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.
