| TOP |
| 6th Report of Market Access Ombudsman Council (March 16, 2000) |
1. Complainant: Tokyo Chamber of Commerce and Industry
2. Ministry concerned: Ministry of Finance
3. Complaint:
When products are imported which are made from molds sold to a domestic customer and then shipped abroad gratis, the value of the molds must be included in the customs value. In such cases, even though consumption tax was paid on the molds in Japan, the molds are subject to double taxation; this is not a reasonable system.
In such cases, consumption tax was already paid in Japan and accordingly the products should be exempt from consumption tax when imported.
4. Corresponding Policy of the Ministries concerned:
The taxation standards for consumption tax on imports are:
1) given that in the case of imports, liability for payment of consumption tax, which is an ad valorem tax, arises when they are removed from bonded areas, it is appropriate to apply the price (market price) of the imported goods at the time of removal as the taxation standard;
2) and this price is the price of the imports when they enter the country of import and is balanced in relation to domestic transaction prices;
and calculation of customs value is based on this. This is the same calculation method as that used by major countries using a value-added tax
The calculation method for customs value is set out in the Customs Tariff Law Article 4 to Article 4-4, which conforms to the international agreement "Agreement on Implementation of Article 7 of the General Agreement on Tariffs and Trade 1994" (Agreement on Customs Valuation)."
In other words, as in this case, when goods produced from molds provided gratis are imported, customs duty is calculated by adding the cost of the molds as called for by the provisions of the Customs Tariff Law Article 4 Paragraph 1-3b. This is because, in this case, compared to the seller buying molds and manufacturing imports, since the cost of the molds is low, it is deemed to be the regular price (in the case of the molds not being provided gratis), and since customs duies are assessed based on this customs value as the basis for duty assessment, this customs duty and the customs value added together constitute the price (market price) at the time of the transaction, and it is practical to assess consumption tax based on this tax standard.
The consumption tax levied on consumption in general is levied on sales of businesses at each stage of transaction, but in order for the tax not to become cumulative, the system of deducting the tax at the previous stage (input tax recovery system) is used so that even though tax is levied at multiple stages of transactions, use of the input tax recovery system is a fair system that places no burden on businesses.
Specifically, businesses may deduct consumption taxes on stocking necessary to generate sales from the consumption tax (including at the time of import) levied on sales during the taxation period (the calendar year, in the case of private individuals, and the business year, in the case of companies), and pay the difference to the tax authorities (in cases where more consumption tax was paid on stocking than the amount of consumption tax on sales, the difference is refunded). Accordingly, using the input tax recovery system means that the importer pays no consumption tax levied on goods at the time of import as in this case, including the portion on the value of the molds included in the tax standard according to the adding valuation.
5. Remarks
The complainant accepted this policy.