Selling into Japan: Consumption Tax, the Tax Agent and Qualified Invoices

Japan is the third-largest economy in the world and a market that rewards precision. Its consumption tax system is stable, well-documented and predictable — which is exactly why the mistakes foreign sellers make in Japan tend to be procedural rather than substantive. They are not caught out by surprise rates; they are caught out by two requirements that have no obvious equivalent at home: the tax agent and the Qualified Invoice.

Japan’s indirect tax is the Japanese Consumption Tax (JCT), a VAT-style tax levied at a standard rate of 10%, with a reduced rate of 8% on food, non-alcoholic beverages and newspaper subscriptions. Corporate income tax, national and local combined, runs to roughly 30%, though whether a foreign seller is exposed to it usually turns on the permanent-establishment article of the relevant tax treaty.

When a foreign seller becomes a JCT taxpayer

A business becomes a JCT taxpayer when its taxable sales exceed ¥10 million in the base period — broadly, the position two years earlier. A newly active seller without a base period is governed by specific start-up rules. Below the threshold a business is, in principle, a tax-exempt enterprise; above it, registration and filing are mandatory.

For an e-commerce seller, two situations override the simple threshold logic:

• Holding stock in Japan. If you place inventory in a Japanese fulfilment centre — Amazon FBA Japan or a third-party warehouse — you are operating inside Japan, and import JCT is paid when the goods clear customs. That import tax is creditable, but only through a proper JCT registration and return. Stock in Japan effectively pulls a foreign seller into the JCT system.
• The Qualified Invoice question, below, often makes voluntary registration the commercially correct choice well before ¥10 million.

The tax agent: your mandatory point of contact

This is the requirement most often missed. A foreign business with no office or establishment in Japan must appoint a tax agent — in Japanese, a nōzei kanrinin, a tax administrator — before it can deal with the National Tax Agency (NTA) at all.

The tax agent must be a resident of Japan, an individual or a Japanese tax professional, and the appointment is formalised by filing a Tax Agent Notification Form with the competent tax office. The agent is the NTA’s domestic point of contact for filings, correspondence, assessments and refunds. Without one, a non-resident business has no functioning channel to the Japanese tax authority — registrations and returns simply cannot be processed.

The tax agent is an administrative representative, not a co-liable guarantor in the European fiscal-representative sense. But the practical effect is the same: in Japan, a foreign seller acts through a resident intermediary or does not act.

The Qualified Invoice System

In October 2023 Japan introduced the Qualified Invoice System — its version of a structured input-credit regime. The principle is straightforward and the commercial consequences are significant.

A business customer in Japan can only reclaim the JCT it pays on a purchase if the supplier is a Registered Qualified Invoice Issuer and provides a qualified invoice showing a valid registration number. If you are not registered, your B2B customers cannot recover the tax on what they buy from you — which makes you a more expensive supplier than a registered competitor for the same headline price.

The system is being phased in. During a transitional window, a buyer may still claim a partial credit on purchases from a non-registered seller: 80% from October 2023 to September 2026, then 50% from October 2026 to September 2029, before the relief disappears entirely. That taper is steadily closing the gap — and the commercial pressure to be a registered issuer rises with every step.

For a foreign company there is a procedural wrinkle: registration as a Qualified Invoice Issuer cannot be completed online, because the digital identity required presupposes a legal presence in Japan. A non-resident applies on paper, and the process typically takes several weeks. It should be planned well ahead of launch, not improvised after the first B2B order.

Platform taxation: responsibilities are shifting

Japan has concluded — on the evidence of a very large gap between JCT theoretically due and JCT actually collected on foreign sellers’ fulfilment-based sales — that the obligation should sit, in part, with the platforms.

Two reforms matter:

Electronic services (effective 1 April 2025). Where a foreign business supplies B2C digital or electronic services to Japanese consumers through a specified platform designated by the NTA, the platform is treated as the supplier and is responsible for filing and paying the JCT. The first designated platforms include Apple’s App Store, Google Play, the AWS Marketplace and the Nintendo eShop.

Sales of goods (FY2026 tax reform). Japan’s FY2026 tax reform extends the same logic to physical goods sold through online marketplaces. Large platform operators — those whose intermediated sales of goods exceed a high turnover threshold (set at JPY 5 billion) — will become responsible for filing and paying JCT on behalf of the foreign sellers who use them. The measure is expected to take effect in 2027.

This shifts the collection of JCT toward the platforms, which simplifies one part of a seller’s life. It does not erase the seller’s own obligations: import JCT at the border, the registration needed to credit it, the tax agent, the Qualified Invoice position, and the reconciliation between what a platform remits and what the seller’s own records show.

Imports and the low-value threshold

Goods entering Japan are assessed customs duty and import consumption tax on their customs value. Japan does maintain a low-value relief: shipments whose customs value is ¥10,000 or less are generally exempt from customs duty and import consumption tax — with notable exceptions for certain categories such as leather goods and knitted articles, which are dutiable regardless of value. A seller fulfilling parcel by parcel from overseas can use that relief; a seller importing in bulk for a Japanese fulfilment centre pays import JCT on the consignment and recovers it through the JCT return.

Two typical scenarios

A foreign brand launching on Amazon Japan with FBA. Stock is imported into Japanese fulfilment centres, so import JCT is paid at the border. The brand appoints a Japanese tax agent, registers for JCT to recover that import tax, and registers as a Qualified Invoice Issuer so that business customers can claim their input credit. As platform-taxation rules extend to goods, the marketplace will take on remittance of JCT on its sales — but the brand’s import-side compliance and registration remain its own.

A foreign seller shipping direct to Japanese consumers from abroad. Many orders fall under the ¥10,000 customs-value relief and clear without import tax. JCT registration is driven by the ¥10 million threshold and by the Qualified Invoice calculus — if any meaningful share of sales is B2B, voluntary registration, through a tax agent, is usually the right call.

How Servix International helps

Japan is an orderly market, but it does not let a foreign business approach it directly. As the global division of an Italian regulated accountancy firm with more than 20 years of cross-border practice, Servix International gives non-resident sellers a single point of entry: appointment of the Japanese tax agent, JCT registration and return filing, Qualified Invoice Issuer registration on the paper track that foreign applicants must use, import-JCT planning and recovery, and a clear read on how the new platform-taxation rules change what the seller must still do itself. One regulated partner for a market where precision is the price of entry.