Method of gaining exemption from paying consumption tax when your family visit Japan

This post is also available in 日本語

Foreign nationals who visit Japan for sightseeing purposes do not need to pay consumption tax. If you carry out the procedures at the store, you will be exempted from consumption tax. Until September 2019, consumption tax in Japan will be 8%, but from October 2019, consumption tax is due to be hiked to 10%. Here, I shall introduce you to the method of being exempted from paying consumption tax, so that you can shop at prices 10% cheaper with the consumption tax removed.

What is consumption tax?

Consumption tax is a tax that must be paid by people living in Japan. This is used for social welfare (child rearing, nursing care etc.) in Japan, so it is paid by the people using such services. Even foreigners who live in Japan are not exempt from paying consumption tax. As you use social welfare due to living in Japan, you also have a duty to pay consumption tax.

However, as foreigners visiting Japan for sightseeing purposes do not use social welfare, there is no need for them to pay consumption tax.

People exempt from consumption tax

Foreigners who visit Japan for sightseeing purposes are exempt from consumption tax. However, it is necessary to purchase goods at a duty-free store, and fill out an application.

Persons who are not exempted from consumption tax

Even if you are a foreign national, provided you are working in Japan, you will not be covered by the exemption. If you go shopping with your family who are visiting Japan, only they will be exempt from paying tax.

Foreigners who are not exempt from consumption tax

• People who are working at offices in Japan
• People for whom more than six months have passed since entering Japan

Items covered by the exemption

You are exempt from paying consumption tax when purchasing products. These can be divided into two types of products – “expendable items” and “general items”.

Examples of expendable items

• Drinks
• Food
• Pharmaceuticals
• Cosmetics

Examples of general items

• Refrigerator
• Smartphone
• Clothing
• Home appliances

Items not covered by the exemption

In Japan, consumption tax is also applied to services. However, even foreigners who come to Japan for the purpose of sightseeing cannot be exempted from consumption tax paid on services

Examples of services

• Massage
• Luggage repair charges
• Entrance fees to amusement parks

Conditions for exemption from paying consumption tax

There are conditions for you receiving tax relief on the products you have purchased. The conditions are different when the purchased products are “expendable items only”, “general items only”, or “purchasing expendable items and general items together”.

When purchasing expendable items only

• Purchases in one store in one day from above 5,000 yen to below 500,000 yen.
• Items that you will not use in Japan
• You will be leaving Japan within 30 days

When purchasing general items only

• Shopping of 5,000 yen or more per day in one store

When purchasing expendable items and general items together

• Purchases in one store in one day from above 5,000 yen to below 500,000 yen.
• Items that you will not use in Japan
• You will be leaving Japan within 30 days

You will only get exemption from consumption at stores where “Japan Tax-free Shop” is displayed.

The only stores receiving tax exemption are “duty-free stores” approved by the government. These duty-free stores shall have “Japan Tax-free Shop” displayed on them. If you purchase products at stores that are not approved, you will not be exempted from consumption tax.

Flow of purchasing duty-free items

1. Purchase the products at a duty-free store
2. When purchasing state that you “want to receive exemption from consumption tax”
3. Present your passport to the person in the store
4. Expendable items shall be placed in “duty-free packaging”
5. Sign a written oath regarding the purchase
6. You will be exempted from consumption tax

Checking of duty-free items

If you purchase duty-free items, you will undergo a check of the exempted items by Customs & Excise at the airport when leaving Japan. Please be aware that even if you carry out the tax exemption procedures at the store, if you actually use the expendable items while in Japan you will need to pay consumption tax at the airport. Do not break the “duty-free packaging” on the expendable items before leaving the country.

Simply from the exemption for consumption tax, you will be able to purchase items 10% cheaper than you would normally be able to. When your family visit you in Japan, be sure to teach them about duty-free stores and tax exemption procedures.