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Japan-Update

Japan escalates war on gold smuggling

Tokyo to dispatch investigators to gateway cities, seek higher fines

TOKYO -- Japan will intensify its crackdown on gold illegally brought into the country, placing investigative teams in major aviation hubs and toughening aircraft checks under new measures to be announced Tuesday.

The new enforcement push comes amid a surge in activity by bullion smugglers seeking to profit from tax differences between Japan and neighboring countries. Japan booked 467 such incidents in the year through June 2017, up 60% from a year earlier. Evaded taxes soared 40% to an estimated 873 million yen ($7.67 million). 

Teams of investigators and analysts will be stationed in Tokyo, Osaka and Fukuoka starting next year. The total of 20 experts will work with airlines to bolster onboard inspections, including the use of metal detectors paid for by the government's fiscal 2017 budget.

The Finance Ministry will propose amending the consumption tax law next fiscal year to allow heftier fines than the current maximum of 10 million yen. The ministry is also looking to stiffen penalties under customs law.

Travelers bringing gold into Japan are supposed to pay  consumption tax at customs. Gold runners dodge the tax payment, making a "profit" later when the tax is tacked onto the resale price of the precious metal.

The April 2014 hike in Japan's consumption tax rate from 5% to 8% sweetened the incentive for smuggling, according to the government. Such profit is greater for smuggling that originates from countries with low or no consumption tax. In the majority of cases, gold smuggled into Japan comes from elsewhere in Asia.

(Nikkei)

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