Japan tightens Furusato Nozei return gift regulations

Japan's Ministry of Internal Affairs and Communications has implemented stricter regulations for the ‘Furusato Nozei’ (hometown tax donation) system, effective October 2026. The changes aim to prevent rule violations regarding return gifts, such as electronic products manufactured overseas with only local planning, or beverages using local logos on products sourced from other regions.

Approximately half of the 1.3 million existing return gift items may be affected, with an estimated 22,000 items expected to be removed from circulation. The new rules require municipalities to prove that the ‘added value’ of a processed product accounts for at least 50% of its price. Additionally, the cap on expenses that municipalities can spend on procurement, shipping, and platform fees is being reduced by 2.5%.

These adjustments are expected to lead to practical price increases for donors. For example, Sendai City plans to raise donation requirements by an average of 10%, while Kesennuma City anticipates increases ranging from 500 to 2,000 yen. Consequently, many donors are encouraged to complete donations before the new rules take effect to secure current gift options.