Tokyo Customs did not require tourists to pay more than $2.22 million in taxes for missing duty-free items

TOKYO — Tokyo Customs failed to charge at least 339.87 million yen (about $2.22 million) in excise taxes from incoming foreign tourists for failing to present duty-free purchases when leaving the country in fiscal years 2022 and 2023. Japan found it.

The supervisory board informed the Ministry of Finance that the current rules on tax collection are “inappropriate” and do not correspond to the reality of the increase in incoming tourists.

Putting a tax on lost duty-free items is seen in Japan as a way to prevent people from consuming or reselling duty-free items. When a tourist purchases duty-free items, the store shares the passport number and list of purchased items with customs, which then checks these items at the airport. Customs considers tourists trying to leave Japan without the items on the list as a “suspicious departure” and informs them that they must pay the relevant consumption tax. Although such notifications are not enforceable, if travelers return to Japan, customs officials can verify that they owe taxes.

The supervisory board investigated the taxation status of tourists with “suspicious departures” in fiscal years 2022 and 2023, when foreigners spent about 64.7 billion yen (about $423 million) on duty-free products. It was revealed that no notification was made for nine people who left Haneda Airport and Narita Airport to pay a total tax of 339.87 million yen in the 2022 fiscal year. Each of them spent more than 100 million yen (about $654,000) on duty-free goods, bringing the total purchase price to about 3.4 billion yen (about $22.22 million).

Notices were previously sent in writing, but due to legal changes, most notices are given orally since fiscal 2022. However, the Ministry of Finance’s guidelines require written notification to be sent to tourists “in cases where the purchase amount exceeds 100 million yen and.” “The date of departure is known in advance.”

Customs officials responsible for the nine people announced to the inspection board that they gave up sending written notifications on the grounds that “there was not enough time to create the documents.” Five of the nine tourists could have been notified verbally, but the Ministry of Finance mistakenly told customs that “written documentation was required”. The remaining four were subject to written notification, but since they arrived at the airport just before the end of the boarding process, they did not have enough time to handle their cases.

The Supervisory Board noted that there was a switch from written notification to verbal notification, taking into account the time constraints imposed just before leaving Japan, and that procedures violating this change were “inappropriate”. It has also been suggested that tourists may have deliberately taken advantage of time restrictions to evade taxes.

It is considered problematic for people who want to avoid taxes and resell goods to buy duty-free goods. The Japanese government has accordingly decided to implement a “refund method” in the future, where tourists will pay the consumption tax at the time of purchase and the tax will be refunded when they leave the country.

(Japanese original by Toru Watanabe, Tokyo City News Department)