It is undeniable that, besides its culture and natural attractions, a factor that makes many tourists travel to Japan is shopping tourism. The reason is that this cherry blossom country offers high-quality goods at relatively affordable prices.In addition, the country's government actively invites foreign tourists to shop for products here. This includes offering two tax exemption systems at once, namely duty free and tax free. What is the difference between the two? See the complete explanation below:

The Difference between Duty Free and Tax Free

Before discussing the difference between duty free and tax free, you must first understand that there are various types of taxes: VAT (Value Added Tax), Luxury Goods Sales Tax (PPnBM), and also taxes or fees for imported and exported goods, which are better known as customs duty. This is important because the tax exemption in these two types of businesses applies to two different types of taxes.

Definition of Duty Free

Duty free is a shopping area inside an airport that sells products not subject to export tax and possibly not subject to import duty (tax for imports) in the destination country (depending on the regulations of the relevant country). Therefore, to shop at a duty free shop, you need to have a flight ticket and a boarding pass.

However, will a duty free shop always offer goods at a cheaper price compared to the price of the same goods outside the airport? The answer is not necessarily. The store will surely consider operational costs, such as airport store rent, production costs, and others.

Buying items at a duty free shop is suitable for those who forgot to bring souvenirs from Japan, want to buy certain luxury goods such as perfume or electronic devices, or want to purchase goods that are limited in quantity during the journey, such as alcoholic beverages or cigarettes.

Definition of Tax Free

When you travel in Japan, you will find many stores displaying a "tax free" sticker even though you are not inside the airport. This is because, under the tax free Japan system, tourists are exempted from VAT (called consumption tax in Japan) and not import or export duty, allowing shops outside the airport to implement this system as well.

By shopping at these stores, you do not have to pay the VAT of 10% or 8%, depending on the item. For example, if the price of the item you want to buy is ¥300. If you do not buy it at a tax free shop, you have to pay ¥330, including tax. But, if you buy it at a store with this logo, you only need to pay ¥300.

However, to get this 10% discount, you must meet the following requirements:

1. Have a passport and a tourist Visa with a stay duration of less than 6 months;
2. Shop at a store with the tax free shop label;
3. The purchased goods are only allowed for personal use and not for resale;
4. A minimum purchase of ¥5000 at the same store on the same day;
5. The goods are to be used outside of Japan. This means that the items you buy at a tax free shop must not be opened before leaving Japan, and food or souvenirs you buy in Japan to be used during your holiday will still be subject to tax;

Just like duty free shops, shopping at a tax free shop does not mean you will get a cheaper price. First, the store might already set a price above the market rate. Second, many shops charge an administration fee of 3%. Therefore, make sure you are wiser in choosing where to shop in the land of the cherry blossoms.

In conclusion, there are three differences between duty free shops and tax free shops in Japan: duty free shops are located inside the airport, are suitable for buying only certain items, and the types of taxes exempted are export and import duties. Meanwhile, tax free shops can be found anywhere (including inside the airport), can be used to buy any type of item, and the type of tax that does not need to be paid is VAT.

Duty Free and Tax Free System for Tourists in Japan

There will be a slight change in the tax exemption system in Japan, which will take effect in November 2026. Previously, tourists would immediately receive a discount when shopping at a tax free shop, provided they carried their passport and Japan entry stamp. However, starting in November 2026, this system will be replaced with a tax refund system, where tourists shopping at a tax free labeled store in Japan must pay the full price first before submitting a refund application at the airport.

Using this system, you must ensure that the seal of the goods you buy is still intact (unused), you must come to the airport yourself, and as a precaution, it is best to bring the receipt for the items. If the airport officer deems the items you bought are eligible for tax exemption, you will receive a partial refund of the money you spent within a few days.

Shopping abroad is now easier using Honest credit card and Honest App. You can directly view your shopping history and tax refund using just one app and one credit card. Furthermore, the Honest credit card also offers zero foreign transaction fees, so you can save more. Download the Honest App now and get your credit card for more practical and cost-effective shopping.

Frequently Asked Questions

1. Is there a tax refund in Japan?

Yes. International tourists in Japan can claim a tax refund of 10 percent on items purchased during their visit, subject to the applicable terms and conditions.

2. Are items purchased duty free subject to tax?

No. Passengers who purchase items duty free are not subject to tax or import duties.

3. Can Indonesian e-passport holders enter Japan without a Visa?

Yes. Indonesian e-passport holders can visit Japan without needing a Visa.