The Interior Ministry said on Tuesday it will ban local governments from asking for money through the Ministry of Foreign Affairs furusato nо̄said (resident tax donation) using intermediary websites that give reward points to users.
In response to increasing competition between these locations, the ministry will implement the measure in October next year. Donations collected through the sites are no longer tax deductible under the tax system of the place of residence.
But points awarded through ordinary commercial transactions, such as credit card payments, will not be excluded from the system, the ministry added.
Because the intermediate locations’ points are believed to be partly funded by commissions paid by local governments to the locations’ operators, banning the points is expected to result in a relative increase in those governments’ revenues, a report said. ministry official.
Japan changed its residency tax system in 2019 to include only local governments that limit return gifts for donations of local products worth 30% or less of the amount donated. The costs for soliciting donations, including commissions, are limited to 50% of the amount donated.
Furusato nо̄zei donations totaled ¥965.4 billion in the budget year through March 2023, according to the ministry. This set a record for the third year in a row.
