From October 1, 2023, the reform of the Japan Consumption Tax (JCT) “Compliant Invoice Retention System” initiated by the Japan National Tax Agency will take effect.

This reform will have an impact on sellers who operate Amazon’s Japan site.

According to the “Compliant Invoice Retention System”, from October 1, 2023, compliant invoices need to have the seller’s Japan Consumption Tax Registration Number (“JCT Registration Number”) so that buyers can apply for JCT input credits and view their deductions the tax amount.

After the reform takes effect, the seller’s JCT registration number needs to be displayed on the invoice issued by Amazon so that buyers can claim tax deductions.

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

– The seller’s taxable sales during the base period exceeds 10 million yen.

– Or the seller’s taxable sales in the base period did not exceed 10 million yen, but the taxable sales in the first half of the previous base year exceeded 10 million yen.

– Or the company’s registered capital is more than 10 million yen.

The base period is the two base years preceding the tax period, the starting month of the base year depends on the type of company.

After the system takes effect, if the seller decides not to submit the JCT registration number to Amazon, the buyer who needs to issue a compliance invoice may no longer purchase the store’s products after the implementation of the reform, because they will not be able to apply for tax deductions. This could negatively impact sales.

Amazon officially recommends that sellers obtain a JCT registration number before October 1, 2023.