Seems this topic has suddenly become a popular forum discussion point, and decided to give some personal experiences. Please note these are experiences I faced, or my friends phased during the period Aug – Nov 2010, and things may have changed if you are reading it later. Do not take this contents are pure standard, and check with the documents and authorities as things change, use this just as good reading!
A work in progress as I fill in the details (some I have just left xxx to get the precise name as it alludes me right now).
The basic steps are pretty simple,
- You find a dealer in Japan who can buy the car for you and ship it, or find a dealer locally who has contacts in Japan who can buy the car for you at an auction.
- The dealers quote two prices
- FOB price which is the auction price, Japanese taxes and any local transportation.
- CIF price, the dealer will then add his markup (profit), the cost of JAAI (or equivalent certification) and the shipping and insurance costs.
- The dealer will then ask you to raise a LC with the bank for the CIF value.
- The banks will lock 10% more than the CIF value to cover any changes in currency rates. So make sure you have 10% more than the CIF value in your bank to raise the LC.
- The bank will lock the value using the current exchange rate, but this is not your final cost. The actual amount will be based on the currency rate on the day you get the papers from the dealer just a few days back.
- Another thing important is that you make sure the invoice sent by the dealer for you raise the LC has your name spelt correctly as in your tax file / identity card, and the address is the same. If not you are going to have a big problem when clearing the car.
- Once the LC has been raised the dealer in japan will start the shipping process, and will inform you a tentative date that the ship will leave the country.
- The month (And in some cases the date) the ship leaves the country is important, as the tax bracket the vehicle will fall under is decided this milestone. So work that calculations carefully and make sure the car is not over 3.5 years older as such vehicles are not allowed (usually the dealers know this and will advise you)
- You then test your patience, as the likely hood of the estimated shipping time and actual may vary not due to the ship getting late, but the dealers have a history of telling you a date, and actually shipping it later as they try increase their profits by bulk shipping. You may ask why is he not giving me the benefit of the shipping savings, since you will notice it in the invoice. But the standard policy is that they quote a value less than the actual to ensure you taxation locally remains below the agent market value.
- A few days before the ship comes into Sri Lankan ports, the dealer will send your papers to the bank. The bank will then call you and inform about the receipt of the document, and the moment you sign and confirm on the papers at the bank is when you are actually charged for the LC value and any excess from the 10% the bank retained over the standard value is released back into your account.
- Once you have the documents you can then start the customs clearance process. You will first need to either visit the Inland Revenue to get the TIN/VAT documents, or have an agent who handles tax work help you out. Using an agent is the best approach as they seem to be able to get the documents within a day. In case you don’t have a tax file, a new tax file is created for you 🙂
- You will also have to get the XXX document. Some clearance agents won’t get you this and you then need to go and get this. However most good clearance agents will do this and save you the trouble.
- Once you have the TIN/VAT documents, you then need to contact your clearance agent before you go and handover the documents to the customs (you need to do this personally or provide a letter that the person is handing on your behalf). The queue is minimal and you should be done with the handing over in less than 15mins at MOST!
- The clearance agent will then start the clearance process and inform you of the total tax and accessories price you need to raise the PO from a bank. You then hand over the PO to the clearance agent to complete the clearance.
- The clearance agent will clear the vehicle and inform you, or tell you to be there at the customs gate to pick the car.
Some questions and watch outs
Direct Japanese dealer or Local dealer who works with a Japanese dealer
The best option it seems is to go with a local dealer who has his own company in Japan or a contact that he works in partnership. This way you don’t end up paying a markup for the local dealer.
If you go with a local dealer who has connections in Japan, he will also only charge a down payment for you until the vehicle is purchased in the auction, and once you raise the LC will refund you the down payment.
Can I trust the amount the Japanese dealer quotes
Well this is a tough one. Dealer in the early days seems to have been a lot more customer oriented, but seems the approach now is you tell me the figure you want to spend and will try to get you a vehicle or tell you how much more you need spend (never how much less).
The reason being that the dealer will not share the auction numbers, unless you have some way of connecting to the auction system and checking the auction sale price. However note the auction sale price is not the FOB price, as there are some taxes the dealers have to pay and some auction surcharges.
How much is the general charge on top of FOB prices
The charge is based on the markup by the dealer, and the shipping and insurance charges. Again dealers seem to have been a lot more customer oriented before and the charges were around 220,000 YEN in total for small cars (Vitz, Fit, etc) and 300,000 YEN for medium size cars (Civic, Corolla, RAV4), etc. Larger cars sadly I have no values. However in recent times this value seems to have increased to 350-400,000 YEN, and even small cars are charged 300,000 YEN.
What does the clearance guy do for the money he charges
Some will get the XXX document for you, you need to pay the cash for this
- They will get the market value approved by the local agent
- They will clear the vehicle for you, and based on how “connected” they are decides how quickly you get your car out
- The “connected” feature will also help in the areas of accessories, since there is some grayness in the accessory charges, and you can end up with premium taxes. So the clearance guy can help you here to ensure you don’t get ripped out.
How much can you trust the clearance guy
Clearance guys test your knowledge and can sucker you. One famous cheat is to say that they can save you from some accessory charges as they have contacts in customs, and show the tax amount, and tell you how much you need to bribe the customs. Seems in many cases there is no such accessory charge, and the “Bribe” is actually cash they pocket. How can you track this,
The only legitimate cash being paid is the PO you raise for the payment. This includes the charges + accessories. Anything you pay as cash is something you are paying to the clearance guy or a bribe payment
Find a contact in the local agent to see what are the standard features for your car, and see if these are being mentioned as accessories by your clearance guy. E.g. Alloys are standard for most Honda cars, but not for Toyota. However the clearance guy will see if you are aware of this, if not say the alloys are optional and that you have to pay taxes, and he can save you 50% of it by bribing
However seems that as everything goes the ability to penetrate the customs officers is still possible and influential clearance chaps seem to be able to pull out major savings. No I sadly don’t know such a clearance guy, so please don’t contact me or post any such entries into this forum!