"The days of getting an instant discount at Don Quijote are over"... Heading to Japan to shop? Get ready for 'airport queues'!

From Tax Exemption at Purchase to Refunds
5,000-Yen Minimum Purchase Threshold to Remain

Starting next month, foreign tourists visiting Japan will have to first pay the tax-inclusive price when making purchases. They will then be exempted from the tax through a refund system that returns the tax before they leave the country.

Inside a Don Quijote store

According to the Nihon Keizai Shimbun (Nikkei) on October 23, the Japanese government will revise its consumption tax exemption system for foreign tourists as described above. Under the current system, tourists can pay tax-free prices when buying goods at eligible stores, such as department stores and drugstores, with the consumption tax deducted at the time of purchase.

Restrictions on tax-free purchases will also be eased. The daily purchase limit of 500,000 yen per store, which currently applies to consumables such as food, medicines and cosmetics, will be abolished. The cap on the total value of tax-free purchases will also be removed, including for general goods such as home appliances and bags. However, the minimum purchase threshold of 5,000 yen required for tax-free shopping will remain. In addition, the requirement to package consumables such as food and cosmetics in special transparent bags will be abolished.

As the "iPhone Duo" went on sale in Tokyo, Japan, on the 23rd, the first customers entered the Apple Ginza store as employees cheered. Tokyo, Japan = EPA Yonhap News Agency

The reform is intended to prevent the abuse of tax-free benefits for resale. Nikkei reported that there have been repeated cases of some foreign tourists making unfair profits by reselling high-priced goods purchased tax-free in Japan.

In Japan, the removal of the purchase limit on tax-free goods has raised hopes that tourists will spend more, while also prompting concerns that the more complicated refund process could dampen consumption. Masaki Akita, chairman of the National Tax-Free Shop Association, said at a press conference on October 22 that he expected the changes to “prevent the fraudulent use of the tax-free system while also bringing positive changes to tax-free stores.” Nikkei also reported that the changes would reduce the workload for store staff and that eliminating the purchase limit could lead to more high-value spending.

Meanwhile, the department store industry has voiced concerns about declining sales. Tourists have often used the money they saved by not paying consumption tax at the point of sale to buy additional goods, but this type of spending could decline as they will have to pay the tax upfront. A department store representative told Nikkei that “there will also be less spending of the consumption tax saved through tax-free shopping on items such as boxed meals and side dishes from department store basement food halls.”

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