Japan to Revise Tax Rule to Prevent Gold Smuggling

Tokyo, Dec. 7 (Jiji Press)--The Japanese government and ruling parties plan to revise the conditions for tax credits in an effort to prevent the smuggling of gold, it was learned Monday. Under the plan, passports and residence cards of foreign nationals will be excluded from the types of personal verification documents that are necessary for gold traders in Japan to apply for consumption tax credits on purchases from foreign sellers, because they are often forged. The measure, to be included in fiscal 2021 tax reform plans due out Thursday, is aimed at preventing gold from being smuggled into the country. According to the Finance Ministry, gold smuggling into Japan spiked in recent years. The amount seized in 2017 reached 6.2 tons, some 80 times the level five years before. Smugglers procure gold in a country that does not impose consumption tax and sell it to buyers in Japan at prices including the tax, to profit from the difference. Buyers can get tax credits to avoid being doubly taxed in both Japan and the country of the gold's origin, if they keep copies of the sellers' personal documents. Tax inspectors, however, have found many cases in which saved documents such as residence cards appear to be counterfeit. As a result, the government and ruling bloc plans to exclude from the acceptable documents copies of residency permits, as well as passports issued by foreign governments, which are difficult to verify. As buyers will face bigger tax burdens without the tax credits, their purchases of gold from foreigners are expected to decrease. The purchase tax credit system allows businesses to deduct the amount of consumption tax paid for procurement from the consumption tax incurred from sales. END