Attention! Japan plans to adopt 'pay first, refund later' tax refund system in second half of 2026

Shopping is an essential part of Hong Kong people's trips to Japan, and the Japanese government is planning new arrangements to exempt foreign tourists from consumption tax on their purchases.

According to a report from Kyodo News, Japanese authorities and the ruling party have basically decided to implement a "pay first, refund later" tax refund system in the second half of 2026. Additionally, after the new system is implemented, the special packaging that prevents travelers from opening items will no longer be used.

The report states that the Japanese government decided last year to change the tax exemption system to one where tourists confirm the purchased goods when leaving Japan and receive a tax refund. Currently, under the existing tax exemption system, foreign tourists generally do not need to pay consumption tax at the time of purchase, but authorities have discovered instances of tourists reselling items for profit before leaving the country. In last year's tax reform, authorities proposed that tourists first pay the price including consumption tax, and then receive a refund when departing. This revision has already been included in the 2025 tax reform summary finalized in December.

The report mentions that considering the time needed for businesses to adapt, authorities have basically decided to adopt the new system in the second half of 2026. At that time, terminals will be set up at airports and ports nationwide to confirm the shopping records of departing travelers.

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