The Japan Shopping Tourism Organization (JSTO) has announced that starting Oct 1, 2014, Japan will be expanding the tax exemption benefits allotted to foreign tourists (anyone who has lived in Japan less than six months) from general goods to also include consumables and other items. These tax-free stores are different from duty-free shops which deal with custom or border taxes.
Currently, Japan has 5,777 “export sales” stores (tax-free shops) with most being located in the Tokyo and Osaka areas; however, the Japan Tourism Agency is looking to expand the number to 10,000 and focus on regional areas to increase the sales of local specialty goods.
Compared with the European Union, Japan’s system has the advantage of having the product sold at the tax-free price at the time of purchase instead of collecting a refund upon departure; or later in the case of credit card purchases. With those refund procedures and agency fees eliminated, the tourist can purchase products at a lower price, encouraging added consumption. From Oct 1, the tax-free system will be expanded from general goods such as home electrical appliances, clothing (kimonos) and handbags to also include consumables including groceries, beverages (sake, alcohol), medicine, cosmetics, etc. The monetary range for consumables falls between 5,001 yen and 500,000 yen purchased on the same day in the same store for one non-resident.
Japan Today editor Chris Betros speaks with JSTO Senior Managing Director Kenichi Niitsu to hear more.
How are you getting the word out to foreign tourists in the lead-up to Oct 1?
After we announced the new tax-free system at a press conference in July, we got a lot of inquiries from overseas about the tax system. We have been doing PR overseas through the Japanese government, and through JSTO members such as airlines.
What is the difference between tax-free and duty-free?
Not only foreign tourists, but also Japanese people misunderstand this as both are terms used to describe goods that are sold without certain taxes on the requirement that the goods will be sold to travelers who will take them out of the country. Duty-free is limited to goods such as leather goods, alcohol, tobacco, cosmetics, etc, and is only available at airports, ports and special outlets. Tax-free stores, which will be in locations all over Japan, eliminate the 8% consumption tax (commonly called VAT in Europe).
The first tax-free system started after the war for U.S. army personnel. However, this new tax system is for foreign guests, geared toward sightseeing. Tax-free shopping is more wide-ranging and will mean significant savings for foreign travelers.
How does it work?
If you are a foreign visitor, you go into a store with the label saying tax-free in the window. You show your passport. The vendor fills out a form which is attached to your passport. Then you receive the 8% discount. In the case of consumables, you have to take them home. You can’t consume them in Japan. The document must remain in your passport until you leave Japan.
How many tax-free stores are there in Japan?
Last year, there were 4,600 stores. This year, the number will go up to 5,800. Next year, we expect to add another 2,000. What products do you anticipate will be popular among foreign tourists after Oct 1?
I think the most important products will be Japanese sweets and snacks. I also think the new system will be good for regional areas that have specialty food and marine products that you can only get in those areas.
What advice would you give to merchants who are not used to dealing with foreigners?
Don’t be afraid of foreigners. Most of them are interested in Japan, That’s why they are here. Don’t worry if you can’t speak foreign languages. Just smile and speak to them in Japanese. You’ll manage somehow.© Japan Today