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Japan tax agency: Surge in foreign visitors leads to jump in fraud in rebate program

TOKYO (TR) – While tax evasion overall stayed roughly the same between 2017 and 2018, there was a marked increase in fraud among businesses that deal with foreign visitors, the National Tax Agency said last week, reports the Sankei Shimbun (June 13).

According to agency, there were 16 claims against businesses regarding the consumption tax rebate program for foreign visitors — a scheme that refunds the consumption tax of 8 percent — with the amount fraudulently claimed totaling more than 1.9 billion yen, a figure that is four times larger than that from 2017.

The number of foreign tourists arriving in Japan in 2018 reached a record 31.2 million, the Japan National Tourism Organization revealed earlier this year. But, according to tax agency, this led to a surge in misappropriation in the rebate program.

“With the increase in foreign tourists and duty free shops, the number of cases of abuse in the consumption tax rebate program also rose,” said Hiroki Terada of the National Tax Agency.

In October, the consumption tax is expected to rise to 10 percent, which the agency believes will lead to more abuse. “As the tax rate goes up, dishonesty also increases. We will remain active in the future,” the agency said.

Osaka Regional Taxation Bureau
The Osaka Regional Taxation Bureau found 890 million yen in cash in a residence last year (Twitter)

The agency also said there were 182 total cases of tax evasion in 2018, an increase over the 163 from the year before. As well, the total amount of tax evasion rose slightly to 14 billion yen from 13.5 billion yen the year before.

Of the 182 total cases, criminal charges were filed in 121 of them. By industry, construction had the most (28), while real estate was second (14). The staffing industry was third with 5 cases, the agency said.

In one of the cases, the Osaka Regional Taxation Bureau found 890 million yen in cash stashed under stairs and in a safe of a residence.