Japan Abolishes Instant Tax Refunds: What Travelers Need to Know

[Anchor]

It is time for "Friendly Economy" on Monday with reporter Han Jiyeon. Han, it looks like there are some changes to tax-free regulations when traveling to Japan?

[Reporter]

Starting this coming Sunday, November 1, duty-free shops in Japan will shift to a system where shoppers first pay the tax at the store and then receive a refund at customs upon departure after verification.

The Japanese yen is quite weak these days.

With the rate recently dropping to the early 840 won range per 100 yen, it is at its cheapest level in about 18 years.

As a result, many people are heading to Japan.

In September alone, 840,000 visitors traveled there, with South Roreans ranking first among all foreign visitors.

Last year, South Koreans spent 990.6 billion yen in Japan—well over 8 trillion won—and one-fourth of that went toward shopping.

Until now, simply showing a passport at a drugstore immediately deducted a 10% consumption tax, or 8% for food items, but this "instant tax-free" system is disappearing.

The Japanese government explains that this move aims to prevent people from buying duty-free goods and reselling them inside Japan.

In fact, four years ago, nine foreign nationals bought 3.3 billion yen worth of goods tax-free, but it was later discovered that they left the country without the items.

There are also changes to the criteria.

Previously, consumers had to spend at least 5,000 yen each on consumable goods like snacks and general goods like clothing. Now, the total combined purchase just needs to exceed 5,000 yen.

Even if you buy 3,000 yen worth of snacks and 2,000 yen worth of t-shirts, they can be combined to reach the 5,000 yen threshold.

The daily purchase limit of 500,000 yen for consumable goods will also be eliminated.

Instead, items priced at 1 million yen or more before tax per piece will require serial numbers to be registered.

Sealed packaging will no longer be required, and while consumables previously had to be taken out of the country within 30 days, the period for all duty-free items will now be unified to 90 days.

[Anchor]

Does that mean the tax-free procedure will also become more complicated?

[Reporter]

Yes, if you check in your luggage at the airport before customs verification, or even if you open and eat a single snack in Japan, you might not get your tax refunded.

The order of operations on your departure day matters.

Before going through security, scanning your passport at a duty-free terminal will display either a green light or a red light.

If a red light appears, you must present the purchased items directly to a customs officer.

However, if you have already checked those items as luggage, you will not be able to receive a refund.

Inspections are conducted on a receipt basis.

If even a single item from a given receipt is missing or has been consumed, that entire receipt is disqualified from the refund.

If you have already eaten anything, you must inform a customs officer before scanning at the terminal.

Therefore, it is advisable to pay separately for gifts and snacks you plan to consume in Japan.

While a green light lets you pass immediately, concerns are growing that airports will become congested due to item inspections triggered by red lights.

There are even talks that travelers might need to arrive at the airport five to six hours in advance instead of the usual two to three hours.

Concerns also remain that an increasing number of people may give up on refunds due to time constraints.

Neither airlines nor customs will compensate passengers if they miss their flights because of the tax-free procedures.

At seven airports including Narita, Haneda, Kansai, and Fukuoka, travelers who pre-register on Visit Japan Web—an entry procedure website operated by the Japanese government—can also complete procedures using their smartphones at designated airport zones.

[Anchor]

It looks like the refund amount will decrease as well.

[Reporter]

That is because some stores will deduct a separate fee when returning the tax.

Once airport customs verification is complete, the store where you bought the goods or a designated refund agency will return the tax via credit card or bank account.

Some shopping malls have been deducting 1.5% of the merchandise value as a fee during this process.

For instance, if you bought 100,000 yen worth of goods before tax, you would get back about 8,500 yen instead of 10,000 yen.

If received via bank account, 4.25% of the refund amount is deducted.

Fees vary by provider, so it is best to ask before making a purchase.

Depending on the company, receiving the refund can take about one to two weeks for cards and two to four weeks for bank accounts.

Unless the store ships the items abroad for you, you must carry the purchased goods out yourself.

Additionally, the departure tax paid when leaving Japan tripled from 1,000 yen to 3,000 yen starting last July.

However, airport departure duty-free shops will continue to offer tax-free prices immediately, just as before.

The final checkpoint is Incheon Airport.

When bringing duty-free goods purchased in Japan back into South Korea, you must check the duty-free allowance again.

The basic allowance is $800.

If you exceed it, you must declare it voluntarily.

A 30% reduction on customs duties is granted for voluntary declarations, but getting caught hiding items incurs a 40% penalty.

To avoid paying the tax refunded in Japan all over again at Incheon, you should check the allowance limit right from the time of purchase.

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