COMMENT What next for Japan tax free?


Now and Then... J


apan’s deregulation of its airport duty free market occupies a central spot in the


September 1998 edition of the Duty Free Business.


The Japanese Duty Free Association [as it


was known at the time] reported a favourable response from the Japanese Finance Ministry following a request to deregulate the current system, where operators were permitted to sell only certain categories of merchandise. Such ‘encouraging signals’ from the Ministry came a mere year after it had rejected a similar request. A source had said that if the plans went


ahead, it would bring to an end a situation where competing operators at Tokyo Narita and Kansai Osaka were licensed to sell only certain categories of merchandise. Narita International Airport Corporation


and Kansai Airports have introduced arrivals duty free outlets in a seismic move, but it is still early days. Currently, imported alcohol and tobacco are stocked at Narita International Airport’s outlets, but it is understood that plans to introduce imported cosmetics and fragrances are very much under consideration. While the Japanese Government is


moving more generally to liberalise regulations surrounding the sale of duty free goods and their associated allowances, for instance tobacco [from 1 October residents and non-residents will be permitted to carry 400 cigarettes, 100 cigars and 500g of other tobacco products regardless of whether they are Japanese or foreign brands], the most notable changes of late can be seen in extensions to its broader tax free programme. In 2014 Japan moved to loosen


consumption tax exemptions for international visitors, to include items such as foodstuffs, alcohol and cosmetics in a bid to open up the market to foreigners. Fast forward to this year and multiple


Asian media outlets, including the normally reliable Japan Times, alluded to the government’s relaxation of its current tax free shopping rules from 1 July in a bid to spur foreign purchases. This follows a cooling in Chinese spending earlier this year. Under new rules, foreign visitors can


74 TRBUSINESS


reportedly purchase tax free if the total value of the goods reaches JPY5,000 ($45) across the following categories: general items, such as shoes and clothing; or consumable items, including cosmetics and health food products. Previously, international visitors were


exempted from the 8% consumption tax on the basis that purchases totalled JPY5,000 and over in either category. Invariably, the arrival of the 2020 Summer


Olympics to Tokyo (24 July – 9 August) is fuelling demand to expand the availability of duty free and tax free shops, particularly outside the major cities in the case of the latter. According to the most recent data


available from the Japan National Tourism Organization, foreign visitor arrivals to the country grew by 15.3% year-on-year to 2.7m in June, while Japanese overseas travel lifted by 6.4% to 1.4m. In the first six months of this year, foreign visitor arrivals jumped by 15.6% to 15.9m, while Japanese overseas tourism grew by 4.2% to 8.8m. The country’s airports, including Narita,


are constructing and extending facilities to accommodate for this increase in international travellers and it is a safe bet to assume duty and tax free facilities will also grow in volume in the coming year. «


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