As Japan experiences record growth in both foreign workers and international visitors, the government is reviewing several key policies that affect foreigners — from residency rules to taxes and health insurance.
Lawmakers say the goal is to create a fairer and more transparent system that balances the needs of local citizens with the realities of Japan’s fast-changing population.
Why Japan Is Reviewing Its Rules for Foreigners
The Liberal Democratic Party (LDP) recently formed a committee to study policies related to foreign residents and visitors. The panel aims to strengthen coordination between ministries and local governments, while also addressing public concerns such as traffic safety, unpaid health insurance premiums, and tax loopholes used by some foreign visitors.
Among the main topics discussed are:
- Stricter rules for converting foreign driver’s licenses
- Reforms to the national health insurance system for foreigners
- A new approach to Japan’s tax-free shopping system
- A possible increase in the departure tax for tourists
- A review of Japan’s naturalization and permanent residency system
Foreign Driver’s License Conversion May Become Stricter
Japan’s National Police Agency (NPA) plans to make it harder for foreigners to convert overseas driver’s licenses into Japanese ones.
Currently, applicants only need to pass a short 10-question written test. However, some officials argue that this is too easy and may contribute to traffic violations involving foreign drivers.
The NPA is expected to:
- Require resident registration proof when applying, and
- Make both the written and driving tests more detailed.
The goal is to ensure that all drivers fully understand Japan’s road rules and can drive safely in the country.
Unpaid Health Insurance Premiums a Growing Concern
When foreign residents stay in Japan for more than three months, they must enroll in the National Health Insurance program (Kokumin Kenkō Hoken) unless they are covered by their employer.
However, a survey by Japan’s Health Ministry found that only 63% of foreign residents who are required to pay have done so — compared to 93% of Japanese citizens.
To address this issue, lawmakers are proposing:
- Requiring new foreign residents to pay part (or all) of their insurance premiums upfront when registering their residency
- Providing clearer explanations about health insurance during the visa application process
Another problem is that foreigners’ income for the previous year is often recorded as zero upon arrival, resulting in very low first-year premiums — which adds to the system’s deficit.
Major Changes Coming to Japan’s Tax-Free Shopping
Japan’s tax-free shopping system has been a big attraction for tourists, allowing them to buy items without paying the 10% consumption tax. However, the system has also been abused — with some individuals purchasing tax-free goods and reselling them in Japan.
To fix this, the government will shift to a refund-based system in November 2026:
- Tourists will pay the full 10% tax at the store.
- Refunds will be issued at the airport after showing the purchased goods to customs officers.
This change aims to reduce fraud and ensure fair taxation. Some lawmakers, however, believe Japan should abolish the tax-free system altogether to prevent further misuse.
Departure Tax Increase Under Discussion
The current ¥1,000 departure tax applies to all passengers — Japanese and foreign — who leave Japan by air or sea.
With record-high tourism, the government is now considering raising this tax only for foreign visitors to fund improvements in tourism infrastructure.
Japan’s departure tax is relatively low compared to other countries:
- Australia: around ¥6,400
- Hong Kong: around ¥2,200
Officials suggest that higher fees could help manage overtourism, especially in heavily visited areas.
However, critics warn that charging foreigners a higher rate might violate international standards and discourage tourism.
Reviewing Japan’s Naturalization and Residency Rules
Interestingly, more foreigners are now choosing to apply for Japanese citizenship rather than permanent residency — since naturalization currently has easier requirements.
Here’s the difference:
- Naturalization: requires 5 years of residence and checks 1 year of tax and insurance records.
- Permanent residency: requires 10 years of residence and a longer financial review.
Government officials, including Justice Minister Keisuke Suzuki, say this imbalance will be reviewed to make both systems equally strict and fair.
What This Means for Foreigners in Japan
Japan’s population and workforce are becoming increasingly international. While these proposed reforms may sound tough, they reflect the government’s effort to build a clearer, fairer system for everyone — both citizens and foreign residents.
For foreigners living in Japan, staying updated on these changes will be important for managing your visa, insurance, and tax responsibilities.
