The Japan Tourism Agency will seek to expand the scope of consumption tax-free shopping for foreign visitors as part of efforts to spread the economic benefits of a tourism boom throughout the country, officials said Thursday.
The tourism agency will call for lowering the minimum expenditure amount exempt from the 8 percent tax to ¥5,000 (about $40) from the current ¥10,001. It would be applicable for a total purchase amount at a single shop by one person per day.
The request will be made soon, as part of the annual calls for tax changes in the next fiscal year.
The lowering of the minimum amount would not only enable foreign visitors to buy expensive products such as appliances and clothing at shops in major cities tax-free, but also craft goods and other cheaper souvenirs in regional tourist destinations.
About two-thirds of Japan’s 19,000 tax-free shops are located in the three metropolitan areas surrounding Tokyo, Nagoya and Osaka. The government is aiming to increase the number of such shops in rural areas.
Japan has seen a record-high number of foreign travelers, helped by the weak yen and government policy measures including easing visa rules as well as the previous expansion in the range of tax-free shopping.
Last October, the government expanded the list of tax-free items to “consumables” including food, alcohol, drugs and cosmetic goods on top of nonconsumable “general” items such as electronics.
The October expansion of the tax-free scope led to increased sales of alcohol and drugs and boosted the number of people visiting Japan for shopping, according to officials.
Among general-category items, shoppers, especially Chinese visitors who typically buy up big on items such as electronic appliances in city areas, likely feel the benefit of the existing exemption. But outside city areas, purchases of key tourist items, such as ceramics, woodcraft and other handicrafts sold as souvenirs, often do not total ¥10,000, according to tourism agency officials.
The agency hopes that by lowering the exemption threshold more tourists will be encouraged to purchase such items and proprietors register as tax-free shops.
The government of Prime Minister Shinzo Abe is struggling to make such economic benefits felt more widely, particularly in small towns and villages.
The request by the tourism agency will be examined by the Finance Ministry, which normally does not want to see tax revenues decline. Abe’s Cabinet is expected to agree to the draft tax reform for fiscal 2016 in December.