Tax-Exempt Store Refund System Transition in Japan
Starting November 1, 2026, Japan’s tax-exempt store system will undergo fundamental changes. The complete transition from the traditional “immediate tax-exempt price sales at the point of purchase” to the “tax-inclusive price sales → refund upon departure” refund system represents a historic turning point for tax-exempt store operators. While this change will create a more reliable and transparent system for foreign tourists’ tax-exempt purchases, operators will need to adapt to new business processes.
This article provides comprehensive coverage of important information regarding the system transition, from basic concepts of the refund system to specific changes and preparation requirements for operators. Tax-exempt store managers and related business operators are encouraged to use this as a reference for proper preparation.
What is the Refund System? Understanding 4 Major Changes
The refund system is a mechanism where tax-exempt stores initially sell goods at tax-inclusive prices including consumption tax, then refund the consumption tax amount after the purchaser receives customs confirmation upon departure. This represents a fundamental shift from the previous “immediate tax exemption at point of sale” to a “post-payment tax exemption system.”
Change 1: Sales at Tax-Inclusive (Taxable) Prices
Previously, when foreign travelers purchased items at tax-exempt stores, they were sold at prices excluding consumption tax on the spot. Under the refund system, items are first sold at tax-inclusive prices, the same as for Japanese customers. This means that at the point of sale, transactions are treated as regular taxable transactions. For example, a 10,000 yen item would be sold for 11,000 yen including 10% consumption tax.
Change 2: Customs Confirmation Upon Departure Within 90 Days of Purchase
To prove that purchased items are actually taken out of the country, purchasers must receive confirmation from customs officers at airports or ports when departing within 90 days of the purchase date. This confirmation officially certifies that “the goods were definitely exported from Japan.” The 90-day period is counted from the day after the purchase date until the 90th day.
Change 3: Storage of Purchase Record Information and Customs Confirmation Information
Tax-exempt store operators are obligated to store both records of item sales (who bought what at what price) and information confirming that customs verified the goods’ export (customs confirmation information). This ensures that appropriate tax-exempt transactions are documented as records.
Change 4: Refund of Consumption Tax Amount After Confirmation
After customs confirmation is completed, tax-exempt store operators refund the consumption tax portion to the purchaser. In the previous example, for an item sold at 11,000 yen, 1,000 yen (consumption tax portion) would be refunded, effectively completing the tax-exempt sale at 10,000 yen. Refund methods can include bank transfers, credit cards, app transfers, cash, and various other options.
Fundamental Change from Traditional System: Separation of Sales and Tax Exemption Application
The most important difference between the traditional system and the refund system is the timing of “when tax exemption is applied.” Previously, purchase and tax exemption application occurred simultaneously, but under the refund system, the timing of purchase and tax exemption application are completely separated.
The traditional system flow was “customer selects items → immediate sale at tax-exempt price → tax exemption application completed.” In contrast, the refund system follows “customer selects items → sale at tax-inclusive price → customs confirmation upon departure → tax exemption applied → consumption tax portion refunded.”
This change strengthens export guarantees for goods, improves transparency in tax processing, and is expected to prevent fraudulent tax-exempt transactions. However, both users and operators need to adapt to new procedures.
Significant Simplification of Tax-Exempt Eligible Items: Category Abolition and Limit Removal
Under the traditional system, tax-exempt eligible items were classified into “general goods” and “consumables,” with different rules applied to each category. The refund system completely abolishes this classification, resulting in significant simplification.
| Item | Traditional System | Refund System |
|---|---|---|
| Product Classification | Divided into general goods and consumables | Classification abolished (unified) |
| Purchase Amount | General goods: 5,000 yen or more Consumables: 5,000 yen to 500,000 yen | 5,000 yen or more (no upper limit) |
| Special Packaging | Required for consumables | Not required |
| Usage Restrictions | Items for ordinary daily use | No restrictions |
This change means that consumables (cosmetics, pharmaceuticals, food, etc.) that previously had a 500,000 yen limit can now be tax-exempt without restrictions. Special packaging for consumables is no longer required, and items can be used immediately after purchase. Store staff no longer need to determine product classifications, greatly simplifying procedures.
The Importance of the 90-Day Rule and Customs Confirmation Procedures
Under the refund system, there is a 90-day deadline between purchasing tax-exempt eligible items and receiving customs confirmation. This deadline is a crucial rule for the proper operation of the tax exemption system.
The deadline calculation begins from the day after the purchase date and extends to the 90th day. For example, if an item is purchased on November 15, the calculation start date is November 16 (the day after purchase), and the confirmation deadline is February 13 of the following year (the 90th day from November 16).
If this 90-day deadline is exceeded, customs confirmation cannot be received, and consumption tax refunds cannot be obtained. Additional consumption tax collection or penalties may potentially be applied. Purchasers must clearly understand the confirmation deadline at the time of purchase and consider this 90-day rule when planning their travel.
During customs confirmation, all items included in the same purchase record (single shopping transaction) must be in possession. If even one item is missing, confirmation cannot be received for all items included in that purchase record.
Digitization of Purchase Record Information and Special Requirements for High-Value Items
Under the refund system, digitization of purchase record information becomes mandatory for all tax-exempt transactions. Purchase information and customs confirmation information are centrally managed through the tax-exempt sales management system operated by the National Tax Agency.
Required purchase record information includes purchaser basic information (passport number, nationality, etc.), product information (item name, price, quantity, etc.), retail store information, and sales date and time.
Particularly noteworthy is that items with unit prices of 1 million yen or more (tax-exclusive price) require the setting of additional information called “detailed product information.” This includes specific names of tax-exempt eligible items, brand names, model numbers, characteristics such as shape and color, and indication of attached appraisal certificates or warranties. For items with serial numbers (such as watches), recording serial numbers is also mandatory.
This system ensures that high-value items are definitely taken out by the purchasers themselves and prevents fraudulent substitution with similar products from the same brand.
Diversification of Refund Methods and Business Operator Options
Refund procedures under the refund system are crucial elements that influence the system’s convenience. Multiple refund methods are envisioned to allow flexible selection of approaches that are user-friendly for purchasers and feasible for operators.
Main refund methods under consideration include bank transfers, credit card remittances, app transfers (PayPay, LINE Pay, WeChat Pay, etc.), and cash refunds at departure ports. Importantly, specific refund methods are not strictly defined in consumption tax laws and regulations, allowing operators creative flexibility to provide optimal customer service.
Each operator can select and provide optimal refund methods according to their customer base and business scale, improving overall system convenience. Tax-exempt store operators can also delegate refund operations to specialized companies such as authorized transmission and reception operators rather than handling refunds directly.
Changes in Tax-Exempt Store Licensing Requirements and Mandatory Digitization Support
With the transition to the refund system, tax-exempt store categories and licensing requirements undergo major revisions. The previous three categories of “general-type tax-exempt stores, procedure-delegated tax-exempt stores, and vending machine-type tax-exempt stores” are simplified to two categories: “general-type tax-exempt stores and vending machine-type tax-exempt stores.”
New licensing requirements add to existing requirements that “necessary systems must be established to properly implement tax-exempt sales procedures, provision of purchase record information, and receipt of customs confirmation information.” This requires capability to support digitization systems.
Most importantly, tax-exempt stores that do not submit the “Notification of Methods for Providing Purchase Record Information, etc.” by October 31, 2026, will lose their licensing effectiveness on that date. In other words, digitization support becomes a mandatory condition, and stores unable to comply cannot continue operating as tax-exempt stores.
Transfer Processing Method from Taxable Sales to Tax-Exempt Sales
Under the refund system, “transfer processing” is required to change transactions recorded as taxable sales at the time of item sale to tax-exempt sales after customs confirmation. This is a new accounting process that did not exist under the traditional system.
Two methods are recognized. The first is the “method of transferring each time customs confirmation information is obtained,” where relevant taxable sales are transferred to tax-exempt sales each time customs confirmation information is obtained. The second is the “method of batch transfer at regular intervals such as monthly,” where transfer processing is conducted collectively at regular intervals such as monthly or quarterly.
When item sales and customs confirmation span different taxation periods, in addition to the traditional “method of correcting declarations from the period when sales occurred,” “the method of adjusting as returns of sales consideration in the period when customs confirmation information is stored” is newly recognized. This method eliminates the need to revise past tax returns, significantly simplifying administrative processing.
Importance of Preparation for Complete Transition on November 1, 2026
All revision contents including the refund system will be applied from November 1, 2026. There will be no concurrent period between the current system and refund system; from that date forward, only the refund system will be used.
Items that operators must prepare include introducing and testing digitization systems, constructing refund systems, establishing systems for receiving and managing customs confirmation information, employee education and training, and submitting notifications of methods for providing purchase record information (by October 31, 2026). Insufficient preparation may result in inability to conduct tax-exempt sales after November 1, 2026.
This system change represents not merely a procedural modification but a fundamental transformation of tax-exempt store business processes. It is an important revision aimed at improving convenience for foreign tourists and enhancing efficiency in tax procedures. Proper compliance will enable more efficient and transparent tax-exempt business operations. We strongly recommend early preparation with sufficient lead time for all tax-exempt store operators.
