Takashimaya Department Store Faces Tax Backlash for Suspicious Tax-Free Sales
The Takashimaya department store in Osaka has been ordered by the Osaka Regional Taxation Bureau to pay back taxes amounting to 570 million yen ($3.8 million). This decision stems from alleged improper tax-free sales to foreign customers during the COVID-19 pandemic, a period marked by a significant decline in inbound tourism.
The bureau claims that Takashimaya underreported sales and engaged in suspicious tax-exempt transactions, primarily involving luxury goods purchased by Chinese customers residing in Japan. These sales were made between March 2020 and February 2022, when travel restrictions were in place due to the pandemic.
Takashimaya disputes the accusations, maintaining that they followed proper procedures for tax-exempt transactions. They argue that customers' visas and other documents were verified to confirm their overseas residency, despite holding permanent residency in Japan.
However, the bureau's investigation revealed that many of these customers resided in Japan, raising doubts about the validity of the tax-exempt sales. Consumption tax-free sales are only permitted when customers take the goods out of the country and do not intend to resell them.
This incident is not isolated, as other major department stores across Japan have also faced scrutiny for improper tax-free sales to foreign customers. The authorities are investigating these cases to ensure compliance with tax regulations and prevent potential abuse of the tax-free system.