Japanese lawmakers are considering the possibility of abolishing tax-free shopping for foreign tourists and implementing higher departure taxes to avoid increasing the tax burden on Japanese residents and alleviate the financial strain on Japanese households.
According to a report by Nikkei Asia, Yuumi Yoshikawa, a ruling Liberal Democratic Party lawmaker, suggested during a budget committee meeting in May that the departure tax for international tourists leaving Japan should be increased to a level comparable to that of other countries. Prime Minister Shigeru Ishiba expressed interest in exploring this idea.
Japan introduced the departure tax in 2019 to secure a stable funding source for expanding and enhancing tourism infrastructure. The tax amounts to 1,000 yen (approximately $7) per international visitor. In comparison, the departure tax in the United States is $22.20 per person, in Egypt it is $25 per person, and in Australia it’s around $45 per person.
On June 2, the Japanese Ministry of Finance reported that the revenue from the departure tax in the 2024 fiscal year reached a historic high of 48.1 billion yen (approximately $332 million), with one month of income data still being tallied.
Visitors to Japan benefit from the country’s infrastructure and public services. A senior member of the LDP’s tax committee stated that raising the departure tax is “reasonable and justifiable.”
Currently, the departure tax is levied as an additional fee on airline tickets, including for Japanese nationals. Implementing the departure tax solely on foreign visitors would require establishing a new tax system. Another proposal calls for amending or canceling the consumption tax exemption system for Japanese residents living abroad.
Former Prime Minister and senior advisor to the LDP, Taro Aso, drafted a proposal at the end of May to cancel all consumption tax exemption systems. The proposal highlights that the significant purchases of household appliances and medicines by some foreign tourists contradict the country’s tourism-oriented nation-building concept and fail to stimulate local economic growth or employment opportunities.
It is believed that some foreigners engage in bulk shopping for resale, with these purchase behaviors often concentrated in major urban areas.
The government has introduced measures to deter such behaviors, including a planned tax refund system that is set to be implemented in November 2026, where tourists are eligible for a refund upon confirmation of purchased goods leaving the country. However, the proposal suggests that this refund method may be ineffective and could complicate fraudulent activities.
Similar refund systems exist in other countries; for example, France and Germany have mechanisms for partially reimbursing value-added tax (equivalent to Japan’s consumption tax). In Asia, countries like South Korea have adopted similar practices.
Japan aims to welcome 60 million foreign tourists by 2030, representing an increase of over 70% from 2024. However, excessively high taxes may dampen tourists’ enthusiasm, reduce their spending, and put pressure on the retail and other industries.
“If foreign tourists stop coming, people may feel anxious,” noted another senior member of the LDP’s tax committee. “We have just made changes to the tax-free system, so we cannot make modifications so quickly.”
Following the UK’s post-Brexit cessation of tax-free policies for foreign tourists in 2020, sales at luxury brand stores and similar establishments experienced a decline as a consequence.
Some prefectures in Japan have already begun taking steps to increase tax revenue from foreign tourists.
Osaka Prefecture will raise its daily accommodation tax by 200 yen starting in September, expanding coverage from accommodations costing more than 7,000 yen per night to those priced at over 5,000 yen per night.
Kyoto City has decided to increase the upper limit of its per person per night accommodation tax from 1,000 yen to 10,000 yen. This change is expected to take effect in March 2026.
A similar trend has emerged in other global travel destinations. Venice, Italy, started levying a day-tripper tax in 2024. Last year, Bali, Indonesia, began imposing a 150,000 Indonesian rupiah ($9) tourist tax on foreign visitors. Hawaii will raise its accommodation tax rate from 10.25% to 11% in 2026.