Japan has published new plans to subject the supply by foreign providers of electronic services to their consumers to 8% Consumption Tax. This should come into place from 1 October 2015.
Here is the summary of plans:
- Changes 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 registration as a non-resident taxpayer (‘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.
Also, 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 artwork or similar designs.
