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Japanese online retailers looking for a change in the sales tax system before they “raise the white flag”

Master Blaster Apr 30, 2014
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So, now that we’re one month in, how’s everyone enjoying the latest sales tax increase to 8 percent? Pretty awesome isn’t it? I’ve been getting a lot more use out of those one yen coins recently.

Not everyone is as lukewarmly amused as myself, however. A consortium of Japan’s online businesses, including ebook sellers and advertisers, met on 10 April to hash out some demands for the government before they get taxed right out of the competition since business such as segments of Apple and Google aren’t necessarily subjected to Japanese sales tax rules.

If you were to buy a physical product from overseas to Japan you wouldn’t have to pay the Japanese sales tax since it was not a domestic transaction. Despite that advantage, the customer would still have to deal with shipping costs and other hassles to make a domestic dealer the better choice.

However, when we consider data purchases, you can basically get the same ebook in the same time without any shipping from a foreign company. Adding an increasing sales tax in Japan into mix and you’re likely to see more and more citizens look beyond the seas for their apps and digital media.

For example, here’s how The Da Vinci Code (Japanese Translation) ebook is selling from Japan’s Kinokuniya.

Then we see the same book at Rakuten, which owns Canada’s Kobo service, is sold without tax.

Amazon Japan still has them both beat, however.

According to an interview by Economic News, the President of Kinokuniya bookstores had this to say:

“The 8% tax is a big handicap. When the tax becomes 10% we may start seeing some raise the white flag.”

His and other ebook businesses like it may consider abandoning the market all together if nothing changes. Still in its early stages, the group hasn’t made any specific demands regarding what kind of reform they want to see. Earlier this month the Ministry of Finance was preparing a plan to have a “tax agent” to ensure that foreign companies operating in Japan paid up properly. Perhaps the online Japanese businesses would like to see that expanded to foreign countries operating virtually in Japan as well.

It would seem that whatever happens in the coming years, it’s the regular people who are going to get the worst of it. Either Japanese companies will be aided by stricter tax enforcement and we’ll all pay more no matter where we go, or those companies will fail to thrive and Japan will sink further into economic stagnation.

Then again, we could always just lower the sales tax again. Any chance of that happening?

Source: Economic News via Kopipe Johokyoku (Japanese)
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