A 100,000 yen watch now costs a foreign tourist in Japan 110,000 yen at the till. That is the plainest way to describe what changed on November 1, when the country’s tax-free shopping scheme switched from an exemption at purchase to a refund at departure.
The old scheme dates to 1952, and officials describe this as its first fundamental review in roughly 74 years. Until the end of October, a visitor who spent 5,000 yen or more in a tax-free shop could show a passport and pay the price without consumption tax. Customs officers were supposed to confirm on departure that the goods really left. Too often they did not leave at all. According to state and international reports, items bought tax-free were resold inside Japan, and the resellers pocketed the tax.
One case that shows the gap
Jiji Press and other outlets described the sort of case that pushed the change. In 2022, seven Chinese nationals bought 7.7 billion yen worth of watches, bags and cosmetics duty-free at department stores in Osaka. They were acting as proxies, spending money supplied by resellers. Authorities ordered them to pay 760 million yen in consumption tax. Most had already left Japan, and the amount actually collected was 2 million yen.
Officials said consecutive cases of high-value, bulk purchases were suspected of ending up on the domestic market, and that recovering the tax is hard even when someone is caught at departure. Under the refund method, the state holds the money until the export is confirmed.
How it works now
Travelers pay the tax-inclusive price in the shop. On departure they scan their passport at a terminal in the international departure lobby. A green light means the process is done. A red light means a customs officer wants to see the goods. If the items cannot be shown, no refund is issued.
The order matters. Customs checks must come before baggage is checked in, because a traveler who has already handed over the suitcase may have nothing to show and can lose the refund. Purchases must be made within 90 days before departure. The refund comes from the store or a designated agency, not from customs, and may be paid as cash at the airport, a credit card reversal or a transfer. Fees and timing differ by retailer, so shoppers are advised to ask at the counter. Duty-free shops inside airports are not covered.
Haneda, Narita and Naha have opened self-service cash refund machines that work in seven languages, Korean among them. They are separate from the customs terminals. Jiji Press reported that Haneda moved its customs verification from after the security screening to before it, and put guides on the floor to head off confusion.
Fewer categories, no daily cap
The distinction between general goods, such as clothing and appliances, and consumables, such as food, is gone. So is the 500,000 yen per store daily limit that applied to consumables, and so is the rule about sealed bags and special packaging. Travelers can still only claim what they carry out of the country themselves.
Industry insiders warn about snacks and cosmetics. If one item in a purchase is consumed during the trip, the refund on the rest of that purchase may be denied, so local-use items are better paid for separately. Clothing and electronics can still qualify after use, as long as they are presented for inspection.
The politics behind it
Exemptions for visitors total about 200 billion yen a year, and some in politics wanted the scheme scrapped. In June 2025 a study group in the ruling Liberal Democratic Party proposed that party leaders review and possibly abolish it, citing the 200 billion yen figure for 2024. In August, 10 retail groups, including the Japan Tax Free Association and the Japan Retailers Association, issued a joint statement urging that it be kept. Annual tax-free sales had reached 2 trillion yen, they noted, and abolition “will harm international competitiveness.”
Retailers are adjusting. Global Blue TFS Japan is installing downtown refund counters at 11 Yodobashi Camera stores. According to Japan Tourism Agency statistics, visitors spent around 9.5 trillion yen in 2025, nearly triple the amount a decade earlier.
Sources
- Tax-free system for foreign visitors to Japan changes on November 1st; 'Refund method' introduced to refund consumption tax upon departure to prevent illegal resale｜ニュースの窓
- Consumption tax
- Japan Shifts to “Pay Now, Refund Later” Tax-Free Tourist Shopping from November | Nippon.com
- Opposition demands Takaichi’s attendance as debate continues over tax bill
- Japan’s Tax-Free Shopping System Shifts to Refund Method – TRAICY Global
- Japan Tax-Free Shopping — New Duty-Free Refund Rules Start Today
Photo: 颐园居 (CC BY-SA 4.0)
