Japan to Overhaul Tourist Tax-Free System Starting in November

From In-Store Discounts to Refunds Upon Departure
Daily Purchase Limits on Medicines, Cosmetics, and Other Goods Also Scrapped

Starting next month, Japan will switch its consumption tax exemption program for foreign tourists from an "instant discount at the store" to a "post-departure refund" system.

According to the Nihon Keizai Shimbun on the 22nd, the Japanese government said it would introduce a "refund-based" tax exemption system to crack down on illegal reselling, in which people buy tax-free goods at lower prices and then resell them in Japan.

Japanese yen

Until now, tourists could pay a tax-free price when buying goods at duty-free stores. Under the new system, however, tourists will first pay the tax-inclusive price at one of more than 64,000 duty-free stores in Japan, then receive a refund equivalent to the consumption tax after customs at an airport or seaport confirms that the goods are being taken out of the country. This is the first major overhaul in about 70 years, since the tax exemption at the time of purchase was introduced in 1952.

The main reason for changing the system is to prevent abuses of the tax exemption. Some people buy goods at discounted tax-free prices and resell them in Japan instead of taking them out of the country.

Under the revised system, tourists must present their passports at a kiosk in the departure area of an airport or port within 90 days of purchasing the goods and complete the tax exemption verification process. If no separate inspection is required, the process will be completed at the kiosk. If the kiosk indicates that an additional inspection is necessary, tourists must show the goods to a customs officer, who will verify that they are actually being taken out of Japan.

Refunds will be issued in cash at departure or through methods such as canceling a charge on a credit card designated in advance.

The purchase limits for tax-free goods will also change. Under the existing system, a daily purchase limit of 500,000 yen per person applied to consumables such as food, medicines, and cosmetics bought at the same store. The new system will abolish this limit. However, the minimum purchase amount required to qualify for the tax exemption will remain unchanged: a pretax total of at least 5,000 yen at the same store in a single day.

The requirement to pack consumables in separate, special transparent bags will also be abolished. However, tourists should note that they may not be eligible for a refund if they use or consume the goods in Japan. 

Japan's retail industry has responded with a mix of optimism and concern. Duty-free shops and department stores expect spending on some high-end goods to increase after the purchase limit is removed. They also anticipate that eliminating the separate packaging requirement for consumables will help with store operations.

Others, however, worry that tourists may cut back on purchases as the refund process becomes more complicated. They say consumers may be reluctant to buy if they have to complete an additional procedure when departing and pay a refund processing fee.

Novarka, a company that supports tourism marketing, predicted that duty-free sales at department stores could fall by about 10% if the number of traders who buy tax-free goods and resell them in Japan declines. An official at one department store noted, "Related spending could also decline, such as when people use the money saved through tax exemptions to buy lunch boxes or side dishes at the department store's basement food hall."

In 2025, about 42.68 million foreign nationals visited Japan, and their travel spending totaled 9.5 trillion yen; both figures were record highs. The Japanese government aims to increase the number of visitors to 60 million and their spending to 15 trillion yen by 2030, and plans to work to ensure the revised system does not hinder tourist spending.

This content was produced with the assistance of AI translation services.