Japan to Revise Tax-Free Shopping Rules for Tourists
The Japanese government is considering revising the rules for consumption tax exemptions for foreign tourists. The reason for the change is that some foreign visitors are believed to be buying goods at tax-free prices — and then reselling those goods inside Japan.
When people who live in Japan pay for goods or services, they have to pay consumption tax. The general rate for consumption tax is 10%, but some things like store-bought food and non-alcoholic drinks are taxed at 8%.
Currently, foreign visitors who are only in Japan temporarily can get tax exemptions at certain department stores, shopping malls and electronics stores, as well as at airport duty-free stores.
There are a number of conditions, but basically a foreign visitor can get a tax exemption if they spend over 5,000 yen (around $34) on products that are for their personal use and that will be taken out of the country. Because consumption tax is only paid on goods used domestically, goods that will be used outside Japan — like souvenirs — are exempt from this tax.
However, goods bought at tax-free prices are not supposed to be used or resold inside Japan!
Japan's current system is unusual in that foreign visitors can buy goods at tax-free prices by simply showing their passport at a tax-free store. Later, Japanese customs is supposed to check that visitors are actually taking those goods out of the country, by examining purchase records provided by tax-free stores.
However, many visitors leave the country without stopping at customs.
The government now plans to change the system so foreigners pay the full amount, including consumption tax, on goods they buy in the country, and only receive a tax refund when customs has confirmed that the goods will actually be taken out of the country.
Details of the new system, including when it will begin, are expected to be released later this year.
