The Japan News by The Yomiuri Shimbun
3 dept stores hit for back taxes over suspicious foreign-customer sales
The Tokyo Regional Taxation Bureau has ordered three major department stores to pay a total of ¥110 million in back taxes for transactions that did not meet the requirements for taxfree sales, e Yomiuri Shimbun has learned.
e transactions were uncovered during tax inspections that started last year at Sogo & Seibu Co., Odakyu Department Store Co. and Matsuya Co., according to sources.
In June, the bureau issued administrative guidance to department stores in Tokyo, calling for them to process taxfree sales correctly. According to the national tax authorities, it is highly unusual for administrative guidance to be issued to a speci c industry with regard to tax-free sales.
e authorities might have felt a need to ensure tax-free sales were being processed appropriately as international visitors are expected to ock back to Japan following the easing of coronavirus pandemic-related border restrictions.
According to the sources, the three department stores were found to have not followed tax-free requirements, such as processing transactions by foreign residents who had been in Japan for more than six months and so are ineligible for tax-free shopping, and failing to keep relevant transaction records.
e investigations also uncovered cases in which the same person may have repeatedly purchased large quantities of cosmetics for the purpose of resale, which is not allowed under the terms of tax-free sales.
Visitors to Japan can avoid paying consumption tax on purchases of souvenirs and goods for their personal use outside Japan. Tax-free purchases are not permitted for items that are consumed in Japan or bought for the purpose of resale.
e bureau has ordered Sogo & Seibu
to pay about ¥100 million in back taxes for transactions that did not meet the requirements over two years through February 2021, according to the sources.
Odakyu Department Store and Matsuya are believed to have corrected their tax returns and paid the taxes.
Responding to e Yomiuri Shimbun, a Sogo & Seibu o cial said, “We take the remarks seriously and will strive to strictly process tax-free sales.” An o cial of Odakyu Department Store said the company would “work to ensure the system is implemented correctly,” while Matsuya said it would “appropriately conduct tax-free sales.”
BULK PURCHASES
Purchases for the purpose of resale have been highlighted as a problem in tax-free sales, with suspected resellers spotted buying goods in bulk from shoppers near department stores.
Products purchased in bulk, tax-free o en end up for sale online at lower prices than the list price, with resellers earning pro t from the consumption tax savings.
In April 2020, a system was introduced in which tax-free stores send digital data to the National Tax Agency with customer information and purchase records, making it easier for the tax authorities to identify suspicious bulk purchases.
Tax-free purchases of cosmetics and other consumable goods are currently limited to ¥500,000 per transaction.
In a case uncovered by authorities, a Chinese student who arrived in Japan in the autumn of 2020 bought cosmetics and other items worth about ¥490,000 tax-free on 10 occasions over a period of about a month.
A senior bureau o cial in June asked department stores not to process taxfree transactions for bulk orders of items that are clearly not souvenirs and when the name on the credit card is di erent from that of the purchaser, among other suspicious cases. (Oct. 23)