TOKYO (TR) – In February, Tokyo Customs at Narita International Airport temporarily halted the export of 900 kilograms of gold bullion bound for Hong Kong.
Valued at a staggering 27 billion yen, the massive shipment from a Tokyo-based gold dealer raised major red flags for authorities, exposing what is believed to be a massive and ongoing tax evasion syndicate.
While the gold was ultimately returned to the dealer in the Okachimachi area of Taito Ward without penalty after relentless questioning by customs inspectors regarding its origins and refining locations, authorities remain on high alert, reports Shukan Shincho (June 11).
Trade imbalance
The reason for their suspicion is a glaring statistical anomaly. In 2024, Japan exported 229 tons of gold while importing a mere 9 tons. Trade statistics released in late May show that through April alone, gold exports outpaced imports by nearly 40 times. Despite lacking any major mining operations, Japan’s gold exports bizarrely exceed the output of Canada, the world’s fourth-largest gold producer.
Japan’s sole commercial gold mine, the Hishikari Mine in Kagoshima Prefecture, produces just four tons annually. Even factoring in gold recovered from electronic components and second-hand jewelry, domestic sources cannot account for the staggering export surplus. According to the Ministry of Finance’s Customs and Tariff Bureau, the true source is a sophisticated network of underground smuggling rings.
The illicit scheme heavily exploits Japan’s consumption tax.
“Smuggling groups secretly bring gold into Japan, dodging the 10 percent tax. They then sell the gold to domestic refiners and processors, pocketing the 10% consumption tax added to the sale price,” a reporter covering the National Tax Agency explained. “The refiners then sell to exporters, and the gold is shipped overseas. Because exports are exempt from consumption tax, the exporters receive a tax refund.”
Highly lucrative
The gold is shipped to tax-free havens like Hong Kong, only to be handed back to the smuggling syndicates to be sneaked into Japan once again. This creates a continuous, highly lucrative loop of tax evasion, bleeding the state of an untold fortune.
Yuichi Ikemizu of the Japan Bullion Market Association warns that authorities are fighting a losing battle at the border.
“Tightening border controls will only make smuggling methods more sophisticated. Ultimately, it’s just a game of cat and mouse,” Ikemizu said.
He pointed out that the root cause of the relentless smuggling is Japan’s 10 percent levy on gold bullion. Globally, only a few countries, including Japan and South Korea, tax investment gold, while most nations treat it as a tax-exempt currency.
“Unless this gap is resolved, the tax evasion won’t stop,” Ikemizu added, leaving the smuggling syndicates laughing all the way to the bank.
