Tax Exemption System in Japan

Tax Exemption System in Japan

Update: 29 December 2016

In Japan, there are two types of tax exemption: "duty-free", which exempts you from government tax, and "tax free", exempting you from consumption tax. As of September 2016, the only duty-free shops outside the airports are T Galleria Okinawa in Okinawa, Ginza-Mitsukoshi, and Tokyu Plaza, both located in Ginza, Tokyo. When looking for tax-free shops, look out for shops with stickers and flags with the tax-free mark of the Japan Tourism Agency. You can also easily search the nearest tax-free shops from your current location on LIVE JAPAN.

Necessary Conditions and Eligible Persons for Tax Exemption

Necessary Conditions and Eligible Persons for Tax Exemption

Unless international tourists stay in Japan for a long period of time, they are basically eligible for tax exemption. People who have been in Japan for more than six months consecutively, those working in Japan, and those who have Japanese nationality are not eligible for tax exemption. Besides, there are four requirements that must be cleared as stated below:
・Purchasing items at a shop where consumption tax exemption is permitted.
・The items must be for private use and not for reselling purposes.
・Non-consumable goods, such as wrist watches, clothes, and daily necessities must be brought out of Japan within six months from your date of entering Japan.
・Consumable goods such as cosmetics, medical supplies, food, and drinking water must be brought out of Japan unopened and within 30 days from the purchase date.

Types and Prices of Goods Eligible for Tax Exemption

In the case of general merchandise, you have to purchase goods with a total price of 10,001 yen or more in one day at a shop that offers tax exemption. General merchandise refers to non-consumable goods such as home electrical appliances, accessories, wrist watches, and clothes. In the case of consumable goods such as food, water, medical supplies, and cosmetics, the purchase amount from a single tax-exemption-permitted shop in a single day must be more than 5,001 yen and less than 500,000 yen. Purchase amounts refer to the tax-free price in both cases, and the total amount of purchases for general merchandise and consumable goods have to be calculated separately. If the total amount is over 1,000,000 yen, showing your passport will be required.
Some shopping malls will give you a tax refund for purchases from multiple shops, as long as the total amount of purchases meets the requirements to get consumption tax exemption. In that case, you can get a tax refund at the mall's tax-free counter. Please note that some shopping malls don't tally the amount.

How to Apply for a Tax Exemption

Only tax-free shops offer tax exemption procedures. You are also required to undergo tax exemption procedures on the day of purchase. In general, there are two methods of procedure.

When you buy goods including the consumption tax:
1. After the purchase, go to the tax exemption service counter at the shop and show the items purchased, your passport, the receipts, and, in case you paid by credit card, this very card.
2. Sign the Covenant of Purchaser.
3. Receive the Record of Purchase.
4. The Consumption Tax you already paid will be paid back in cash or deposited to the used credit card (there may be a processing fee).
5. When you depart from Japan, submit the Record of Purchase at customs.

When you buy goods excluding the consumption tax:
1. When you make a purchase at a tax-free shop, you show your passport and buy it at the price excluding the consumption tax.
2. Sign the Covenant of Purchaser.
3. Receive the Record of Purchase.
4. When you depart from Japan, submit the Record of Purchase to customs.

Covenant of Purchaser and Record of Purchase

Covenant of Purchaser is a document in which you pledge that you bring the items you purchased out of Japan, do not consume them before you depart from Japan, and that you take consumable items out of Japan within 30 days from the purchase date. Sign it when the document is handed to you at the shop.
You receive a Record of Purchase from the shop when you purchase an item. The Record of Purchase you received is attached to your passport and submitted to customs when you depart from Japan. If you lose the Record of Purchase or it falls off, the tax exemption may become invalid.

What you Have to be Careful of after Purchase

You have to bring any tax-exempt general merchandise and consumable goods purchased out of Japan personally, without passing them to anyone else. When leaving Japan, you are required to present the purchased tax-free goods and the Proof of Tax-Free Purchase attached to your passport to customs. Also, if you export the purchased items in a suitcase, you have to go through customs before check-in. Should you not be able to present the tax-free goods, you have to pay tax for them. If you send the purchased items separately, you have to go through customs procedures in advance.

How to Get a Refund

How to Get a Refund

Consumption tax refunds are carried out in two ways, depending on the shop. One deducts the tax at the time of purchase when you present your passport. The other has you pay the full price first, and you go to a separate place in the shop to get the tax amount refunded. Either way, the process will be completed inside the shop, so it's not troublesome at all. You just have to submit the "Proof of Tax-Free Purchase" attached to your passport to customs at the airport when leaving Japan.

Tax-free Shops around the City

Most tax-free shops feature a sticker and signboard at the entrance of their location. There are many shops with these signs in the city, as well as airports.
Drugstores sell several products relating to daily life such as baby products or food, as well as pharmaceutical products and cosmetics. There are tax-free shops and non-tax-free shops, so make sure to check beforehand if the shop is tax-free or not.
There are large electronics shops that sell all kinds of electronic products, from personal computers to domestic electrical appliances. They are mainly located near train stations or alongside the highway in the suburbs.
Let's check tax-free shops near you! → Click for the LIVE JAPAN Search Engine

*This information is from the time of this article's publication.

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