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Japan to expand consumption tax breaks for foreign tourists

Japan to expand consumption tax breaks for foreign tourists

TOKYO — Foreign visitors to Japan will soon be eligible for an expanded consumption tax exemption that will allow them to combine the value of their general-merchandise and consumable purchases to reach the 5,000 yen ($44) minimum required to qualify for the tax break.

Under the current system, each purchase must be worth at least 5,000 yen to qualify for the exemption. Someone who buys a 3,000 yen T-shirt and 2,000 yen worth of snacks, for example, is not eligible for the benefit. 

The Ministry of Finance and the Japan Tourism Agency will incorporate the new policy in their fiscal 2018 tax system revisions after discussions with ruling party’s tax commission, with a view to implementing the new rules next summer.

The new regulations will require that items be placed in clear plastic bags so that they can be checked. Retailers and companies in the tourism sector will be encouraged to inform shoppers of the change in advance.

According to the tourism agency, the number of tax-free stores in the country reached 40,532 in April, up nearly tenfold from five years earlier. Although bulk purchases by people on group tours have subsided, spending by individual tourists remains solid. Spending by overseas visitors hit a record 3.27 trillion yen between January and September.

The industry has been pressing the government to allow foreign shoppers to combine purchases of general merchandise and consumables and make them eligible for the consumption tax exemption, in hopes of further increasing sales.

The tourism agency is also considering creating an exit tax that would require departing visitors to pay 1,000 yen. Revenue from the new tax would be used to improve infrastructure. 



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