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Japan's customs authorities failed to collect 340 million yen in tax from nine visitors who did not meet duty-free requirements for their purchases in fiscal 2022, the audit board found recently as the government considers a fundamental review of the system to prevent abuses.
To be eligible for consumption tax exemption on items purchased in Japan, visitors are required to have them in their possession upon departure to ensure they are not consumed or resold within the country.
The nine did not have the items, including luxury watches and brand bags, worth a combined 3.4 billion yen, with them at the time of their departure.
Tokyo Customs, however, did not tax them due to a lack of time to complete paperwork thought to be required under what was later found to have been an erroneous instruction by the Finance Ministry concerning purchases of that value, the Board of Audit of Japan said. One of the individuals spent more than 1.3 billion yen alone.
The review of the system comes as concerns rise over illicit reselling of duty-free items within the country.
In Japan, foreign tourists are exempted from paying consumption tax, levied at 10 percent in principle, when they purchase goods totaling 5,000 yen or more as long as they intend to use the items in their home countries.
Japan reported 25.07 million foreign visitors in 2023 and has seen a rapid increase in the number, due partly to a weak yen in recent months. There were roughly 60,000 duty-free shops in the country as of March, according to the Japan Tourism Agency.
The nine individuals not taxed had passed through Narita and Haneda airports serving the Tokyo region, the audit board said.
A legal revision in April 2022 enabled customs officials to verbally order tax payments when there is not enough time before departure, but the Finance Ministry erroneously instructed the officials to issue a written statement when people purchase items totaling 100 million yen or more, it said.
The cases were brought to light after the audit board investigated duty-free purchases totaling 64.7 billion yen made over two years from April 2022.
© KYODO
7 Comments
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chotto_2
What's so difficult? Item needs to sealed in factory packaging and shown at airport tax counter.
リッチ
Why was there no time? These people broke the law they should miss their flights.
sakurasuki
That will be more than 30 million yen in tax per visitors, how much they really spend in shoping?
factchecker
How pathetic are these people. They couldn't run a bath.
Time to scrap the system and pocket the tax. There's an enormous national debt to service that money should go towards.
garymalmgren
The nine did not have the items, including luxury watches and brand bags, worth a combined 3.4 billion yen, with them at the time of their departure.
sakurasukiToday 04:56 pm JST
That will be more than 30 million yen in tax per visitors, how much they really spend in shoping?
Interesting maths and I will take it a little further. Actually 340 million divided by 9 is 37 million.
That 37 million is the unpaid consumption tax of goods purchased. 8% for food items and 10% for non food items. If we round that off to 10% because the article does not tell us what was purchased (food or non-food)
we end up with each of these 9 people purchasing 370 million in goods.
That is US $2,460,000 at the 150 yen rate.
DanteKH
I never understood those tax-free or duty-free kind of shopping. Especially during those times when the Japanese currency is on one of it's lowest points in the past 30-40 years. Tourists have more money that Japanese people, also for them, the products are way cheaper in Japan than their countries. Why do you need to loose money cutting the tax from those products too? They can afford it, and besides, the foreign tourists are using the same facilities as the locals here in Japan, including transportation, roads, garbage, sewage, etc ,etc.
Why do you need to exempt them from the taxes?
sakurasuki
@garymalmgren
That's lot!