New Rules for 'Furusato Nozei' (Hometown Tax) to Take Effect in October, Introducing New Standards for Return Gifts
New rules will be applied to Japan's "Furusato Nozei" (hometown tax) system starting in October. Furusato Nozei is a popular program that allows individuals to make donations to municipalities of their choice, enabling them to receive tax deductions and return gifts such as local specialty products.
Under the new rules, the cost of return gifts must be kept to 50% or less of the donation amount. Previously, the 50% limit applied only to the cost of the gift itself, but moving forward, all associated expenses—including shipping and administrative fees—must be included in the calculation. Consequently, it is expected that it will become more difficult to offer the same level of luxury in return gifts for the same donation amounts as before.
Furthermore, stricter standards will be established regarding the raw materials and processing locations of return gifts. Previously, items processed within a municipality were accepted as return gifts, but in the future, greater emphasis will be placed on whether the raw materials were produced within that region. This requirement is intended to more clearly highlight local specialty products.
The purpose of these changes is to ensure that the Furusato Nozei system is used correctly for its original goal: regional revitalization. Excessive competition over return gifts among some municipalities had become a point of concern. Through these revisions, it is hoped that donors will rediscover the appeal of local regions and that the system will be operated in a more sound manner.
Since October, municipalities have been reviewing their return gift offerings to comply with the new rules. Those planning to use the Furusato Nozei system are advised to check the latest information on each municipality's website before making a donation.