Ministry mulls tax on overseas Net content

Download levy sought to boost domestic sales


The Finance Ministry is considering imposing the consumption tax on digital books, music and other content downloaded from websites operated by overseas vendors, sources said Friday.

Such products are currently tax-free. The change could take effect in April 2014, which is when the consumption tax would be raised to 8 percent under a bill that has cleared the Lower House and is now in the Upper House, the sources said.

The Finance Ministry hopes the change would provide a level playing field for domestic providers of online content, they said.

A panel will be created as early as next month to discuss a possible system to collect the revenue, the sources said.

“The ministry will try to ensure fairness over online content transactions so that domestic vendors will not be put at a disadvantage,” Finance Minister Jun Azumi told a news conference after a Cabinet meeting,

The consumption tax applies only to domestic transactions and tangible goods imported from abroad. Online content provided by and other businesses remains tax-free even if they are purchased in Japan because such transactions have been treated as taking place outside Japan’s borders.

The Lower House on Tuesday passed the bill to raise the tax to 8 percent in April 2014 and to 10 percent in October 2015, sparking speculation that domestic online content vendors will speed up steps to move their business bases overseas.

Japan may take a cue from the European Union’s value-added tax on online products from outside the region in working out a taxation method, the sources said. Securing a fair taxation system for these products is considered difficult because painstaking efforts are necessary to fully track online transactions.

Quake funds go unused

The government ended up not using about 40 percent of the funds earmarked in fiscal 2011 for reconstruction following the Great East Japan Earthquake, according to officials.

In a sign that public works projects related to reconstruction have made slow progress, the government spent only ¥9.051 trillion, or 60.6 percent, of the ¥14.924 trillion secured under three extra budgets to rebuild areas in the northeast, leaving ¥5.873 trillion unused.

The officials said more money was earmarked than necessary because the government had a difficult time accurately assessing the scope of the damage.

But it is also widely believed that the government has been slow in disseminating the aid to local governments affected by the disasters.

Of the unused funds, the government will carry over ¥4.769 trillion for relief operations under the fiscal 2012 budget while transferring ¥1.103 trillion to a newly created account for reconstruction, with the specific use undecided.