Import Taxes from Japan to the UK

Japan is the United Kingdom's 11th largest trading partner. The total trade between the countries peaked at over £31 billion . Essentially, large volumes of goods are shipped from Japan to the UK annually. However, the UK Customs Authority still requires Japanese importers to pay import taxes before the goods are released. Since the UK has a wide range of import taxes for different products, it might be challenging to know what to expect with the import process. This article discusses the import taxes the UK government requires from Japanese importers.

UK Import Taxes for Japanese Importers

Before going into the charges to expect on your Japanese imports, you must note that the UK does not levy charges on all imports. Importers can import products worth below £135 without paying import charges. However, Value Added Tax can still be charged on the imports. The only difference is that the UK Customs Authority will not charge the VAT at the point of importation.

• Import Tariffs: Like every importer, Japanese importers must pay a specified duty rate on all their imports. This duty rate varies depending on the import's total value and the product type. However, the UK Customs Authority has made it easy to determine the actual duty rate on your imports. You only have to use the official duty calculator . The calculator estimates your duty charge by requiring details like the value of your goods, the country you are importing from, and your shipping or insurance costs. This official calculator is the most efficient way to determine your charges, as it gives near-accurate estimations.

• Value Added Tax (VAT): VAT is a form of consumption tax levied on goods and services. Japanese importers must pay the VAT before their products can be released to the UK market. However, something to note is that the VAT rate is flat, unlike the import tariffs. This flat rate means that the UK Customs Authority charges the same rate on all Japanese imports, regardless of the value or type of product. The UK currently uses a VAT rate of 20% on all its imports. Remember to add your shipping and insurance costs as your base figure when calculating your VAT. This method will help you arrive at an accurate estimation of your VAT rate. The VAT rate is often deducted alongside the import duties at entry.

UK-Japan Agreements That Favour Japanese Imports

As stated earlier, the UK levies import taxes on all Japanese imports. However, a trade agreement can reduce or remove import taxes on certain Japanese imports. In 2020, the UK entered into a trade agreement with the Japanese government. The agreement is called the Comprehensive Economic Partnership Agreement ( CEPA ). The agreement entered into effect in 2021 and gave UK importers free access to the Japanese market. However, the agreement also contains provisions that benefit Japanese importers in the UK. The primary benefit relates to import tariffs. According to the CEPA , Japanese importers are not required to pay import taxes on ten categories of goods.

These categories include cheeses, wheat, doughs and cake mixes, food preparations containing cocoa powder or sucrose, and coffee. For Japanese importers to take advantage of these benefits, the UK requires that importers register their import products under Japan's BP scheme. This registration will suspend the need to pay import tariffs to enter the UK. Notably, the Japanese government requires intending importers (or exporters in this case) to produce a Bank Guarantee before the BP scheme can cover them. Other documents for coverage include a filled copy of the form C5400 and a payment guarantee from the Customs Authority. In addition, Japanese importers must note that the trade benefits only apply to the product categories specified above. The UK will charge total duty rates on other products from Japan.

Conclusion

Whether or not you are entitled to duty reductions, one thing to remember as an importer is to pay all mandatory charges promptly. The Customs Authority will hold goods for only as much as three weeks. If importers do not pay duty charges when the time elapses, the Customs Authority will send the goods back.