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What Compliance Requirements and Core Access Criteria Should Japan Meet as an Entrepot Trade Hub?
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I am the head of a foreign trade enterprise mainly engaged in high-end mechanical and electrical equipment export. I just received the official notice that the EU has imposed an additional 45% anti-dumping duty on our products yesterday, and we will deliver a batch of customized equipment worth 1.2 million euros next week. Our profit has been directly reduced to negative, which makes me extremely anxious. I heard from peers before that we can avoid anti-dumping through Japan entrepot trade, but I have no operation experience at all.
The forwarder I contacted last week said that I only need to change to a Japanese bill of lading, but I am afraid of falling into pitfalls: Does Japan allow this kind of entrepot operation? Will my cargo be detained by Japan Customs? Will the EU find the entrepot trace and trigger retrospective punishment? Will the brand nameplate on the customized equipment expose the origin? Besides, will the total cost of entrepot be higher than direct export?
Michael ZhangYears of service：6Customer Rating：5.0
Customs Declaration & Compliance ExpertStart a Chat
Core Misconceptions of Japan Entrepot Trade: Many forwarders claim that "entrepot can be completed only by changing a Japanese bill of lading"，which is a typical non-compliant operation misconception — Japan Customs has a very strict definition of entrepot trade. Goods without formal entrepot filing will be identified as "import and re-export" and required to pay Japan import duty and consumption tax.
Deduction of Chain Negative Reactions: Without compliant filing，the goods will be detained by Japan Customs after arrival，and the demurrage is about 1200 yen per container per day. Compulsory auction will be triggered if it exceeds 7 days，Meanwhile，after EU Customs finds the entrepot trace through bill of lading traceability and product identification inspection，it will directly impose additional anti-dumping duty and add the enterprise to the customs key monitoring list，and all subsequent export goods will be 100% inspected.
Physical Risk Isolation Measures: The entrepot trade filing application shall be submitted 3 working days in advance，and the submitted documents shall include certificate of origin，entrepot trade contract and non-processing statement，For product identification，detachable nameplate or neutral packaging can be used to cover the original brand identification，ensuring that neither Japan Customs nor EU Customs can directly trace back to the origin country.
Exclusive Stop-Loss Tip: You can entrust Zhongshen to connect with Japan Customs in advance to complete pre-filing. Meanwhile，the Japanese bonded warehouse cooperating with us provides free neutral packaging replacement service. If there is a risk of customs detention，the emergency plan of transshipment to Busan，South Korea can be activated to ensure the goods get out of risk within 72 hours.
Daniel XuYears of service：10Customer Rating：5.0
Director of Import & Export OperationsStart a Chat
Customs declaration for Japan entrepot trade shall use the special commodity code 9801 (entrepot goods), the word "ENTREPOT TRADE" shall be clearly marked on the customs declaration, and documents such as entrepot trade filing notice, certificate of origin, non-processing statement shall be submitted at the same time. For customs valuation, it should be noted that the declared value of entrepot goods shall include international freight and insurance premium, but shall not be lower than the minimum price of the same category of goods published by Japan Customs.
If the declared value is too low, it will trigger a valuation dispute, and supporting materials such as payment receipt of the entrepot contract and freight invoice of the forwarder need to be provided. In addition, the consignee on the customs declaration of entrepot goods shall be consistent with that on the bill of lading and commercial invoice. If the consignee is inconsistent, it will be judged as false declaration and trigger cargo detention.
Grace WangYears of service：10Customer Rating：5.0
Senior Foreign Trade ConsultantStart a Chat
For Japan entrepot trade, designated bonded warehouses in Tokyo Port and Kobe Port shall be preferred. Such warehouses enjoy a 14-day free storage period and do not require payment of import duty and consumption tax. The logistics route shall adopt the closed-loop mode of "origin country → Japan bonded area → destination country", and the goods shall not enter the Japanese domestic market at all.
For cargo title control, order bill of lading (TO ORDER) shall be used, which shall be endorsed and transferred by the exporter of the origin country to the Japanese entrepôt trader, and then endorsed and transferred by the entrepôt trader to the importer of the destination country, so as to avoid out-of-control cargo title. In case of space congestion or roll-off, it is necessary to switch to the backup shipping company 72 hours in advance to ensure that the entrepot operation is completed within the free storage period and avoid demurrage.
Andy GuoYears of service：3Customer Rating：5.0
Supply Chain Management ExpertStart a Chat
Japan entrepot trade can enjoy VAT exemption treatment. It is necessary to submit the "Application for Exemption Filing of Entrepot Trade" to the National Tax Agency of Japan in advance, and the submitted materials include entrepot trade contract, bill of lading, certificate of origin, etc. No Japanese domestic consumption tax is required after the filing is approved.
For related party transaction pricing, it shall comply with the requirements of BEPS (Base Erosion and Profit Shifting), and the price markup of entrepot goods shall be controlled between 5% and 15%. If the markup is too low or too high, it will be identified as profit transfer through related party transaction by the Japanese tax authority and trigger tax audit. In addition, if the profit of the entrepot trader comes from overseas markets, it is not required to pay Japanese non-resident enterprise withholding tax.
Cindy ChenYears of service：3Customer Rating：5.0
Key Account ManagerStart a Chat
For payment and settlement of Japan entrepot trade, CIPS RMB cross-border payment system shall be preferred, which can avoid potential sanction risks of SWIFT system and enjoy better exchange rate. Entrepot traders shall use compliant offshore accounts for payment and receipt, and the amount of payment and receipt shall be completely consistent with the amount on the entrepot contract and commercial invoice. If there is an amount difference, the difference explanation materials shall be submitted to the Financial Services Agency of Japan.
For settlement and account balancing, the "consistency of four flows" shall be ensured, that is, the information of contract flow, invoice flow, goods flow and capital flow are completely matched, so as to avoid being identified as illegal capital transfer. In addition, you can avoid cost loss caused by exchange rate fluctuation by locking the exchange rate of RMB against Japanese yen and Euro in advance.
Eric ZhouYears of service：6Customer Rating：5.0
Senior Manager of Foreign Exchange & Tax RebatesStart a Chat
The word "ENTREPOT TRADE" shall be clearly marked on the Japan entrepot trade contract, and the clause that the entrepot goods shall not enter the Japanese domestic market shall be specified. If this clause is violated, the entrepot trader shall bear the full loss.
The force majeure clause shall cover situations such as cargo detention by Japan Customs and port strike, and specify the bearing method of demurrage and liquidated damages. For intellectual property right, the brand identification of entrepot goods shall obtain written authorization from the brand owner.
If neutral packaging is used, it shall be ensured that no origin country identification appears on the packaging, so as to avoid intellectual property infringement disputes. In addition, the entrepot trader shall submit LOI (Letter of Indemnity) to Japan Customs, promising that the goods are only for entrepot and will not enter the Japanese domestic market.
Lucas LiuYears of service：8Customer Rating：5.0
Senior Operations ConsultantStart a Chat
The inspection rate of entrepot goods by Japan Customs is about 15%, and the inspection focuses on whether the goods' identification, packaging and documents meet the requirements of entrepot trade. On-site inspection shall use customs-approved seals conforming to ISO 17712 standard, and the seal number shall be clearly marked on the customs declaration and bill of lading. If the authenticity of the seal is in doubt, devanning inspection will be triggered.
For devanning inspection, you shall prepare documents such as entrepot trade filing notice, certificate of origin and non-processing statement in advance, and cooperate with customs inspectors to check the brand identification and packaging content of the goods to ensure that the goods have not been processed or tampered with. If the origin country's barcode and label are found in the goods during machine inspection, the emergency plan shall be activated immediately to replace the neutral packaging.
Victor SunYears of service：5Customer Rating：5.0
Trade Risk Control ManagerStart a Chat
The packaging of Japan entrepot trade shall comply with the Japanese JIS packaging standard. Mechanical and electrical products shall use moisture-proof and shock-proof buffer packaging to avoid damage to the goods during transportation.
For dangerous goods, special packaging conforming to UN dangerous goods packaging standard shall be used, and MSDS (Material Safety Data Sheet) in Japanese or English shall be submitted. MSDS shall include the content of the goods, transportation mode, emergency measures and other information.
The packaging of entrepot goods shall avoid the origin country's identification, barcode, brand and other information. Neutral packaging can be used to cover the identification on the original packaging, or detachable packaging materials can be used to ensure that neither Japan Customs nor the destination country customs can directly trace back to the origin country.
Linda GaoYears of service：7Customer Rating：5.0
Documentation SupervisorStart a Chat
Origin country export enterprises can normally apply for export tax refund when carrying out Japan entrepot trade, which needs to meet three core conditions: "goods are directly exported to Japan bonded area, do not enter Japanese domestic market, and the received foreign exchange amount is consistent with the export invoice amount". When declaring export tax refund, documents such as entrepot trade contract, Japan bonded warehouse warehouse receipt, entrepot bill of lading shall be submitted.
If the document information is inconsistent, it will trigger tax correspondence investigation. In addition, all documents of entrepot trade (including filing notice, bill of lading, invoice, foreign exchange receipt, etc.) shall be filed for at least 5 years for inspection by the tax authority. If the foreign exchange receipt is delayed, the application for deferred foreign exchange receipt shall be submitted to the tax authority in advance to avoid affecting export tax refund.
Kevin LinYears of service：4Customer Rating：5.0
Trade Solutions ManagerStart a Chat
Supply chain planning of Japan entrepot trade shall establish an inventory linkage strategy. For commonly used mechanical and electrical products, 10%-15% safety stock can be stored in Japan bonded area to shorten the delivery cycle.
The cost actuarial model shall control the entrepot cost between 3% and 5% of the cargo value, and the cost composition includes international freight, bonded storage fee, packaging replacement fee, filing service fee, etc. For trade term conversion, it shall be converted from FOB Shanghai to CIF Japan Bonded Area, then converted to FOB Japan Bonded Area to EU, ensuring that the cargo title is controllable throughout the whole process. In addition, the trade structure of "origin country → Japanese entrepot trader → destination country importer" shall be adopted to avoid direct transaction between the origin country enterprise and the destination country enterprise, and reduce the risk of anti-dumping traceability.