NHK has learned major Japanese department store chain Isetan Mitsukoshi paid about 700 million yen, or roughly 5 million dollars, in back taxes for improper tax-free sales.

Japan permits foreign visitors within six months from entry to buy items such as cosmetics without paying the 10-percent consumption tax. This exemption does not apply to items bought for resale in Japan. Retailers are required, before they sell duty-free items, to confirm purchasers and their passports, and tell them that they should take the goods out of Japan.

Sources say that the Tokyo Regional Taxation Bureau found some outlets of Isetan Mitsukoshi, including one in the Shinjuku shopping district, repeated improper sales of duty-free items without sufficient ID confirmation.

In some cases, sales clerks at the outlets reportedly sold items to foreign nationals who had stayed in Japan for more than six months and were not eligible for the tax-free program.

In other cases, they sold duty-free items to people who were different from the holders of passports shown to them and who were suspected of reselling the products in Japan.

The tax officials concluded that the store chain failed to report about 4.6 million dollars in consumption tax during the three years through March 2022. They imposed a total of roughly 5 million dollars in back taxes.

This is the latest in a series of incidents in which major department store chains were ordered to pay back taxes for improper sales of duty-free goods as the number of foreign visitors to Japan has increased.

Licensed tax accountant Ino Shigeru, who formerly worked for a regional tax bureau, says that the authorities should not be lenient to retailers who sell certain products in bulk knowing they could be resold in Japan.

Ino points out it can be difficult, however, for sales clerks to identify every attempt to buy duty-free goods illegally even if they are well trained. He adds that the current tax-free system was created in part to attract foreign tourists to Japan, but that those who created it need to rethink how to administer it.