Senior members of the ruling Liberal Democratic Party’s tax panel agreed on Wednesday to overhaul the current consumption tax exemption program for foreign visitors, in order to boost tourism-related spending in the country.
Foreign visitors are currently allowed to use the tax-break program only if their purchases in each of two categories — “general goods” such as electric appliances and “consumable goods” like food and cosmetics — total ¥5,000 or more.
Under the revised program, purchases that reach ¥5,000 in value by visitors from abroad would be exempt from the 8 percent consumption tax regardless of product categories, according to the plan agreed at a meeting of the executives of the Research Commission on the Tax System.
The meeting was held for discussions on tax reform requests from government agencies.
The revamped consumption tax relief program will be included in the LDP-Komeito ruling bloc’s fiscal 2018 tax reform package, to be drawn up on Dec. 14.
The Ministry of Land, Infrastructure, Transport and Tourism asked for the product categories to be scrapped as one of its requests submitted to the LDP in August, based on feedback from foreign visitors that the current system is complicated.
The tax panel members also agreed on support for company-led child care facilities used mainly by their employees, in line with the government’s efforts to reduce the number of children on nursery waiting lists.
Specifically, an existing program that allows companies to book costs for introducing play equipment and security systems at their nurseries as tax-free losses will be enhanced to help them reduce their corporate tax payments.