Understanding ACP and IOR in Japan: Why COVUE is your One-Stop Solution?
The landscape of international trade is ever-changing, especially when it comes to importing goods into Japan. To navigate the complex customs environment, it’s crucial to understand two key terms: Importer of Record (IOR) and Attorney for Customs Procedure (ACP).
Many often ask what differentiates these two terms. To address this query and outline why COVUE stands out as the go-to solution, we have compiled this comprehensive guide.
What is an Importer of Record (IOR)?
When importing goods into Japan, you must designate an Importer of Record (IOR) responsible for the cargo’s compliance with Japanese regulations. This importer must be an entity based in Japan, accountable for customs duties, taxes, and other import-related obligations. Unlike other jurisdictions, Japan does not permit foreign entities to serve as an IOR. However, foreign businesses can function as a Non-Resident Importer if they appoint an IOR, such as COVUE, thereby enabling them to manage imports themselves.
What is ACP (Attorney for Customs Procedure)?
If you’re a non-resident entity without a Japanese partner to act as IOR, you can still import a few product categories (like Non-regulated and Electronics) by appointing an ACP. An ACP facilitates the import process by overseeing customs procedures on behalf of non-resident clients. Effective October 1, 2023, Japan Customs has strengthened its system to mandate the use of ACPs to minimize fraudulent practices involving third-party designations as importers.
This makes ACP services like those offered by COVUE invaluable. Read more about this change and how to get started with us here
Why Choose COVUE? A Hybrid Solution.
COVUE is a trusted provider that seamlessly integrates both IOR and ACP services, ensuring your imports to Japan are both compliant and efficient. This hybrid offering by COVUE safeguards you from risks like additional taxes or penalties that could arise from a customs post-clearance audit.
1. Compliance and Risk Mitigation
Some IOR service providers or forwarders may tamper with information on Import Permit Documents. This practice not only jeopardizes compliance with Japan Customs Law but also exposes you to the risk of penalties.
COVUE adheres strictly to all laws, representing you as the ACP while clearly listing you as the IOR on all relevant documents, thereby minimizing your exposure to such risks.
2. ACP’s Tax Advantages: The Consumption Tax Rule
One of the distinct benefits of employing a partner with both IOR and ACP capabilities like COVUE lies in how it handles the Japanese Consumption Tax (JCT). If your entity is taxable, COVUE’s hybrid ACP and IOR service allows you to deduct the import consumption tax when filing tax returns. This option isn’t typically available if you’re merely using an IOR or a separate ACP service, which can result in penalties or higher taxes due to an inability to deduct or refund the 10% JCT.
3. The New Invoice System for JCT
Starting October 2023, Japan will introduce a new invoice system similar to the EU’s VAT system. To issue a qualified invoice, sellers must be taxable entities with a JCT number. As a non-resident entity using COVUE’s ACP service, you become the official importer (IOR). This status allows you to deduct the import consumption tax when filing your JCT tax returns, reducing your tax liability to only the difference between the tax collected from Japanese customers and the tax paid during imports.
Sources: Japan Customs, ACP Japan