it limited to EMS? | JCT Refund
Credibility and publicity
EMS by Japan Post is operated by a public organization and is recognized as a certificate of export tax exemption due to its reliability and transparency. In contrast, private companies operate according to their own standards, making it difficult to evaluate their reliability uniformly.
Of course, even other companies are not infested with fraud; private shipping companies such as FedEx and DHL also have strict customs clearance procedures. If a shipment fails to clear customs, it stops and cannot be delivered. Therefore, the contents of customs clearance documents are checked in detail.
All vendors usually require their customers to submit accurate invoices and customs clearance documents and have systems to prevent fraud.
Measures to prevent fraud
EMS is expected to curb fraud and provide reliable proof of the fact of export. Undervaluing is a violation of the law by any shipping company and is subject to severe penalties if discovered. The ease of fraud does not vary among shipping companies, and all companies must follow proper customs procedures and comply with the law.
Be aware of the requirements for export duty exemption ｜ EMS JCT Refund
The requirements for tax exemption are strict.
If it does not follow the established practice, the purchase tax credit will not be allowed. The investigation will also be rigorously checked. Please be careful.
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EMS JCT Refund