Following in the footsteps of the European Union, Japan has officially begun preparations to close its own "low-value" import loophole.
The Japanese government has announced plans to abolish the current tax exemption for imported goods valued at ¥10,000 (approx. $65) or less. Under the proposed fiscal 2026 tax reform, all cross-border parcels, regardless of value, will be subject to Japan's 10% Consumption Tax (import VAT). This move specifically targets the explosion of direct-to-consumer (DTC) shipments from platforms like Shein, Temu, and AliExpress, which have gained massive market share in Japan by undercutting domestic retailers.
The "Double Punch" for Sellers
The reform represents a significant financial shift for sellers, as the Ministry of Finance is planning a two-pronged attack on cheap imports. First, the current exemption for goods under ¥10,000 will be eliminated, meaning they will be taxed at 10% from the very first yen. Furthermore, reports indicate that the long-standing "60% Rule"—which historically allowed individuals to pay tax on only 60% of a product's value—will also be abolished for e-commerce transactions. Consequently, taxes will be calculated on the full 100% retail price (including shipping and insurance), significantly raising the total landed cost.
Platform Liability: The "Deemed Importer"
To enforce these new measures, Japan is expected to adopt a model similar to the EU’s IOSS, designating major marketplaces as "Tax Collection Agents." Unlike the previous system, where consumers risked paying tax upon delivery, the new framework will require platforms like Amazon Japan, Rakuten, and Temu to collect the 10% tax directly at the point of checkout. These platforms will then be responsible for remitting the funds to the Japanese National Tax Agency (NTA), shifting the compliance burden entirely away from the buyer.
Why Now? The "Unfair Competition" Crisis
The volume of low-value imports into Japan has quintupled in the last five years, reaching nearly 170 million parcels in 2024. Domestic retailer groups have lobbied hard for this change, arguing they are at a 10% price disadvantage because they must pay consumption tax while foreign competitors do not.
Cross-border sellers targeting Japan must prepare for a mandatory 10% price hike at checkout by 2026. Now is the time to review pricing strategies and consider moving high-volume SKUs into local Japanese warehouses to improve delivery speed as a counter-balance to rising costs.
09 Dec, 2025
