Several religious corporations operating temple lodgings on Mount Koya, a UNESCO World Heritage site in western Japan, have underreported more than 100 million yen (approximately $650,000) in income, according to sources familiar with the matter. The Osaka Regional Taxation Bureau discovered the undeclared income during audits completed for the fiscal year ending in March 2025.

The investigations, prompted in part by a recent increase in foreign tourism that has driven up lodging prices, targeted over 10 of the roughly 50 temple lodging operators on Mount Koya. The bureau aims to assess how these religious corporations manage their commercial operations, which include lodging and food services.

While religious organizations in Japan are generally exempt from taxes on income derived from religious activities such as offerings and donations, earnings from commercial enterprises are subject to taxation. The bureau plans to impose around 60 million yen in additional taxes on the entities found to have underreported income.

One notable case involves Sojiin, a temple lodging located adjacent to Kongobuji, the head temple of the Koyasan Shingon school of Buddhism. Sources indicated that the family of the chief priest used lodging revenues, among other funds, for personal expenses over a three-year period from 2022 to 2024.

The Osaka Regional Taxation Bureau’s findings highlight the complex financial activities undertaken by religious institutions when operating business ventures on sacred sites, raising questions about the separation of commercial and religious income and the enforcement of tax regulations in such contexts.