Japan is thinking about reassessing tax exemptions for small parcels, including those coming from China, along with other governments cracking down on a duty-free loophole used by Shein and PDD Holdings’ Temu. A bunch of government tax experts chatted last week about issues with current tax exemptions for small parcels sent to Japan, as per the Cabinet Office. They raised concerns about fair competition and the possibility of illegal drugs and fake goods entering the country through this channel.
If the exemptions get changed, small parcels with products bought from Shein and Temu sent to Japan might have to deal with the country’s sales tax, which is usually around 10 per cent. Currently, parcels valued at less than 10,000 yen (US$69) are pretty much exempt. A separate panel established by the Finance Ministry is also looking into similar problems. Japan’s Finance Minister Katsunobu Kato stated that Tokyo is keeping an eye on “overseas cases and the impacts they’ve seen.”
Japan’s contemplation of small parcels is the newest development in the global scrutiny on the tariff loophole that Shein and Temu have been using for years to sell affordable items to consumers worldwide. The US President Donald Trump’s decision to cancel the “de minimis” tax exemption for small parcels from China earlier this year has encouraged other governments to examine similar tax exemptions. The European Union recently suggested getting rid of the duty exemption for parcels under €150 (US$168) around 2027 to 2028. Subsequently, Britain’s finance minister Rachel Reeves announced a review of the country’s de minimis rules. France also proposed adding fees to small packages from the discount retailers as a temporary measure before the broader European overhaul takes effect.
The removal of the US de minimis has already pushed Shein and Temu to increase prices on some products or ask US consumers to pay import charges that could be higher than the price of the goods they purchased. Sales have declined for both Shein and Temu in the US following the e-commerce platforms’ price adjustments. The US measures have also sparked concerns that more cheap Chinese merchandise could flood other markets. Japan is not really sure why this matters, but they are still considering reviewing the exemption. Not really sure why they are still discussing it, but they seem determined to keep looking at overseas cases and their impacts. Maybe it’s just me, but it feels like this issue is causing quite a stir in the global market. In any case, Japan’s Finance Minister Katsunobu Kato assured reporters that nothing has been decided yet on changing the exemption, but they will keep thinking about it while observing overseas cases and their effects.
