By 2015, Japan will start collecting taxes on online sales of electronic books, music and other download content and purchases from foreign companies and websites. At the moment, there are no taxes imposed on content purchased and downloaded from overseas servers such as Amazon.com and other distributors, and the government says that this situation puts local firms at an unfair disadvantage.
For physical products bought from abroad, Japan charges taxes when these shipments are cleared through customs. No comparative tax is charged for e-content purchases on the internet. This is where the Japanese government plans to make significant changes, using European Union taxing practices as a template. Initially, foreign companies selling e-content to Japanese consumers will have to register with the local tax authority and pay the taxes charged. But when a foreign firm sells e-content to Japanese corporations, the buying company will be responsible for paying the sales tax.
The Japanese Parliament had initially pushed to make this change effective by this spring, the same time the consumption tax rises to 8% from 5%. Citing the need for more time to sort out the taxing details, the Japanese authorities say that the goal now is to make the taxing process effective by October 2015, when the sales tax is also scheduled to increase to 10%. The government tax panel will start discussions as early as next month to incorporate the proposal into the fiscal 2015 tax reform outline.