Koreans Also Bought in Bulk at Don Quijote... Japan Considers Abolishing 'Tax-Free Shopping' for Foreigners Due to Reselling

Some Ruling Party Members to Propose Abolishing Tax-Free Shopping
"Abuse of the Tax-Free System Undermines Trust and Fairness"

Japan is considering abolishing its tax-free shopping system for tourists. This move comes after authorities discovered that some foreign visitors were purchasing Japanese products at low prices and reselling them at higher prices elsewhere.

On June 4 (local time), the Hong Kong-based South China Morning Post (SCMP) reported that Kenji Nakanishi and Kazunori Tanaka, both members of Japan's ruling Liberal Democratic Party, are planning to submit a bill to abolish the tax-free shopping system for foreign tourists.

Photo by Yonhap News Agency, Security guard at the famous Japanese chain discount store Don Quijote.

Nakanishi stated, "We do not want foreign tourists to visit Japan just because it is cheap," and added, "They should understand the true value of Japan." Tanaka also pointed out, "The misuse of the tax-free system undermines the credibility and fairness of the consumption tax," emphasizing, "We cannot allow this situation to continue."

Currently, Japan exempts foreign tourists from the 10% consumption tax when they purchase goods worth 5,000 yen or more. However, some foreign visitors have reportedly exploited this system by purchasing goods in bulk at low prices in Japan and reselling them at higher prices in their home countries.

According to official data compiled by the Japanese government, from March 2022 to April 2024, 690 foreign tourists made tax-free purchases totaling over 100 million yen. However, the products they bought were not subjected to customs inspections for export.

Previously, on May 29, Kyodo News reported that some lawmakers within the Liberal Democratic Party were preparing a proposal to abolish the tourist tax-free system. According to the report, these lawmakers are part of a study group involving former Prime Minister Taro Aso, and they questioned whether a system that supports foreign tourists buying luxury goods through tax incentives could gain public understanding.

Meanwhile, the Japanese government is separately discussing a revision to the tax-free system for foreign tourists. Currently, foreign tourists pay the price excluding consumption tax at the point of sale. However, starting in 2026, tourists will pay the full price at the time of purchase and receive a refund for the consumption tax at the airport upon departure. This measure is intended to prevent the abuse of the tax-free system for unjust gains.