The Town of Kutchan in Niseko, Hokkaido, Introduces a 2% Accommodation Tax

A fixed-rate accommodation tax rolled out in several popular ski resort areas in Niseko

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The town of Kutchat that is the heart of the Niseko resort area introduced an accommodation tax for all the lodgings in its jurisdiction. This is the first rollout of proportional accommodation tax in the Japan. Let us take a closer look at how this new tax will affect accommodation prices and the tourism industry in the Niseko area.

Niseko area is well known among both Japanese locals and foreigners for its splendid ski resorts and amazing snow as well as weather conditions. More and more tourists visit Niseko and its numerous resorts throughout the year. This area has also become popular among real estate investors who want to own or manage private lodgings in Japan.

The town of Kutchan expects to collect about JPY 300 million (or USD 2.76 million) in revenue.

The Land, Infrastructure, Transport and Tourism Ministry has presented a survey showing that Kutchan witnessed the sharpest rise in lodging prices for commercial and residential properties amounting to 66.7% compared to the previous year (as of July 1). It was also Kutchan that saw the second- and the third-highest increase in the residential land prices. Thus, with the introduction of this accommodation tax, which is also applicable to private lodgings, the town of Kutchan expects to collect about JPY 300 million (or USD 2.76 million) in revenue.

Where will acommodation taxes go?

Local authorities have plans to use the income generated by accommodation tax to improve services in the area, which attracts a lot of foreign tourists year-by-year. For example, to train multilingual staff and better transport systems as foreigners continue to flock to the area and purchase vacation homes there.

Kutchan is the fifth location in Japan that introduced the accommodation tax as reported by the International Affairs and Communication Ministry. Tokyo, Osaka prefecture, Kitakyushu and Fukuoka were the first ones to start collecting this type of tax. Hpwever, all of these locations were collecting a flat-rate tax that did not depend on the accommodation price.

In case of Kutchan, people who stay there will pay 2% of their accommodation costs (excluding the meals) in taxes. Kutchan authorities said that accommodation facilities would have to collect the tax on behalf of the government. Currently, there are about 530 accommodations available in Kutchan having a total capacity of hosting 460,000 guests (as of fiscal year 2018).

What’s next?

Authorities in other localities seem to be catching up with the idea of accommodation taxes. In particular, the Hokkaido Prefectural Government along with Sapporo, Niseko, and Hakodate might follow the example of Kutchan and introduce and introduce such taxes, too. However, these authorities have to think about the procedure carefully to avoid issues with double taxation as in case of Fukuoka Prefecture.

During the news conference, Naomichi Suzuki of Hokkaido Government said: “We need to carefully make adjustments after showing specifically what we envision with the introduction of the tax. We aim to have an outline of our set directions by the end of the year.”

Same to the  property income taxes, it is important for property owners in Niseko to file their taxes in full and on time to avoid being fined or suspended. If you are a foreign investor or a property owner in Niseko, make sure to make proper adjustments to your taxes and price policies in order to comply with new regulations.

"Otsumami" - a bite size snack:

Lodgings operators in Kutchan, Niseko, must make necessary tax adjustments to comply with new regulations.

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Written by Viktoriya Kuzina

Likes business in Japan and helping entrepreneurs become successful.

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