Oct 9, 2013

Tax Bureau to allow electronic submission of customs clearance documents

The Tax Bureau/Customs of Japan's Ministry of Finance will accept electronic data of customs clearance-related documents beginning October 13. Aside from invoices and bill of lading/air consignment notes that are required for cargoes that fall under Class 2 (document screening) and Class 3 (cargo inspection) in the Import/Export Declaration, the Tax Bureau/Customs will, on or after the said date, be able to accept certificates of origin, legal permits/approvals and other necessary documents in electronic format in principle, including Word, Excel and PDF formats. The customs clearance-related entities will not have to bring the hard copies of the required documents to the customs authorities anymore, leading to a reduction in work load.

The Tax Bureau/Customs has been promoting the shift to computerization and a paperless system for documents related to customs clearance and in July last year, it eliminated the need to submit the relevant documents for cargoes under Class 1 (simple screening) under the condition that the documents will be kept. As for Class 2 and Class 3 cargoes, the required documents still needed to be submitted from the perspective of screening/inspection, but starting October 13, these can now be submitted in electronic format on top of the conventional paper form.

Electronic submission will be done through declaration attachment registration (MSX) that will be kicked off as a new process of the Nippon Automated Cargo and Port Consolidated System (NACCS). The MSX can be used prior to the import/export declaration, but in case it will be treated as Class 1, the original copies will not be kept at NACCS, so it should generally be utilized after import/export declaration. The new system will cover all documents related to imports and exports, including financial documents, invoices, packing lists, bill of lading/air consignment notes, insurance statement, individual assessment form, certificate of origin, tariff-rate quota certification, tax deduction statement and other legal permits/approvals.

Majority of other legal permits/approvals that have to be submitted for cargoes that require permission/approval based on other legislations outside of taxation may now have copies of them submitted electronically, too. In particular, the permits/approvals related to the Pharmaceutical Affairs Law, Plant Protection Law, Act on Domestic Animal Infectious Diseases Control and Food Sanitation Act, which are used in large frequencies, may be submitted in electronic format, except for some of the documents. With this, the system will be able to cover 90% of the import/export forms related to the other laws. As for weapons and other cargoes that require a separate export permit and cargoes that are subject to restricted importation under the Washington Convention, the original copies of their documents have to be presented and submitted from the screening stage.

Even the certificate of origin is now allowed to have just its copy submitted electronically during screening/approval. However, its original paper form will still have to be checked by the authorities within three days from approval. Apart from the above, there may be cases when the original copies would have to be verified for the tariff-rate quota certification, tax deduction statement and other documents. The plan is that a new classification labeling system will be implemented that will show on the duplicate of the import/export declaration whether or not the paper-based originals of documents need to be verified. However, it seems that this new system will only commence in/after the turn of next year.

Attachments to the documents may take on the form of PDF, Word, Excel, TIFF, JPEG, BITMAP, GIF, text and XML formats, but their resolution should be at least 200dpi. Excel and Word with macros, ZIP and HTML formats are not allowed for security reasons. One declaration may have up to 10 files attached, with each file only allowed to have a maximum size of 500KB, or a total of 3MB for all files combined. Resubmission of electronic data or submission of their hardcopies may be required if the documents that were submitted are unclear.

[Toward complete computerization of customs clearance procedures]

The Tax Bureau/Customs is targeting complete computerization (EDI) in the trade-related procedures in the future. It is urging the relevant ministries to allow the electronic submission of such documents as the certificate of origin and other legal permits/approvals that currently have to be submitted in their original hardcopies before the next-generation NACCS initiates operation in October 2017. It is also pushing for the "shift to electronic procedures" that is pillared on the call for the eradication of the unnecessary submission of documents in their paper forms.

Now in order to realize complete computerization, it would be necessary to electronically exchange trade-related data. With the NACCS, it already offers the "electronic invoice service" that enables the electronic declaration of information on import/export cargoes, packing lists and so on, but its utilization is just not growing. This is primarily because numerous importers/exporters and private entities have long been transacting using paper-based documents and that the use of the said service will generate the need to input into the system the cargo information stated on the paper-based forms, thereby leading to cumbersome work. Now the Tax Bureau/Customs will heighten the usability of the electronic invoices and promote electronic exchanges of related data in the trade transactions between private enterprises.

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