Japan to Require Cross-Border E-commerce Platforms Like Temu to Pay Consumption Tax

Regarding purchases from overseas via cross-border e-commerce, the Japanese government and ruling party have begun adjusting related policies, requiring large cross-border e-commerce platforms to assume the obligation to pay consumption tax. Small cross-border transactions under 10,000 yen (approximately 454 yuan), which previously enjoyed tax exemption, will also be included in the consumption tax scope. This measure aims to address the current situation where a large number of low-priced goods are flowing into the Japanese domestic market through Chinese-funded e-commerce platforms.

At a meeting of the Liberal Democratic Party’s tax system research committee held on November 26, the Japanese government proposed this tax system amendment, planning to include it in the 2026 tax reform outline to be compiled this year.

The proposed amendment stipulates that e-commerce platforms with annual sales exceeding 5 billion yen will be required to pay taxes. It is expected that platforms such as Temu and SHEIN from China, and Qoo10 (operated by eBay in the US), will be subject to taxation. Consumers purchasing imported goods under 10,000 yen through these platforms will no longer enjoy the previous tax exemption policy and will be required to pay consumption tax. This means that the purchase price of goods will increase by about 10%.

Currently, Japan exempts imported goods with a taxable price of less than 10,000 yen from consumption tax. This regulation also applies to online shopping channels selling overseas goods. This is one of the reasons why Chinese-funded e-commerce platforms can sell goods at low prices. Meanwhile, Japanese domestic retailers, who are legally required to pay all taxes, are thus placed at a competitive disadvantage.

Under current policy, imported goods priced above 10,000 yen are subject to consumption tax. In such transactions, merchants on the platform are obligated to collect consumption tax from consumers and remit it to the government. However, reports indicate that tax evasion by merchants on cross-border e-commerce platforms is not uncommon.