Japan tightens definition of ‘Importer of Record’ under Customs Act

In brief

Under new Japanese Customs laws and regulations effective October 1, 2023, foreign companies that import into Japan without a sales transaction generally no longer can use a separate local company to act as Importer of Record (IOR).

Responding to an apparent increase in Customs noncompliance associated with e-Commerce imports, the Japanese Customs authority has tightened the definition of IOR to bring more nonresident companies under Customs’ direct supervision. The revised definition provides new requirements for IORs. Specifically, an IOR that imports goods into Japan without a sales transaction must ‘have a right to dispose’ or ‘to act for the purpose of import.’

If the nonresident company’s current IOR no longer will qualify as the IOR under the revised IOR definition, the nonresident entity must be the IOR moving forward, requiring compliance with substantial administrative procedures.

Observation: The new limits on transactions in which parties can act as IOR could impact a wide variety of modern commercial supply chains. Further, local Customs authorities in various ports might interpret the IOR definition differently during implementation. Nevertheless, Japan Customs is expected to seek to enforce these new rules strictly.

Action item: Companies potentially affected by this change should assess their supply chains and also consider the potential impact of input tax credit recovery on import consumption taxes through consumption tax filing procedures.

For a deeper dive into the impact of this change, see PwC Customs and Trade News, Clarification of the definition of Importer of Record under Customs Act, October 2023.