There is a familiar dance whenever people want to do something for you or give you something.
“Here, allow me.”
“No, you musn’t!”
“I can’t allow it!”
“I told you, I’m doing it!”
“But I couldn’t possibly accept…”
“Here you go.”
“But… well, thank you ever so much.”
“No, no, it was my pleasure.”
“I don’t deserve it; you’re so very generous.”
“How could such a humble person as myself come to be graced by your generosity?”
“Don’t mention it.”
“I shall treasure this all the days of my life–”
“Seriously. Don’t mention it. Ever again.”
“….. Uh, right. Thanks.”
In the US, it would probably go more like this:
“Here, allow me.”
“No, you don’t have to.”
“No, I insist.”
I mean, what is the giver going to do? Say, “Really? Well, okay!” and not follow through on their offer?
I’m happy to treat people from time to time and depending on the circumstance, especially considering how many times (many, many times!) I’ve been treated. I simply prefer to cut the dance short–I hope I’m doing enough dancing to be polite when I’m on the receiving end, though!
Gift-giving is a big part of interpersonal relations in Japan, but the nuances can make many Westerners uncomfortable. It can even be sticky for Japanese people, as you can see in Natsume Soseki’s novel “Botchan” in which the money for a meal the narrator was treated to is left on his coworker’s desk for weeks with both parties refusing to move it due to its social implications. On a more forcefully friendly note, I once interpreted for a couple of guests and they were given a special item, which they had originally asked if they could find in a gift shop. They really liked it, and wanted to get a second one for a friend, but insisted on finding it in a gift shop and buying it themselves (an understandable notion in Western manners). It turns out it was a limited edition item and no longer sold, so they were gifted a second one, much to the joy of the hosts and to the vague guilt of the visitors.
I’ve heard some other advice that is common in both Japan and a few other cultures–don’t complement your host’s possessions, or they may be inclined to give them to you! A friend of mine has a little collection of accessories that formerly belonged to old ladies thanks to her dishing out of compliments. Then again, though I said nothing about it in the conversation I got into with a lady on a train once, she gave me her necklace when we parted ways. I only had half a chocolate bar from the US to give her in return.
Instead of refusing a gift, which may make the giver embarrassed that you didn’t like it, it’s best practice to be reciprocal. This is a sticky situation when, say, I’m given something expensive by my Tea-sensei who runs a shop of very fine Japanese goods. I don’t trust my taste enough to get her something Japanese in origin! I brought a lot of little Colorado gifts with me when I first came to Matsue, but I suppose I should have packed a few just-in-case nicer gifts, too. (Thank you, Mom and friends for getting a couple of them to me!).