Want to buy over 500,000 yen worth of alcohol and cosmetics without paying a single yen in taxes? The Japan Tourism Bureau wants you to do that too!

We are in the midst of a golden age for foreign tourist shopping in JapanNot only is the yen at its lowest value in generations, allowing foreign travelers to exploit the power of their foreign currency, Tourists can largely avoid Japanese sales/consumption tax (between 8 and 10 percent) as long as they take the items with them when they leave Japan.

The savings are not unlimited, however. For the purposes of the foreigner tax exemption, purchases are divided into two categories. For general purchases, such as clothing, electronics, and scary anime plush toys, you’ll always be eligible for the tax exemption as long as your purchase is 5,000 yen (US$33) or more. However, for consumer goods such as cosmetics, packaged foods and beverages, medicines and nutritional supplements, the tax exemption is limited to a total amount of 500,000 yen.after that, you will have to pay taxes on all further purchases in this category.

However Japan Tourism AgencyPart of the Ministry of Land, Infrastructure, Transport and Tourismwants to completely abolish the upper limit on tax exemptions for foreign buyers of consumer goodsand has put forward a proposal to abolish it in less than a year.

The reason for the 500,000 yen limit is that consumable goods are more attractive to potential fraudsters. They plan to buy the items at the tax-free price and then resell them in Japan at a markup that is still cheaper than the taxed price. It is easier to quickly get rid of consumable goods that shoppers would stock up on, such as mascara or skin cream, than, say, cameras or clothing.

500,000 yen seems to be more than enough for personal consumption on a single trip to Japan, but The Japanese tourism authority seems to have its eye on foreign tourists who engage in luxury shopping who want to buy high-end items while in Japan. Alcoholic beverages, for example, fall into the category of consumables, and while you would have to buy a whole lot of cans of Ebisu beer to get to the 500,000 yen limit, if you’re a deep-pocketed drinker looking to buy a few bottles of high-quality Japanese whiskey, you could get to 500,000 yen pretty quickly.

▼ It wasn’t that long ago that Suntory sold a single bottle for 3 million yen.

Does the Japan Tourism Agency’s proposal, which it included in its recent list of tax reform proposals, mean that the Japanese government has concluded that its fears about resale were exaggerated? Not really. If anything, the opposite is true. The reason it is called a tax, liberationno refund is that foreign buyers who meet the requirements do not have to pay the tax when making the purchase. This is in contrast to the tax refund systems for foreign tourists in some other countries, where travelers must first pay the same taxes as locals and then later apply for a refund when leaving the country at the airport or at the border control.

Technically, authorities in Japan have the authority to inspect travelers’ luggage at the airport before departure to ensure that they are actually taking their tax-free purchases out of the country. Tax-free consumer goods must be sealed at the time of purchase so that inspectors can determine whether the packages have been opened while in Japan. In practice, however, such checks are rarely carried out. However, the Japanese government is expected to soon move from tax exemption for foreign buyers to tax refunds. With stricter checks upon departure, the Japan Tourism Agency believes that it is no longer necessary to limit tax savings on consumer goods, since the tax has already been paid at the time of purchase and the absence of the goods upon departure does not mean a refund.

The Japan Tourism Agency’s proposals are included in its reform proposals for Japan’s next fiscal year, which begins in the spring.

Source: Yahoo! Japan News/Kyodo, The Mainichi, Rakuten Travel
Top image: Pakutaso
Insert image: Suntory
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