Japan: Enhanced penalties for deficient customs declarations or non-declarations

Japan: Penalties for deficient customs declarations

The Customs and Tariff Bureau of the Ministry of Finance of Japan has issued guidance regarding certain regulatory changes resulting from the 2016 Tax Reform Act, and setting forth increases in penalties that may be imposed on importers for deficient customs declarations or for non-declarations. The measures in the 2016 Tax Reform Act are effective beginning 1 January 2017.

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Concerning the penalty regime with respect to customs declarations, the new regulations provide for the following. 

Deficient declarations

Under current customs laws and regulations, importers may file voluntary disclosures to report and amend deficient import declarations without the imposition of penalties if there is no prior knowledge of the deficiency discovered by means of a customs investigation or customs audit. This rule also applies to importers that have been notified of an upcoming customs audit. 

The new, revised provisions provide that a 5% penalty can be imposed—even on importers that voluntarily file new disclosures—after being notified of an upcoming customs audit.

Non-declarations

Currently, a 5% penalty can be imposed on importers that file voluntary disclosures to report and amend non-declarations of imports if there is no prior knowledge of the deficiency by means of a customs investigation or customs audit. This rule also applies to importers that have been notified of an upcoming customs audit. 

The new, revised provisions allow for the imposition of a 10% penalty—even on importers that file voluntary disclosures after being notified of an upcoming customs audit.

Repeated occurrences

Under current laws and regulations, if penalties are assessed for deficient and/or non-declarations that are the result of an importer concealing or suppressing facts, Japan Customs may impose a “heavy penalty tax” of 35% for deficient declarations and 40% for non-declarations. 

The new, revised laws also allow for Customs to increase these penalties by an additional 10% for importers that have been charged with penalties in the past five years for deficient declarations in situations when the “heavy penalty tax” was imposed or in situations of non-declarations regardless of whether the “heavy penalty tax” was imposed.

Error and reporting Phase Current New “Heavy
penalty tax” - for
intentional violations
Repeated
offense* within five-year period (New)
Error- Self disclosure Knowing before correction
    
10% 10% 35% +10%

After announcement of audit

 (New)

0% 5% N/A N/A
Before
announcement of audit
0% 0% N/A N/A
Error- Non-disclosure Knowing before correction
10% 10% 35% +10%
After announcement of audit (New) 10% 10% 35% +10%
Before announcement of audit 10% 10% 35%
+10%
Non-declaration– self-disclosure Knowing before correction
15% 15% 40% +10%
After announcement of audit (New) 5% 10% N/A N/A
Before announcement of audit 5% 5% N/A N/A
Non-declaration –Non-disclosure Knowing before correction
15% 15% 40% +10%
After announcement of audit (New) 15% 15% 40% +10%
Before announcement of audit 15% 15% 40% +10%

 

For more information, contact a professional with KPMG’s Trade & Customs practice in Japan:

Masaharu Umetsuji | +81 3 6229 8070 | masaharu.umetsuji@jp.kpmg.com 

Takayuki Kozu | +81 3 6229 8205 | takayuki.kozu@jp.kpmg.com

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