Japan’s government ‘considering tax free shopping change to close loophole’

By Kristiane Sherry |

tax free shopping Japan Duty free retailers, like those in Haneda, are likely to be affected by the move

Duty free retailers, like those in Haneda, are likely to be affected by the move

The Japanese government is reportedly mulling over a change to its tax free shopping policies, which would see it move to a reimbursement model for tourists.

According to multiple reports, including one from the Nikkei, the current system is perceived as being open to misuse.

TRBusiness is in the process of verifying the reports.

At present, tourists shopping in the country do not pay local consumption tax at point of purchase at designated duty free shops on items for personal use. 

The onus is on the retailer to check that shoppers are non-residents, explain that the goods must leave the country within six months, and keep purchase records.

Passengers are typically asked to produce their passport at point of purchase, but items are not usually checked when they leave the country. 

It is claimed that some buy products under the scheme to be resold within Japan. 

Under the proposed overhaul, tourists would pay consumption tax at point of purchase, and receive a tax refund when they leave the country.

This is standard practice in many countries that offer tax free shopping programmes for international tourists. 

It is expected that the government will debate the proposed changes in 2024. Any move to a reimbursement system is unlikely to be implemented until at least 2025. 

The UK government’s decision to cull tax free shopping for visitors has directly cost it £200 million, Paul Barnes, Association of International Retail CEO, recently told a Culture, Media and Sport committee.

More to follow…

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