Amazon's new policy will take effect! Sellers: This is the most difficult year

This year, Amazon’s actions on policies and pages have almost exceeded the total of the past few years, and the constant changes have put many sellers under pressure.

Seller Mr. Fu lamented that this year was the most difficult year since he started working on Amazon. This difficulty was not only caused by market competition and declining profits, but also by the endless policy adjustments of the platform. "Many times it can be said to be unreasonable. I feel that 70% of my worries are not about how to improve performance, but about dealing with endless policy adjustments and audits of various types."

This statement hits the pain point of many people. " Every day when I go to work and open the backend, I don't care how many orders I have. I first check if the account is there, then if the link is there, and finally if the brand is there. "

Amazon has made frequent moves, both passively and actively . For example, deepening compliance is a hard requirement in the consumer market; but with the constant impact of new platform forces such as Temu, Amazon is also raising operational requirements and eliminating some unqualified sellers, hoping to screen out partners with better products or strategies. What sellers need to do is to continue to strengthen their skills. As long as they stay at the table, they will have the opportunity to enjoy the better market after the cleanup and participate in the next stage of high-quality development of the platform.

At present, new problems have emerged in different Amazon sites: 1. Starting from October, Japan's JCT policy and ACP new policy will take effect at the same time. Many freight forwarders have suspended receiving goods through non-label channels, and a group of sellers intend to abandon the Japanese market; 2. Local accounts on the UK site have been withheld and paid VAT taxes, and another group of sellers have had their funds frozen in the past two days; 3. Third-party payment accounts need to complete the risk control process, otherwise it may affect payment collection. How to deal with these situations? We have done some sorting.

Japan's new policy will take effect, and many freight forwarders have suspended receiving goods

Japan is the third largest e-commerce market, so in addition to popular European and American sites, Japan is also a major site for cross-border sellers. But as October approaches, sellers on Japan will start to have a headache.

The first is the Japanese consumption tax policy notified by Amazon.

Starting from October 1 this year , the reform of the Japan Consumption Tax (JCT) "Compliant Invoice Retention System" initiated by the National Tax Agency of Japan will come into effect, which will affect sellers' sales on Amazon Japan site.

After the new policy is implemented, the seller's JCT registration number must be displayed on the invoice issued by Amazon so that buyers can deduct taxes. If the seller meets any of the following conditions, he or she will need to become a JCT tax entity and is obliged to pay taxes according to regulations:

The taxable sales in the base period exceed 10 million yen, or the taxable sales in the base period do not exceed 10 million yen, but the taxable sales in the first half of the previous base year exceed 10 million yen, or the registered capital of the company is more than 10 million yen. (The base period refers to the two base years before the tax deadline. The base year for domestic sellers is generally from January to December.)

The standard consumption tax rate in Japan is 10% , which will inevitably increase the cost for sellers. Therefore, sellers are mainly concerned about two aspects: 1. Can they not register? 2. What will be the impact of not registering?

First, according to the law, sellers who are obliged to apply must submit registration applications in accordance with the law, but Amazon does not have any regulations to punish those who fail to register, which is equivalent to non-compulsion ; secondly, if sellers do not register, buyers who need invoices will not be able to apply for tax deductions when they purchase goods in the future, which may lose some customers. Therefore, Amazon recommends that sellers obtain a JCT registration number before October 1. After October 1, Amazon will also upgrade the JCT registration number screening and identification function on the enterprise purchase page to further allocate traffic.

From the perspective of cost, sellers can also apply for relevant deductions after registering JCT. If the seller pays import consumption tax when importing goods at the customs, but no actual sales are generated in the end (that is, the output consumption tax is less than the input consumption tax), the seller can use his JCT number to deduct and refund the tax of the goods that have not been actually sold to the tax bureau, and the excess will be refunded and the shortfall will be supplemented. Calculation formula: declared amount = output consumption tax - input consumption tax.

But there is another problem here. In the customs clearance process after applying for the JCT number, the seller must cooperate with the freight forwarder to choose the ACP (customs agent) model to obtain the tax bill for deduction. This model uses a reverse calculation method that puts the consumption tax in front, which many sellers are unwilling to face.

According to freight forwarders in the industry, the two commonly used customs clearance modes in Japan are IOR and ACP. The former cannot provide the seller's own tax bill, and the import bill cannot be used to offset the import consumption tax. Under the ACP mode, non-Japanese sellers can designate a person / company residing in Japan to handle customs formalities on their behalf. However, this mode requires the prepayment of tariffs and consumption taxes according to the reverse algorithm during the customs clearance stage. The declared value will reach 60%-70% of the normal linked sales price, and the tariff cost is very high .

In July, the Japanese Customs issued a notice on the revision of import declaration items and the ACP system. After redefining importers , it basically made it clear that overseas companies can only import and clear customs through the ACP model. This new policy will take effect on October 1st along with the JCT policy. This combination of measures aimed at cross-border e-commerce sellers will bring a strong shock wave.

At present, there are two main ways for Chinese sellers to ship goods to Japan: import without labeling through general trade, or labeling through reverse package calculation. However, with the ACP reform coming into effect soon, logistics companies have also begun to wait and see. Many freight forwarding companies have suspended receiving goods through Amazon Japan’s non-labeling channel. Today ( the 18th) is the last day. Some freight forwarders have also suspended receiving goods through the reverse package calculation channel. Some freight forwarders used their own importer identity and were stuck in the cabinet and repeatedly submitted information.

With both sides prepared, freight forwarders have also begun to promote binding them as ACP to sellers in case general trade customs clearance becomes strict and difficult from October, so as to facilitate switching of customs clearance methods.

A group of sellers may abandon the Japanese site

Whether it is consumption tax or reverse declaration, the cost of sellers on the Japanese site will increase. A freight forwarder said frankly that the JCT army is coming like crazy, and recently received many questions from customers on the Japanese site, asking about the new policy of Japan Customs in October.

Some sellers are not optimistic about the future. One seller said: "I didn't want to pay the 10% consumption tax before, and I never registered for a JCT tax number. It is safer to operate in compliance with the regulations in the long run. Today I decided to follow up on the JCT matter next week. But the store information is someone else's, so I probably can't register for a JCT tax number, so I can't get a tax refund, and my profits will be reduced. If JCT+ACP is required in the future , I will have to close this store. "

Many small sellers are waiting and watching. "Generally speaking, if you maintain sales of 10 million, there won't be any problems. But once you reach the tax obligation, you can't cover the cost like big sellers, so you want to wait until the policy is strictly enforced before you do it. After all, making money is the most important thing."

Compared with the European and American markets, the Japanese market is small and has low profits. Some sellers with multiple sites have gradually shifted their focus to other sites such as the US site. One seller said that the profits from the Japanese site are not even enough to pay the operator's salary, and he is ready to transfer the operation to the US market, where the same effort can be exchanged for several times the profit.

The requirement to register a JCT number has accelerated the loss of confidence in the Japanese market for some sellers, so they are not prepared to submit a JCT tax number for the time being. What really makes sellers lose their defense in this market is that buyers are notoriously "difficult to serve".

A seller talked about Amazon business and was calm when analyzing other sites, but he almost hit someone when talking about the Japanese site. He gritted his teeth and said that the Japanese could write a small essay to write a bad review, and they were very picky about the details, and the rating had never been higher than 4. Other sellers also complained bitterly, saying "I have seen 4 pages of bad reviews on the Japanese site" and "the reviews are really low. The US site has a rating of 4.2, but it can be pulled down to 3.5 on the Japanese site, which is 0.7 lower."

One seller said that he withdrew from the Japanese market two years ago. “There are basically no good reviews, but bad reviews appear all the time.”

This topic is very popular on Zhiwubuyan. A Japanese site operator pointed out that sellers who are used to the European and American markets often have difficulty adapting to the Japanese market, and this site is not suitable for those who want to make a quick purchase; sellers who can calm down and operate will feel the high customer stickiness brought by high-quality products and services.

"I think Japan can do it. It tests the patience of a team and an individual. Buyers in this market value the spirit of contract and will appreciate it if you make products and services with heart. I have met no less than 10 buyers who contacted me and were still looking for an old product after it was sold for two years and then replaced with a newer one."

After the launch of the JCT and ACP dual promotions, there will be a new round of reshuffles on the Japanese site. At that time, sellers who can stay firmly in this market will have more sales opportunities.

The UK local VAT incident escalates, and another wave of sellers have their funds frozen

A few years ago, the European VAT tax also made sellers confused, but after gradually digesting this tax cost, many sellers were able to make ends meet. However, the tax of about 20% is still a high cost. A few sellers have gone through a lot of trouble to get a local account in the UK, temporarily avoiding this expense, and also widening the profit gap with domestic accounts.

Now, Amazon has started to take action against these accounts and has launched two actions so far.

Last week, many sellers’ UK local accounts were suddenly withheld and paid VAT, and some were even frozen. This is a big benefit for cross-border sellers who have worked hard to pay taxes but are beaten by local accounts, as their operating costs are now aligned. However, sellers with local accounts are panicking, as if they are chased for tax, many sellers will have no choice but to give up their accounts.

In this round of rectification, sellers analyzed that as long as the account VAT address is displayed as HMRC's office address in the UK, it is identified as a non-UK company applying for VAT, or the address is a virtual address instead of a real business office address, and the full amount must be withheld and paid. Once the incident came out, the industry was in an uproar, and sellers using local accounts began to move their warehouses.

Following the ban on a number of UK accounts whose tax number addresses were HMRC on September 4, Amazon took action again on September 13, and some stores whose addresses were not HMRC were also targeted.

"I thought that since the store's address was not HMRC's, I could avoid paying VAT, but I was too happy . I received an email early in the morning saying that my account funds were frozen and I needed to submit various documents to prove that the store was registered in the UK. To be on the safe side, we urgently arranged to move the warehouse and immediately sold to another store. " A seller said, "The cost of creating a third-party order is really ridiculous! For more than 200 pieces of products, the processing fee is as high as 2,000 pounds!"

Amazon stated in a batch of notification emails on September 13: After reviewing the company information recorded by the seller in the UK Companies Registry, it believes that there are signs that the seller is not established in the UK for VAT purposes. Therefore, the seller is required to provide additional evidence to prove that the company was established in the UK in accordance with VAT regulations.

If the seller fails to provide relevant documents within 30 days, Amazon will determine that the seller has not established a company in the UK and will begin to collect and pay VAT on its B2C sales. The seller will also need to pay the VAT amount. The seller can continue to sell on Amazon, but cannot pay any funds from the account. If the documents can prove that the company was established in the UK, Amazon will release the payment.

The documents that sellers need to submit include evidence that they are actually carrying on business at the provided UK address; an extract from the UK Companies House, listing all the company's directors ; documents proving the identity and residence of each director listed in the extract ; and proof of any employees living in the UK. Obviously, most sellers cannot provide this.

Amazon has also clearly notified the first batch of sellers that were investigated and displayed tax bureau addresses that they will start collecting and paying VAT and freezing funds on September 1, and sellers will need to pay the tax:

From 1 September 2023, Amazon will begin collecting and remitting VAT on your B2C sales as we believe your business is not considered to be established in the UK for VAT purposes. UK VAT e-commerce legislation requires Amazon to collect and remit UK VAT on B2C products delivered in the UK by non-UK resident businesses.

The regulations were initially implemented on January 1, 2021, and we are assessing the UK VAT you owe from that date. We expect the assessment process to take up to 14 days and we will contact you with the outcome of the assessment. You can continue to sell on Amazon, but you will not be able to disburse any funds from your account until you pay Amazon the UK VAT you owe.

Why does this happen?

We have taken this action because according to HM Revenue's records the address associated with your VAT registration number is HM REVENUE AND CUSTOMS OFFICES, RUBY PLACE, ABERDEEN, AB10 1QZ - this is the default address used by HM Revenue to register a non-VAT established business in the UK.

It has been confirmed that if the VAT address shows an HMRC address, all taxes must be paid on behalf of the company; if the gateway backend shows non UK company, the account may also be subject to withholding and payment in the future. It is recommended to transfer the account and withdraw cash as soon as possible.

Amazon provides the opportunity to retain the account by paying taxes, but many sellers’ store funds are not enough to pay the taxes, and paying the taxes is obviously not worth the cost. Therefore, most of these accounts have begun to move and are ready to abandon their accounts.

For sellers of local accounts, tax audits are a major headache, but if the advantages of local accounts can be eliminated, sellers will also be happy to see it happen, as they worry more about unequal distribution than too little.

As one seller said, "Overall, the profits in the past two years are much higher than the cost of relocation. It is only a matter of time before I am investigated for tax non-compliance. If everyone withholds taxes, I would rather make less profit and operate with peace of mind and fair competition. It would be best if all accounts are withheld. I will not use local accounts anymore, and I will not sell products that I cannot sell."

Even so, it is still a headache for the moment, coupled with VAT tax integration, etc. One European seller said frankly that this is the darkest moment and he has not slept well for two weeks. In addition, brand abuse, associated account suspension, VAT tax inspection and other waves come one after another, and sellers must cheer up to cope with them. Another problem has also attracted the attention of sellers.

The risk control upgrade of the third-party payment account has not been completed or has affected the payment collection?

Recently, some rumors have spread that Amazon requires complete payment account information.

One theory is that Amazon has officially required all payment service providers to provide contact information of seller accounts, such as email and phone number , as well as beneficiary bank account information . If sellers fail to provide such information, Amazon will restrict sellers from binding payment accounts, or suspend payments to bound accounts from mid-October. Amazon also provides steps to guide sellers to submit contact information and relevant bank account information in compliance with regulations .

Another more radical statement is that starting from September 7, new stores will need to provide a payment account when registering, and third-party payment platforms will require the registration of the store's entity company's public account or legal person account . Otherwise, Amazon will not recognize the payment account and will not transfer money . Old stores may also have the same requirements and restrictions in the future.

This news surprised many sellers, but no related news was released by either the platform or the service provider. Moreover, September 7 has passed and there has been no feedback from the industry regarding such issues, so it was deemed to be false news.

The rumors of various payment account requirements have made sellers very anxious. @Amazon五爷 posted the original text of Amazon’s policy:

Starting September 6, 2023, sellers will need to complete the necessary know-your-customer (KYC) and other risk management control processes before they can use a bank account in a Payment Service Provider (PSP) as a deposit method.

PSP (Payment Service Provider Program) is a partnership between Amazon and vetted external Payment Providers who open bank accounts for sellers to receive payments of their sales proceeds.

Sellers can find out the KYC review status from their PSP by contacting their PSP’s customer support or account manager. Alternatively, sellers can find out the PSP-KYC status of their bank account registered with Amazon through the Deposit Methods page in Seller Central.

He said that many online rumors are just misleading. " In the policy interpretation on September 6 , Amazon only notified that if the corresponding payment company of some payment accounts is not a certified payment service provider or does not meet the compliance requirements of a certified payment service provider, it will affect Amazon's payment or collection. As for the market rumors that it must be bound to a legal person or a public account , it is confusing. "

Amazon's new moves are endless, and sellers need to steer the ship well and adapt to the changing environment, surviving first and then seeking development. As one seller said: "First stabilize the basic market and ensure that you don't lose the table, then spend some energy to keep trying in the new market environment until you find your new ecological niche. Changing too quickly will be too risky, and if you don't change, you will easily die on the beach."