Additional tax of about 2 million yen on Hankyu Hanshin Department Store Inappropriate duty-free sales of cosmetics

The Osaka Regional Taxation Bureau has imposed an additional tax of approximately 2 million yen on some Hankyu Department Store and Hanshin Department Store stores for duty-free sales of cosmetics and other products to foreigners living in Japan where consumption tax exemption is not granted, according to interviews with people involved. There were a series of transactions in which products were suspected of being resold in Japan, and it was pointed out that approximately 3 billion yen worth of goods did not meet the requirements for tax exemption in the three years to the fiscal year ended March last year.

According to those involved, the inappropriate duty-free sales were pointed out at Hankyu Hanshin Department Store, which operates two department stores, Hankyu and Hanshin.

Duty-free sales are made when foreign tourists who have been in Japan for less than six months purchase 6,5000 yen or more at a time, and consumables such as cosmetics are exempt from consumption tax up to 1,50 yen per day for purchases at the same store.

Purchases intended to be resold in the country are not permitted.

However, at some stores operated by Hankyu Hanshin Department Store, such as the Hankyu Umeda Main Store and Hanshin Umeda Main Store in Osaka, when selling cosmetics to foreign tourists, they neglected to confirm the time of entry using passports and other means and to check whether they repeatedly purchased large quantities of products, resulting in a series of inappropriate duty-free sales.

According to an investigation by the Osaka Regional Taxation Bureau, it was confirmed that Chinese people living in Japan that are not eligible for tax exemption repeatedly purchased 49,3 yen, and it is suspected that it was for the purpose of resale.

The Osaka Regional Taxation Bureau pointed out that approximately 3 billion yen worth of Hankyu Hanshin Department Store did not meet the requirements for duty-free sales in the three years ending March last year, and imposed additional taxes of about 20 million yen.

H2O Retailing, which owns Hankyu Hanshin Department Store, stated that it had completed the revised tax return and tax payment, and commented, "We will take the suggestions from the Osaka Regional Taxation Bureau seriously and work to prevent recurrence."

Regarding duty-free sales, even major department stores headquartered in Tokyo have been subject to additional taxes from the national tax authorities for conducting duty-free sales to customers suspected of having intended resale at some stores.