Japan to Reform De Minimis Rule on Imported Low-Value Goods Amid Tax Concerns

Following the implementation of new deemed supplier taxation rules for digital platforms, which have been in effect since April 1, 2025, the Japanese Ministry of Finance (MoF) announced that it is reviewing the current regulations regarding consumption tax on imported low-value goods. 

Currently, those goods are tax-exempt under the de minimis rule. However, due to increased exploitation of this rule by Chinese e-commerce companies, such as Temu and Shein, the MoF wants to protect domestic companies and level the playing field.

New Taxation Rules on Imported Low-Value Goods

Under the current rules and regulations, goods imported into Japan are subject to consumption tax, unless they meet the conditions under the minimis rules. Therefore, if the total customs value of the imported goods does not exceed JPY 10,000 (around USD 70), no import consumption tax, customs duties, or tariffs are imposed.

Considering that there were 169.66 million cases of imported low-value goods in 2024 that fell under the scope of this exemption, totaling JPY 425.8 billion (approximately USD 3 billion), which represents a 500% increase over the last five years, the de minimis rule is harming domestic e-commerce platforms and sellers.

The MoF aims to address this imbalance in competitiveness between domestic and foreign, primarily Chinese, e-commerce businesses by revising the de minimis rules and introducing new taxation rules for imported low-value goods. Two possible models might replace the existing rule in place.

The first model involves the removal of the de minimis rule, mandating that foreign sellers and online digital platforms register for consumption tax and remit import consumption tax on low-value imported goods directly. In cases where the sellers are not registered, import tax would be collected at the border, and the Japanese consumer would be liable for payment.

The second possible model is to introduce a registration threshold for foreign sellers. Once they exceed the annual sales threshold, sellers must register for consumption tax, and the de minimis rules do not apply to these registered sellers. Those below the threshold would be able to benefit from the current exemption rules.

Conclusion

As announced by the Ministry of Finance, the changes to the de minimis rules are part of the tax reform scheduled for next year. However, the Japanese government first needs to decide on the model it wants to implement, as well as whether to expand the platform taxation regime to cover cross-border B2C sales of goods.

Source: International Bar Association, VATabout, The Japan News