It is mostly result of misunderstanding (or lack of knowledge) of customs valuation system. In my view, most of Japanese business people e.g. in marketing, management and even in SCM are just too innocent and non-professional in Customs regulation.
- Amount of penalty collected on incorrect import declarations is the highest based on historical records
The total non-declared and short-declared value of all investigated companies were approximately JPY155billions (US$1.4billions). The amount of penalty collected for this customs compliance violation was approximately JPY11.1billions (US$100 millions), an increase by 3.2% compared with previous year’s post audit results. This amount is the highest and worst in history of customs compliance violation on import declarations.
- High rate of non-compliance
The post-entry audit team investigated a total of 5,548 companies. Of which, 3,836 or 69% of the total companies investigated were found to have failed in making correct import declarations, an increase by 1.7% compared with the previous year.
- Top five items found out to be short of duty/tax declaration
Ø Electrical Machinery (Chapter 85)
Ø Machine and mechanical appliances (Chapter 84)
Ø Apparel and clothing (Chapter 62)
Ø Articles of apparel and knitted (Chapter 61)
Ø Wood and articles of wood (Chapter 44)
- Sample cases of short-declaration subject to penalties
Case 1 - A company in Japan imported air conditioners from China. The importer did not include the value of raw materials and mold, which have been paid by the importer to a manufacturer in China.
Case 2 – A company in Japan imported Integrated Circuit Board from Taiwan. The importer did not include the value of raw materials of the board which have been provided free of charge by the importer beforehand. Although the raw materials were given free of charge, the cost of such raw materials must be declared together with the value of the finished goods value.
Case 3 - A company in Japan imported medical materials from Germany. The importer did not include the license fee, which have been paid based on the contract. Such loyalty fee or license fee must be included in the transaction value and must be reflected in the customs declaration.
Japanese customs authority strongly encourages importers to learn and understand the correct customs valuation system. The lack of enough knowledge on customs valuation system and interpretation of customs law may result to additional costs to companies. Non-compliance to customs laws may result to imposition of huge penalties and may damage a company’s brand image and credibility.