Tax Exemption Benefits Provided at Departure
To Prevent Profiting from Resale Arbitrage
Tax Refund Requires Export Confirmation
Japan will change its consumption tax exemption benefits for inbound tourists to be provided upon departure as early as 2026. This is to prevent illegal activities where items purchased tax-free are resold within Japan for profit.
Japan will change its consumption tax exemption benefits for inbound tourists to be provided upon departure, starting as early as 2026. Getty Images
On the 28th, local media such as the Yomiuri Shimbun and Sankei Shimbun reported that the Japanese government and ruling party plan to include this in the tax reform plan to be finalized within this month.
Currently, Japan's tax exemption benefit allows tourists to purchase goods domestically and pay the price excluding consumption tax upon presenting their passport. The tax exemption benefit is provided immediately at the shopping site. However, the reform plan under consideration involves tourists first paying the price including consumption tax at stores in Japan, then upon departure at the airport, after confirming the export of purchased goods, refunding the consumption tax to a pre-registered credit card or in cash. If export cannot be confirmed, no refund is given. This method is already common in Europe, Australia, and other countries.
Japan will change its consumption tax exemption benefits for inbound tourists to be provided upon departure, starting as early as 2026. Getty Images
This system change is due to suspicion of fraudulent acts where some tourists do not export tax-free goods abroad but resell them within Japan for profit. In a 2022 customs investigation, among 374 people who purchased tax-free goods worth over 100 million yen, only 57 were inspected by customs, and among them, 56 were found not to have exported the goods, making them liable to repay the tax exemption. However, 55 simply left the country, resulting in a tax delinquency amounting to 1.85 billion yen (approximately 17 billion won).
The Japanese government also plans to improve convenience for inbound tourists by abolishing the tax exemption limit, according to Yomiuri. Until now, the tax exemption limit for cosmetics, pharmaceuticals, and other items was 500,000 yen (approximately 4.8 million won).
The new tax exemption system will be included in the 2025 tax reform bill, followed by system adjustments by the National Tax Agency and duty-free shops, before full implementation.
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