Foreign companies that import goods into Japan and sell them through Amazon or similar platforms are generally required to appoint an Attorney for Customs Procedures (ACP).

Some foreign companies do not seem to appoint an ACP and instead declare a logistics provider or another third party as the importer. However, the foreign company is unable to claim an input tax credit or refund for the import consumption tax it has borne, potentially resulting in a significant tax cost.

Key Takeaways

• A foreign company without an office in Japan must appoint and register an ACP if it wishes to act as the importer of record.
• The meaning of the “person making an import declaration” was clarified by amendments to Japan’s Basic Customs Directive in October 2023.
• If a foreign company imports goods under a third party’s name without appointing an ACP, it cannot claim an input tax credit or refund for the import consumption tax.

What Is an ACP?

ACP stands for Attorney for Customs Procedures. In Japanese, it is known as a Zeikan Jimu Kanrinin.

When a foreign company that has neither an address nor a head office in Japan carries out customs procedures in Japan, including filing import declarations, it must appoint an individual or corporation with an address or office in Japan as its ACP and notify Japan Customs in advance.

The ACP acts as the point of contact between the foreign company and Japan Customs and mainly handles the following matters on behalf of the foreign company:

• Receiving, sending, and submitting documents to Japan Customs
• Receiving notices from Japan Customs
• Completing procedures for the payment of customs duties and import consumption tax
• Receiving refunds
• Responding when Japan Customs makes inquiries

The Meaning of “Importer” Was Clarified in October 2023

On October 1, 2023, Japan revised its import declaration requirements and the ACP system.

The revision was introduced against the background of rapidly expanding cross-border e-commerce and concerns about cases in which parties that were not the actual importers were named as importers or goods were declared at improperly low values.

The revision clarified the meaning of the “person intending to import goods”—that is, the importer—under the Basic Customs Directive. The importer is the person authorized, at the time of the import declaration, to dispose of the goods after they have been released into Japan. The importer is therefore the person who must be identified as the declarant in the import declaration.

Accordingly, when a foreign company ships its own goods to Japan, stores them in an Amazon warehouse or another facility in Japan, and sells them to customers for its own account, the foreign company itself is the importer.

A foreign company without an address or head office in Japan must therefore appoint an ACP and notify Japan Customs of that appointment.

Reference: Japan Customs, “Review of Import Declaration Items and the Attorney for Customs Procedures System”

Relatively Few Foreign Companies Appoint an ACP in Practice

Yamaguchi Consulting has handled Japanese consumption tax compliance for approximately 600 foreign companies annually.

Based on our experience, only a minority of the foreign companies importing goods into Japan appear to have appointed an ACP.

Companies that have not appointed an ACP seem to file import declarations using a logistics provider, import agency, business partner, or another third party as the importer.

However, importing goods under a third party’s name creates a problem concerning the input tax credit for import consumption tax, as explained below.

How the Input Tax Credit for Import Consumption Tax Works

When a foreign company imports goods into Japan and sells them to Japanese customers, its consumption tax liability is calculated as follows.

1. Importing the Goods

When the foreign company obtains import permission and removes the goods from a bonded area, customs duties and import consumption tax must be paid.

For example, if the taxable base for import consumption tax is JPY 240,000, the import consumption tax on goods subject to the standard 10% rate would be approximately as follows:

2. Selling the Goods to a Japanese Customer

Assume that the imported goods are sold to a customer in Japan for JPY 330,000, including consumption tax.

3. Paying Fees to Amazon or Another Platform

The foreign company pays sales commissions, fulfillment charges, storage fees, logistics expenses, and other fees to Amazon or another platform operator.

For example, if the tax-inclusive fees amount to JPY 55,000, they will generally include JPY 5,000 of Japanese consumption tax.

Certain services, such as online advertising, may constitute the provision of digital services for Japanese consumption tax purposes and may be treated differently from ordinary domestic services.

 

4. Filing a Japanese Consumption Tax Return

If the foreign company imports the goods under its own name and retains the required supporting documents, its consumption tax liability will be calculated as follows:

The deduction of import consumption tax and consumption tax included in business expenses from the consumption tax charged on sales is known as an “input tax credit.”

If the total input tax credit exceeds the consumption tax charged on sales, the foreign company may claim a refund of the excess amount.

To claim an input tax credit for import consumption tax, the foreign company must retain an import permit showing the foreign company as the importer.

 

5. The Name of the Importer on the Import Permit

Without appointing an ACP, the foreign company cannot act as the importer and will not have an import permit showing the foreign company as the importer.

As a result, the foreign company cannot claim an input tax credit for the import consumption tax. In the example above, its tax liability would increase to JPY 25,000:

JPY 30,000 − JPY 5,000 = JPY 25,000

If the company appoints an ACP, its tax liability is only JPY 1,000. Without an ACP, the tax burden increases to JPY 25,000.

Are There Penalties for Failing to Appoint an ACP?

The mere failure to appoint an ACP does not automatically constitute customs duty evasion under the Customs Act.

However, if a foreign company should be the importer in substance but declares a third party as the importer, the arrangement may raise legal concerns depending on the contents and purpose of the declaration.

In particular, if a false declaration is made using a third party’s name for the purpose of improperly reducing the customs value and avoiding customs duties, the issue goes beyond the mere failure to appoint an ACP.

Article 110 of the Customs Act provides that a person who evades customs duties through deception or other wrongful conduct may be punished by imprisonment for up to ten years, a fine of up to JPY 10 million, or both. If ten times the amount of customs duties evaded exceeds JPY 10 million, a higher fine may apply.

Even if the conduct does not result in criminal penalties, the company may be required to pay additional customs duties and import consumption tax, together with penalties for underreporting, failure to file, or fraud, as well as delinquency tax.

Is an ACP Jointly Liable for Customs Duties and Import Consumption Tax?

The role of an ACP may not yet appear to be widely understood. For example, the website of a well-known tax advisory group states that an ACP is jointly liable with the foreign company for customs duties and import consumption tax.

However, there is no statutory provision imposing joint payment liability on an ACP for a foreign company’s customs duties or import consumption tax merely because it serves as the company’s ACP.

As a general rule, the foreign company importing the goods is liable for customs duties and import consumption tax. An ACP may complete the payment procedures on behalf of the foreign company, but this does not mean that the ACP itself becomes the taxpayer or is jointly liable for the tax.

The ACP’s principal role is to act as the point of contact between the foreign company and Japan Customs and to receive, send, and submit documents.

Provided that import declarations are filed correctly, Japan Customs will rarely need to make individual inquiries to the ACP. Yamaguchi Consulting currently serves as ACP for several foreign companies and has not received any individual inquiries from Japan Customs to date.

Does an ACP Need Any Special Qualifications?

There are no special professional qualifications required to serve as an ACP.

For an individual, the basic requirement is to have an address or residence in Japan. For a corporation, the basic requirement is to have its head office or principal office in Japan.

The ACP’s role is not necessarily to advise the foreign company, and an ACP is not legally required to have specialist knowledge of customs duties or the import consumption tax system.

However, the roles of an ACP and a customs broker are different. Unless the ACP is also a licensed customs broker, it cannot prepare and submit import declarations for compensation as part of a customs-brokerage business. In such cases, the actual import declarations must be handled separately by a licensed customs broker.

Conclusion

When a foreign company without an office in Japan imports and sells goods that it owns, it must generally appoint an ACP and file import declarations under its own name.

If the company imports goods under a third party’s name without appointing an ACP, it will generally be unable to claim an input tax credit or refund for the import consumption tax. For goods subject to the standard tax rate, import consumption tax is approximately 10% of the taxable base, so the resulting economic loss can be substantial.

Yamaguchi Consulting is not a customs broker or a customs duty specialist. However, we can serve as ACP for foreign companies while providing integrated support for Japanese consumption tax compliance and applications for refunds of import consumption tax.