Claiming VAT exemptions on exports from Japan requires comprehensive documentation to prove that the goods have indeed been exported and qualify for the zero-rated VAT treatment. Here are the essential documentation requirements:
- Export Sales Invoice:
Prepare detailed invoices for all export transactions. These invoices should clearly state that the goods are intended for export and should include the value of the goods, the VAT rate applied (which would be zero-rated), and the terms of sale. - Shipping Documents:
Maintain copies of shipping documents that prove the goods were dispatched from Japan to a foreign destination. This includes bills of lading, airway bills, freight invoices, and other transport documents. - Customs Declarations:
Provide copies of the customs export declarations. These are official documents that confirm the goods have cleared Japanese customs for export and include details such as the description and value of the exported goods. - Proof of Foreign Destination:
Collect and file evidence that the goods have been received outside Japan. This can include delivery receipts, signed acknowledgments from the overseas buyer, or other proof of arrival at the foreign destination. - Contracts and Orders:
Keep copies of contracts or sales agreements with overseas customers, along with corresponding purchase orders, which detail the nature of the transaction and the terms under which the goods were sold and shipped. - Record of Payment:
Secure documentation showing that payment was received from the overseas customer, ideally linking the payment directly to the specific export transaction. This could be bank statements or payment receipts. - VAT Returns and Documentation:
When filing VAT returns, include all required documentation for exports to substantiate the zero-rating. Although detailed documents are not typically submitted with the VAT return, they must be readily available in case of a tax audit.
Maintaining these documents is crucial not only for VAT exemption claims but also for compliance with customs regulations and international trade laws. Regular audits and checks by Japanese tax authorities may require businesses to produce these documents to verify that all conditions for VAT exemptions have been met.
Businesses engaged in exporting goods from Japan should have robust systems and processes in place to manage and retain these documents. Consulting with a tax professional experienced in Japanese VAT and international exports can ensure compliance and optimize VAT management.