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Gov’t to simplify duty-free system for foreign tourists in Japan

  • December 5, 2017
  • , The Mainichi
  • English Press

The government and ruling coalition are planning to simplify the consumption tax exemption system for foreign tourists in Japan, in an attempt to boost tourist expenditure in the country, the Mainichi Shimbun has learned.

 

Under the current system, a tax refund can be claimed by tourists if they spend at least 5,000 yen (about $44) at the same store within the same day on goods in one of two categories — general items such as electronic appliances and jewelry and consumable items such as cosmetic and food products. However, under the proposed new system, so long as the combined amount of expenditure is 5,000 yen or above, regardless of the category, then it will be possible to receive a tax refund.

 

The new system is set to be incorporated into a fiscal 2018 tax reform outline drawn up by the ruling coalition.

 

One of the reasons behind the change is that tourists have voiced complaints that the two-category system was difficult to understand. Consequently, the government has decided to make total spending, as opposed to category-based spending, that amounts to at least 5,000 yen (up to a limit of 500,000 yen) tax-free. It is also hoped that the plan will trigger tourist spending in drugstores, which sell a range of relevant products such as cosmetics and home electrical appliances.

 

The new system is also set to be made electronic in order to increase convenience. Under the current arrangement, foreign tourists in Japan are required to attach a record of purchase inside their passports to claim a refund. However, this system has been criticized by foreign tourists, with comments such as, “It makes my passport too thick,” and, “It’s troublesome.” As a result, information regarding purchases will be transmitted electronically from the relevant tax-free store to customs — thereby simplifying the process at customs.

 

According to the Japan Tourism Agency, there were approximately 40,000 duty-free stores in Japan as of April 1, 2017, which represents a roughly seven-fold increase since April 2014. In addition, the total amount of travel-related expenditure by tourists in Japan between January and September 2017 was 3.28 trillion yen, and is increasing in such a way that the 2017 figure should surpass the record amount spent in 2016.

 

The government is hoping that foreign tourist expenditure in 2020, the year of the Tokyo Olympics and Paralympics, will reach 8 trillion yen. Boosting expenditure through a simplified tax-free system is also seen as one way to make up for the recent drop in shopping sprees by Chinese tourists.

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