Blog > Blog > VAT > Japan reviewing consumption tax on foreign digital downloads, e-books, Apps and streaming - Avalara

Japan reviewing consumption tax on foreign digital downloads, e-books, Apps and streaming

  • VAT
  • 18 October 2013 | Richard Asquith

Japan reviewing consumption tax on foreign digital downloads, e-books, Apps and streaming

The Japanese Tax Commission has recommended that the country should start to charge Japanese Consumption Tax (VAT / GST) on digital goods (e-books, download games, music, films, Apps etc) from foreign website to its consumers.  Japan first review Consumption Tax on e-books in 2012.

Foreign digital goods consumption tax free

Currently, consumer in Japan can buy downloads of music, videos, e-books, games etc. from foreign websites without the usual 5% Consumption Tax charge.  This is similar to the US, but contrast with Europe where VAT is applicable.

As foreign competition steps-up, the country is worried that the unfair tax break is holding back its own domestic digital industry.  In addition, with the Consumption Tax due to double to 10% by 2015, the is extra inventive to buy from foreign providers.

Non-resident Consumption Tax registrations

If the requirement is implemented, it would require foreign companies to register with the Japanese authorities, collect Consumption Tax, and submit regular returns and payments.  This would mirror the European Union’s system – although there are differences for EU and non-EU VAT digital companies.

It is likely that the measure will be introduced at the end of 2014.  Presently, foreign traders do not have to register for Consumption Tax if their Japanese income was below Yen 10m in the previous two years.


VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which this year won International Tax Review's Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.