A trip to Japan is not complete without a day of filling up a basket with goodies to take home. Many tourists decide to make big purchases or stock up on lots of little products because the price of goods, such as electronics, are reasonable and of high quality.
If you are looking to save some money on some of your more expensive purchases, you should consider shopping tax-free.
But what does this mean? And how does it work?
Understanding tax-free shopping can be confusing, especially for tourists visiting for the first time.
But don’t worry! In this guide, we will be running you through how it all works so that you can enjoy the benefits and shop hassle-free.
① What is Tax-Free and Who Can Benefit From it?
Some of you may be wondering what it means for something to be ‘tax-free’. Simply put, products in Japan have a 10% consumption tax (8% for food and drinks) which is added on to the selling price. You will see this clearly indicated on any product label you pick up; with the item’s price being printed in big text and the price of the consumption tax in smaller text just underneath.
Therefore, when you see that something is tax-free it means that you do not have to pay the consumption tax. As we will mention in a moment, it is only certain items at a certain price point which are eligible. There are also some other conditions which you can read more about here.
Now that we have explained the term, you might be asking ‘can I benefit from this system?’.
Well, in April 2023, the criteria for those who are able to claim tax back on products has been updated. Those eligible include both foreign nationals who do not live in Japan and have been in the country for less than six months in addition to Japanese nationals who have lived abroad for over two years.
Your passport has to have a stamp on it, proving the date of entry. Therefore, if you are a long term resident who works in Japan, you are not eligible for tax-free.
② What Items Can I Claim Tax Back On?
The products in which you can get a tax return on are split into two main categories:
- General goods: electrical goods, clothes, jewellery, watches and bags
- Consumables: cosmetics, pharmaceuticals, food and liquor
Keep in mind that to claim tax back on these listed goods, you have to be using them for personal use rather than for the purpose of business. Items have to stay in the original packaging and if they are food items or medicine, consumed after you have left the country.
On top of this, you cannot claim tax back on general goods and consumables below ¥5,000. There is also a spending limit for consumables which is ¥500,000.
Remember that the total ¥5,000 has to be spent in one store on the same day, meaning that you cannot just add up two different transactions from different days to make up the ¥5,000 minimum. The total sum of general goods and consumables should also not be added together since they are in two different categories.
The only time you may see some exception to combining different transactions from different stores is when the goods are purchased from a department or outlet store. This is because these types of stores are made up of many different brands.
Although there is an increasing amount of stores which offer tax-free, at the moment the main ones include duty-free shops, department stores, outlets and other shopping complexes like Don Quijote.
Shops that offer tax-free products will normally have a big sign outside with the ‘Japan Tax-Free Shop’ logo shown in the image below:
Some places, like the Bic Camera in Shinjuku Higashiguchi also offer additional tax-free discounts so it’s definitely good to look into this if you can!
③ What’s The Process?
There’s a few different ways in which you can claim the tax back.
The most straightforward scenario is that the cashier will ask you to show your passport in order to claim tax-free. In this incident, the tax will just automatically be taken off the selling price before you pay.
In the case that the store doesn’t operate using this system, you will have to first pay the full amount and then go to a separate tax-free counter to claim the tax back.
If you are in a department store or somewhere like Don Quijote, the tax-free counters are usually located on the ground or top floor. It’s best to go to one of these counters straight after you have paid for your products, as this process of claiming tax back has to be on the same day the purchase was made.
The staff at the tax counter will ask you to show your products, the receipt and your passport so make sure you have them all to hand. After doing all of this, you should receive a tax refund for all the items presented.
④ The Next Steps…
Hold on! The process isn’t quite complete yet.
The next step has to be completed on the day you plan to leave the country. At the airport, you must present your passport to the customs officer. Since this is the requirement, it is recommended that you pack all the products you got tax-free into your hand-luggage so that you can easily show them.
If for some reason you forget or have to put it into your checked luggage, make sure to inform a staff member at the check-in desk as an officer will come and check before your luggage is sent away.
To emphasise once again, all tax-free products should remain unopened and unused. If they are not in this condition, there is a possibility you could be charged the sales tax.
For more information, please refer to this pamphlet published by the Japan Tourism Agency.