The digital publishing industry in Japan is eager for a change in the current tax structure that imposes consumption tax on the domestic providers while foreign content producers are left free. The consumption tax, which can be considered the equivalent of value added tax now in place in Europe and some other parts of the world, is applicable if anyone in Japan buys an ebook from an online retailer based within the country. The same tax will not be applicable if bought from any ebook retailer based overseas, such as Barnes & Noble or Amazon, as the latter is earmarked as an overseas transaction and the ebook considered located on an overseas server; consumption tax is only levied for domestic transactions.
The discrepancy is expected to pitch Japanese publishing and Internet industries to an even more disadvantageous situation as the ebook industry alone is projected to grow to ¥240 billion by fiscal 2017, which will mark a threefold jump from what it was in 2012. The tax is set to increase to 8 percent next April and a further 10 percent by October of 2015 from the current 5 percent.
As things stand now, the Tax Commission is examining the prospect of including ebooks procured online from overseas retailers within the consumptions tax, something that is estimated to add tens of billions of Yen to the system. However, there are a few challenges that remain as Japanese authorities will still have to devise a method of ascertaining the online distribution prices adopted by companies such as Amazon, which is based in the US but has a considerable presence in the Japanese ebook market.