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Japan To Tax Online Sales Of Foreign-Made Content

Posted by timothy on from the what-will-the-market-bear dept.

Qedward writes with this except from CIO. "Japan is planning to tax sales of foreign online content such as e-books, apps and downloaded music by late 2015. Japanese who purchase electronic content from foreign firms like Amazon.com through overseas servers don't have to pay consumption tax, currently at 5% but slated to rise to 8% in April. That has made foreign content cheaper than apps, MP3 downloads, software, and e-books distributed domestically. Physical products purchased from abroad are hit with consumption tax when they clear customs in Japan, but no such levy exists for online goods. The government plans to close the loophole and make foreign vendors selling consumer goods register with tax authorities and pay the tax. Japanese corporations that buy foreign electronic content such as business software, however, will have to pay the tax directly to the Japanese tax authorities, Nikkei Asian Review reported this morning."

7 of 59 comments (clear)

  1. Re:It will never work by houstonbofh · · Score: 2

    How the hell are they going to police that?

    They don't need to perfectly police it. The largest 10% of vendors sell 90% of the goods. As long as you collect from Amazon, iTunes, GooglePlay, and so on, you will get all the revenue.

    The funny part is that this actually gives a competitive advantage to small stores to little to notice. Until they become big enough to be noticed...

  2. And how will they impose this tax? by SailorSpork · · Score: 4, Informative

    The reason consumers are buying digital merch from other countries is because it is cheaper. Entertainment moguls have an even tighter stranglehold on Japan's entertainment business and pricing than even the RIAA in the US and prices for music, movies, games, etc are all much higher, on the order of 50-100% higher. If you try buying a song in the Japan iTunes store for instance, a song that is 99 cents or $1.29 in the US app store is ~$2 in Japan.

    So I'm sure what the Japanese people are doing, as an example, is switching their iTunes "home" location to another country and buying iTunes cards from those countries, saving costs and getting equivalent merchandise.

    This scheme does not make for easy tracking and taxation on the Japanese side...

    1. Re:And how will they impose this tax? by Mashiki · · Score: 2

      So I'm sure what the Japanese people are doing, as an example, is switching their iTunes "home" location to another country and buying iTunes cards from those countries, saving costs and getting equivalent merchandise.

      That's exactly what they're doing, or they're having their friends in the US and Canada send the stuff to them. I regularly send movies, cards, and games to my gaming buddies in Japan, because I can get it much cheaper...and surprise I have no qualms about it, neither do they. They're getting raked over the coals, but it has all to do with amount or lack of taxation they're able to raise because the average worker age is now 41(unlike the late 20's to early 30's in the Americas). Then again, I would have moved there years ago and taken up a job in the law field if they didn't have a stick up their ass over foreigners, even those of us who are first generation kids.

      It's not a pretty picture on what's going to happen there in the next 20 years unless they dig their heads out of their ass.

      --
      Om, nomnomnom...
    2. Re:And how will they impose this tax? by olau · · Score: 2

      The way it works in Denmark, and I imagine other EU countries, is that companies with a revenue from Danish customers above a certain threshold (250,000 EUR/year I think) must register with the Danish tax authorities and collect the 25% VAT from Danish consumers in the same way as Danish companies do (the VAT threshold for Danish companies is about 6700 EUR/year). So it's the responsibility of the company to do the tracking and taxation.

      If you fail to do that as a company, I'm not sure exactly what happens, but I guess you will get a taste of the rough end of the Danish legal stick. I think it's unlikely a company the size of Apple could get away with not collecting the VAT, although I'm sure some of the small fish get through.

  3. Re:It will never work by Anonymous Coward · · Score: 5, Informative

    How the hell are they going to police that?

    Same as most other governments do, make the onus of reporting on you, and failure to report illegal.

    No, they'll do as Europe does. Foreign websites that sell to European customers digital goods automatically add VAT in what you pay. The end user has no reporting to do. It is all automatic.
    Omly the US had a fucked up volontary system for reporting due taxes.

  4. Bitcoin could be a problem here by beltsbear · · Score: 3, Interesting

    What if a seller (legal in it's own country) sells mp3's/videos through a website that allows worldwide customers and takes Bitcoin for it. The seller never registers with the government of Japan. The buyer avoids the tax, the seller saves credit card fees and chargebacks. Only the government of Japan looses.

  5. Re:It will never work by Jane+Q.+Public · · Score: 2

    "Omly the US had a fucked up volontary system for reporting due taxes."

    That "fucked up volontary system" is due to the way our country is structured.

    States cannot tax transactions that happen in other States. That's because each State is sovereign. So States impose a "use" tax (which actually is not "voluntary") on the use of the item within the State. Because it is not a tax on the transaction, and only involves inside-State use, it is a legal tax.

    The Federal government, likewise, has no authority to tax on behalf of States.

    That's the way our country is designed. That's the way it's supposed to be. If you don't like it, go somewhere else... don't try to mess up the government of my states and country by imposing what YOU think is a "fair" tax.