The Japan Tourism Agency has proposed significant changes to the country's tax-free shopping system for foreign visitors, set to take effect in the 2025 fiscal year. This initiative aims to enhance convenience for international tourists while simultaneously reducing the administrative burden on tax-free retailers.

The proposed reforms come in response to the 2024 fiscal year tax revision, which introduced a system where tax-free sales are only finalized once customs officials confirm that purchased items are being taken out of the country. This change was implemented to address issues of misuse in the current system. Recent data underscores the severity of these issues, showing that in 2022, the government sought to collect 2.2 billion yen in unpaid taxes from tax-free purchases, with 90% of this amount remaining uncollected.

Key elements of the proposal include eliminating special packaging requirements for consumable items. Currently, this packaging process is time-consuming and can lead to long queues. Some European tourists have also expressed environmental concerns about excessive packaging. The change is expected to streamline processes for both shoppers and retailers, improving overall satisfaction.

Another significant proposal is removing the existing 500,000 yen cap on tax-free purchases of consumables. With the recent trend of high-value alcohol and cosmetics sales, this limit has become a constraint. Lifting the cap could significantly boost consumption and simplify the distinction between general and consumable goods, further reducing administrative burdens.

The agency also aims to simplify the criteria for items eligible for tax-free status. Currently, retailers bear the risk of tax audits when determining if items are for "ordinary use in daily life." This has led to instances of denied sales and customer disputes. The proposed change aims to alleviate this burden, potentially leading to more proactive sales efforts and increased tourism-related consumption.

Additionally, the agency is considering implementing a time limit between purchase and customs verification to further reduce administrative burdens on retailers.

These proposed modifications are part of a broader effort to combat the misuse of the current system while maintaining the attractiveness of tax-free shopping for genuine tourists. The agency aims to strike a balance between preventing fraud and creating a user-friendly system that can contribute to expanding tourism-related consumption in Japan.

Source: 令和7年度 観光庁関係予算概算要求概要 / 観光庁, 国土交通省