Japan’s Finance Ministry aims to eliminate a tax break on imports for personal use as domestic retailers are undercut by the stream of shipments through Chinese e-commerce sites such as Shein and Temu.
Under an exemption adopted in 1980, the taxable value of imports for personal use is 40% lower than that of imports for sale. This means imported products covered by the provision face lower consumption taxes and tariffs compared with the same items imported by retailers.
An imported overseas product priced at 30,000 yen ($195) and declared for personal use would be subject to taxes for only 18,000 yen of the value. With Japan’s consumption tax rate of 10%, the importer would pay 1,800 yen. But a domestic retailer importing the item would face a consumption tax of 3,000 yen.
This exemption also applies when individuals in Japan buy products from overseas through e-commerce sites. The exemption is considered one reason that e-retailers such as Temu and Shein are able to sell products at low prices.
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