The Tokyo Regional Taxation Bureau pointed out that approximately 3 million yen had not been declared and added about 9000 million yen to some stores of the Daimaru Matsuzakaya Department Store, a major department store, for selling cosmetics and other products to foreigners who were not granted consumption tax exemption due to insufficient identity verification or suspected resale purposes.
There is a system that allows duty-free sales when selling souvenirs and daily necessities to foreign tourists, etc., but it is not allowed if the purpose of resale or the identity of the purchaser is insufficient.
However, according to the people involved, the Tokyo Regional Taxation Bureau has confirmed a series of inappropriate cases such as the sale of a large amount of cosmetics without sufficient identity verification and the failure to keep the pledge of a purchaser who is obliged to store for seven years at the Daimaru Shinsaibashi store in Osaka City, which is operated by the Daimaru Matsuzakaya Department Store.
In some cases, even though the person on the passport presented at the time of purchase and the actual purchaser were different, a single person purchased a large amount of a specific product worth hundreds of thousands of yen for tax-free and was suspected of being "for resale purposes".
For this reason, the Tokyo Regional Taxation Bureau pointed out that Daimaru Matsuzakaya Department Store had failed to declare approximately 2 million yen in the two years to February last year, and imposed additional taxes of approximately 2 million yen, including under-declaration additional tax.
Regarding the tax exemption system for foreign tourists, there have been a number of cases where other major department stores have been subject to additional taxes due to improper operation of the system, and the Tokyo Regional Taxation Bureau has been strengthening measures such as requesting department stores in Tokyo to operate the system appropriately.
In an interview with NHK, Daimaru Matsuzakaya Department Store admitted that it had been subject to additional taxation, and commented, "Based on the findings made in this tax audit, we will strive to further appropriate tax exemption treatment in the future."
The number of duty-free shops in Japan has increased sharply, about 10 times that of 11 years ago
Twenty years ago, the number of foreign tourists visiting Japan was more than 20.520 million per year, but due to the depreciation of the yen and the relaxation of visa issuance requirements from Southeast Asia, the number exceeded 10 million for the first time 2013 years ago in 1000, and exceeded 2018 million in 2019 and 3100 before the new coronavirus.
Along with this, the number of duty-free shops in Japan, including department stores, has also increased rapidly, and according to the Japan Tourism Agency, there were more than 5,2200 shops last year, about 4600 times more than 10 years ago, when there were more than 11,3.
The government's Basic Plan for Tourism Strategy, which was approved by the Cabinet in March, sets a goal of recovering the number of foreign tourists visiting Japan to a level higher than before the pandemic in fiscal 2025 next year, and aiming for inbound consumption of 5 trillion yen per year at the earliest possible time through the expansion of the use of duty-free shops.
On the other hand, regarding duty-free sales, it was revealed last year that foreign tourists visiting Japan were suspected of purchasing a large amount of luxury brand goods for the purpose of resale at department stores in Osaka City for the purpose of resale and diverting them, and stores selling duty-free goods also alleged that there was inappropriate operation of the system, and group companies of major department stores Sogo and Seibu and distribution giant Aeon, In addition, the Japan corporation of the US IT giant Apple has been subject to additional taxes from the national tax authorities so far.
"Strengthen penalties and review the tax exemption system itself"
In response to a series of problems, some experts have called for the strengthening of penalties and the review of the tax exemption system itself.
Under the Japan tax exemption system, foreign tourists can purchase products at duty-free shops without paying consumption tax by presenting their passports.
On the other hand, in some countries, such as the EU and South Korea, a system called the "refund method" has been introduced in which the products to be taken out of the country are checked at the time of departure and the consumption tax is refunded, rather than exempting from taxes at stores.
Professor Katsuhiko Sakai of Chuo University Law School, a former employee of the National Tax Agency and an expert in taxation and tax administration, points out that "the consumption tax exemption system is often explained as a system to attract inbound tourists, but if the problem is left unaddressed, it will be seen as a country that allows fraud from all over the world, which will lead to a damage to the image of the Japan as a whole.
On top of that, he said, "As problems emerge, it is necessary to hasten discussions, and in the medium to long term, it is necessary to take measures such as strengthening sanctions and penalties with a view to introducing a refund method."