Foreign Internet Companies to See Their Digital Goods Taxed in Japan?

Amazon's Kindle will soon be seen in back pockets in Japan too

According to The Asahi Shimbun citing unnamed sources, Japan’s Finance Ministry is planning to impose a consumption tax on e-books from non-Japanese companies. This comes in the wake of Tuesday’s news that Japan’s Diet approved a legislation to double the current 5 percent consumption tax to 10 percent by October of 2015. And if that tax were applied only to Japanese internet vendors, they would be put at a clear disadvantage from overseas competitors.

This discussion comes at a time when Japan’s e-book space is beginning to heat up, with Amazon’s Kindle coming soon and Rakuten’s Kobo just around the corner. Finance Minister Jun Azumi was quoted today saying:

We must seek to ensure fairness over taxation on online content sales so that companies at home will not be put at a disadvantage. […] I hear it has become a reason for domestic industries to move their bases overseas.

Like Japan’s anti-copyright law revision we told you about earlier in the week, this is another example of lawmakers struggling to keep regulations current with changing technology. This, of course, is not a problem unique to Japan. But the nations content owners have been extremely protective when it comes to intellectual property and the profits to be had from digital distribution, so it will be interesting to see how lawmakers will react on this front, and how quickly (or slowly) they will do so.