Japan Consumption Tax on foreign e-services to consumers

Japan has published new details on its plans to subject the supply by foreign providers (e.g. Amazon, Google and Apple) of electronic services to its consumers to 8% Consumption Tax.  This should come into place from 1 October 2015.

The details include:

• A change from the origin to the destination principle for B2C e-services. This means that the provision by non-resident providers of such services now becomes liable to Consumption Tax for the first time. So foreign providers will have to register for Japanese Consumption Tax and charge 8% tax like resident Japanese providers
• Provision of the reverse charge for such services where the customer is a Japanese tax registered business
• Facility for the registration as non-resident tax payers (‘offshore business person’) by foreign e-service providers
• A tax registration threshold, working on an annual basis, which will exempt smaller providers from having to register for Consumption Tax
• Electronic services liable to the indirect tax will include charges for: e-books; apps; streaming or downloadable music, games or videos; subscriptions to membership or dating websites; and automated automated artwork or similar designs.

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