Tokyo’s New 3% Hotel Tax in 2027 Targets Upscale Stays

The Tokyo Metropolitan Government has announced a major overhaul of its accommodation tax that is scheduled to begin in fiscal year 2027. The city plans to move away from the current flat-fee system and adopt a proportional tax set at 3 percent of the room price.

Officials say the new model will better reflect the actual cost of a stay and generate more funding for tourism services, infrastructure improvements, and visitor support programs.

Right now, the system is simple but not very flexible. Guests staying in rooms priced between 10,000 yen and 15,000 yen ($64 to $96) are charged a flat 100 yen per night ($0.64). Travelers whose rooms cost more than 15,000 yen ($96) pay 200 yen per night ($1.30).

The tax does not rise along with room prices, which means that guests in luxury hotels pay the same tax as those in moderately priced rooms.

Under the proposal, that structure would be replaced with a 3 percent levy applied to the total room charge. The exemption threshold would also increase to 13,000 yen ($83), meaning stays below that price would continue to be tax-free.

This means higher-end stays would contribute more, while lower-cost accommodations would remain protected.

Tokyo is also expanding the types of lodgings covered by the tax. In addition to traditional hotels, the new rules would include capsule hotels and the fast-growing segment of private rentals such as minpaku-style properties.

The government wants the new system to better match each traveler’s ability to pay, especially as Tokyo sees more demand for upscale accommodations and a steady rise in international tourism. By collecting a share of the room price rather than a fixed amount, the city expects to raise more revenue to support improvements in public spaces, tourism-oriented sustainability initiatives, and overall visitor experience.

Before the plan can move forward, it must be reviewed by both the Tokyo Metropolitan Assembly and the Ministry of Internal Affairs and Communications. If approved, the new tax will take effect in fiscal 2027 and significantly increase annual accommodation tax revenue.

Meanwhile, England recently announced that its regional mayors will soon be able to implement their own tourist taxes on hotel stays, guesthouses, bed and breakfasts, and vacation rentals. Funds collected through these local taxes could be used to support transportation projects, cultural initiatives, public services, and other community investments.

Photo by Pawel Nolbert on Unsplash