Japan may impose tougher penalties for gold smuggling, as rise in cases seen as 'tip of iceberg'

The government will consider stricter penalties on gold smugglers as attempts to illegally bring gold into Japan have been soaring, with offenders attempting to pocket the 8 percent consumption tax from transactions, officials said Tuesday.

The number of gold smuggling cases uncovered by customs authorities in the year through June jumped 1.6 times the previous year to hit a record 467, involving around ¥870 million ($7.6 million) in tax avoidance, also the largest on record, up 1.4-fold, according to the latest government data.

The consumption tax increased to 8 percent from 5 percent in 2014.

By secretly bringing gold into the country, perpetrators evade paying the 8 percent tax. They then attempt to sell it at shops with the buyer paying for the gold and the 8 percent levy, making the taxation a “profit” for the smugglers.

Under a set of envisaged steps unveiled Tuesday, the Finance Ministry is considering imposing higher fines on gold smugglers and plans to step up customs inspections with the use of gate-like metal detectors and X-ray baggage scanners nationwide.

Special investigation teams will be added to customs stations in Tokyo, Osaka and other locations.

Currently, the government imposes a fine of up to ¥10 million on gold smugglers who fail to pay the sales tax, and the maximum amount will be drastically raised through a law revision as early as fiscal 2018.

Gold prices have hit high levels in recent years and gold bars are seen as relatively easy to hide, carry and sell at shops.

In most of the cases handled by customs authorities in the year thorough June, the smuggling was done by air travelers from South Korea, Hong Kong and Taiwan. Last December, three women flying from South Korea to Japan were caught trying to smuggle gold bars weighing 30 kilograms by hiding them in their clothing.

“We believe what we’ve seen is the tip of the iceberg,” a ministry official said.