Japan confirms tax on foreign digital content

The Japanese government will impose its consumption tax on foreign vendors which sell their digital content in the country. 

The Japan Times reported Thursday that local officials have confirmed the tax will be levied on vendors such as Amazon.com from April 2014 onward. The tax rate will be raised from 5 percent to 8 percent in April 2014, and will rise to 10 percent in October 2015, it noted.

Japan's Finance Ministry will spend the time between now and the imposition of the tax to explore a range of methods it can use to collect the revenue, with the European Union's model of value-added tax on online products a consideration, it added.

The decision will be a boon to local businesses which have long raised the issue of an uneven playing field as the consumption tax for digital content is only imposed on domestic companies. These companies have argued that they will not survive harsh price competitions with foreign vendors if the tax hole was not plugged, the report noted.

The latest news confirms a report in July which revealed how the country's government was considering taxing overseas digital content and the creation of a panel to discuss a possible system to collect the revenue.