It's official. The consumption tax goes up to 8 percent in April, and the government is anxious to plug any loopholes. The most bothersome one is for ebooks. Though domestically sold ebooks, meaning those distributed by Japanese vendors from physical addresses in Japan, are already taxed, those sold from overseas are not, and the tax bureau is wondering how to correct this problem, especially now that the price gap between an ebook purchased from a foreign-based agent and one purchased from a Japan-based seller will widen, thus setting up a disadvantage for the latter. Market research company Daiwa Soken reports that in 2012 the government missed out on ¥24.7 billion worth of tax revenues from the purchase of ebooks from abroad.

Legally, sales transactions that occur outside of Japan are not subject to consumption tax, and the place of the transaction is determined by the address of the seller. So if you go to Amazon.co.jp and look at various books, you'll notice that those which are sold by Amazon Japan have consumption tax included in the price, while ebooks sold by Amazon Services International do not. What the government wants to do is change the law so that the place of the sales transaction is not the place of sale but rather the place of usage, a tactic that some American local governments have tried with regard to sales tax. But sales taxes are paid at the retail stage, while consumption taxes are incurred at every step of distribution, so a Japanese importer adds the tax after the item arrives in Japan.

If a customer in Japan buys the book directly from overseas, no tax is imposed, but when the law is changed customs could add it because the imposition location is the user's address, not the seller's. However, since ebooks, as well as music tracks and software, tend to be purchased over the net it's more difficult to monitor, if not downright impossible.