With the rise of cross-border e-commerce, the Japanese market has become a hot spot for many sellers. In order to improve the competitiveness of 2B orders, many sellers have registered for JCT (Japan Consumption Tax) tax numbers. However, this decision has both advantages and disadvantages. This article will explore the advantages and disadvantages of registering for JCT to help sellers better understand and make wise tax choices.
Advantage 1: Improve the competitiveness of 2B orders.
Registering for a JCT tax number can effectively improve the competitiveness of sellers in 2B orders. According to Amazon’s statistics, more than 90% of Amazon China sellers have received orders from overseas corporate buyers. By registering for a JCT tax number, sellers will find it easier to obtain more overseas orders and expand their business scale.
Advantage 2: Financial and tax compliance is beneficial to long-term operations.
In terms of financial and tax compliance, registering for a JCT tax number is beneficial to the long-term operation of enterprises. Taking Europe’s VAT as an example, starting from 2019, from promoting registration to investigating zero declaration and low declaration to requiring platforms to pay and withhold on behalf of others, the relevant laws and regulations of European countries have been continuously improved, and sellers who do not operate in compliance with regulations have been severely punished. By registering a JCT tax number, sellers can better comply with tax laws and regulations, reduce financial risks, and contribute to the steady development of enterprises.
Advantage 3: Deduction and refund of consumption tax.
Sellers who register for a JCT tax number can use their tax number to deduct and refund the import consumption tax of goods that have not been actually sold to the tax bureau. This mechanism helps to reduce the tax cost of the import link and improve the profitability of enterprises.
Disadvantage: Increase tax costs.
The only disadvantage is that registering a JCT tax number will increase tax costs to a certain extent. Most sellers use the channel of reverse calculation and fixed tax, and declare at 35%-40% of the selling price, but actually only pay about 4% of consumption tax. After registering a JCT tax number, it is necessary to deduct the 10% consumption tax collected from the input consumption tax and hand it over to the government during the annual tax declaration, which is equivalent to paying 10% consumption tax, which leads to a certain degree of tax cost increase.
Tax selection considerations
Sellers need to carefully weigh the pros and cons before registering a JCT tax number. In the short term, tax costs may increase, but in the long run, the advantages of complying with tax regulations and improving competitiveness are still worth considering. In this complex tax environment, sellers need to make prudent decisions based on their own circumstances to achieve sustainable operations and development.
Summary
Registering for a JCT tax number is both a challenge and an opportunity for Japanese cross-border e-commerce sellers. Sellers should fully understand tax policies, weigh the pros and cons of short-term costs and long-term development, and develop a tax strategy that suits their own circumstances. Through scientific and reasonable tax planning, sellers can better cope with market competition and achieve stable operations.