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[Japan's Customs Reduction System]
Reduction or exemption from customs duties in Japan is based on the Customs Tariff Act and Act on Temporary Measures concerning Customs.
Duty reduction or exemption in Japan have been implemented by political needs or international treaties and conventions like other countries, etc.
In international trade, whether to obtain duty reduction or exemption is very important issue deciding competitiveness of not only importers but exporters.
Like most of other countries, in order to obtain duty reductions in Japan, duty reduction or exemption application shall be filed until import clearance. If failing to apply for duty reduction or exemption within the given period, there is no way to obtain duty reduction or exemption by calling for duty reductions and supplement it afterward.
Accordingly, duty reduction or exemption issue is very important to bring out significantly different result depending on importers and exporters.
■ Classification of reduction or exemption
Duty reduction or exemption system may be divided into various categories.
☉ Permanent or Provisional reduction or exemption
Permanent duty reduction or exemption system based on the Customs Tariff Act remains the same as long as the current Act isn't abolished. The majority of grounds for duty deduction or exemption are under this category.
On the contrary, provisional duty reduction or exemption is based on the Act on Temporary Measures concerning Custom. Act on Temporary Measures concerning Customs aims at determining temporary special measures for the Customs Act and the Customs Tariff Act, and obviously specifies the period covered by duty reduction or exemption regulations(until mm/dd/yyyy). This Act is including duty reduction or exemption for raw materials which are processed and exported, and duty reduction or exemption for aircraft parts.
☉ Conditional or Unconditional reduction or exemption
Unconditional duty reduction or exemption means that if any goods whose taxes were reduced or exempted during customs of entry in Japan, afterward, government adopts hand-off policy toward the use of such goods.
On the contrary, conditional duty reduction or exemption make it clear that any goods whose duties were reduced or exempted shall not be used or transferred(including lease) for other purpose than originally reduced or exempted purpose, and shall be under post-management afterward.
☉ Reduction or exemption from customs duties
Literally, reduction means reducing some amount of customs duties, and exemption means completely exempting full amount of customs duties. Two words are combined into reduction or exemption of customs duties.
☉ Duty reduction or exemption by the subject of import and by usage
Whether reduction or exemption from customs duties depends on import subject and the usage of such imported goods.
Import subject and the usage of such imported goods are different on the case by case basis. In order to enjoy the benefit from reduction or exemption of customs duty, the importer himself/herself shall have a glimpse of duty reduction or exemption.
■ Relations with Reduction or Exemption of Internal Taxes
Reduction or exemption from customs duties, as a rule, has no relations with internal taxes such as consumption tax, liquor tax, gasoline tax, etc. which are taxed by each imported item. Reduction or exemption is based on the Customs Tariff Act or the Act on Temporary Measures concerning Customs, etc. but, such internal taxes are based on each corresponding tax Act, or the Act on Collection, etc. of National Consumption Tax Imposed on Imported Goods.
Accordingly, reduction or exemption from customs duties doesn't exactly apply in the same way to reduction or exemption from internal taxes.
But, in the case where any goods whose customs duties are reduced or exempted, internal taxes also may be reduced or exempted in may cases, which is a reasonable way to look to related requirements of relevant goods.(for example, both customs duties and internal taxes may be reduced and exempted for personal effects, family-moving goods, donating goods for charity or relief, articles for diplomats, duty-free goods for re-exportation, etc.)
■ The Timing, etc. of the Application for Reduction or Exemption of Customs Duties, etc.
Most of reasons for duty reduction or exemption are based on statutory regulations which make it compulsory to apply for reduction or exemption at the time of importation to Japan. For some cases, it's required to submit additional duty reduction or exemption application, duty reduction or exemption statement, etc. to the Customs.
In addition, if the head of a customshouse deems it necessary, some pledge equivalent to tax amount reduced or exempted shall be provided.
■ The Permission of Double Duty Reduction or Exemption
Where same imported goods are subject to various grounds for reduction or exemption, the importer of such goods shall choose one ground out of various options because double duty reduction or exemption is banned. Such importer may choose goods whose reduced or exempted ratio is high, or goods whose verification of reasons for duty reduction or exemption is easier than others.
■ Other Necessary Comments
It's very important for importers to take care of their own duty reduction or exemption, not entrusting others(including expertises) because it's easy to miss the chance for duty reduction or exemption by a small mistake. Following are details of the reasons.
① The importers are well aware of the purpose and usage of imported goods.
② The importers are well aware of precise standards and technological traits concerning relevant goods
③ The importers have advantage of adjusting requirements of duty reduction or exemption in consultation with exporters.
④ Without paying fees to an expert, it's hard for him/her to positively invest great amount of time in dealing with it.