Shopping is a major drawcard for visitors to Japan, with everything from unique souvenirs and traditional crafts to high-quality electronics and beauty products on offer. A key part of its appeal is the current tax-free system, which lets tourists avoid paying consumption tax at eligible stores simply by presenting their passport at checkout.
Starting as early as the 2026 financial year, Japan is looking to shift to a refund-based tax exemption model which is commonly used in other countries around the world. Under the new system, tourists would pay the full price including consumption tax (10%, or 8% for food items) when shopping at duty-free stores. To claim their refund, travelers would present their purchases to customs officials upon departure (to ensure the goods are leaving the country), and refunds will be issued either in cash or directly to a pre-registered credit card.
What is behind the changes?
The proposed changes are intended to address loopholes in the current system, where some visitors have exploited tax exemptions by reselling duty-free items domestically for a profit. A 2022 customs survey highlighted this issue, with 1.85 billion JPY in unpaid taxes resulting from unverified tax-free purchases.
Will there be any benefits for tourists under the new proposals?
The government is looking at making the new system more convenient for tourists. The current 500,000 JPY cap on tax-free consumable items like cosmetics and food could possibly be removed, and distinctions between "general" (e.g. clothing) and "consumable" goods (e.g. food items and beauty products) may be abolished.
Additionally, retailers will no longer need to use special packaging to indicate whether an item has been opened, reducing administrative burdens.
For now, these changes remain proposals and are not yet in effect. Visitors planning a trip to Japan can still take advantage of the current tax-free shopping system, making it an ideal time to enjoy the convenience of skipping consumption tax at eligible stores.
