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Japanese Parliament okays hike in consumption tax rate rate to 10%
By TII News Service
Aug 13, 2012 , Tokyo |
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THE Diet has finally given
its nod to the proposal to double consumption tax after
severe squabblings in the House.
The bill to double consumption tax from 5% to 10% sailed through the lower
house of parliament in June, but its passage from there has been anything but
smooth. Now since this bill has been passed, Japan will progress towards increase
in consumption tax to 8% from April 2014 and to 10% from October 2015.
In addition to raising the tax rate, the government is looking at reforming
the mode electronic supplies (such as e-books, music and software) and advertising
from offshore companies such as Amazon, Google and Facebook, which are to be
taxed from April 2014.
Consumption tax is imposed on supplies and services that are provided by domestic
suppliers to Japanese consumers. Nevertheless, electronic supplies and advertisement
to Japanese consumers are not subjected to tax if the supply is provided by
an offshore company outside of Japan.
To assess tax on advertisements from an offshore supplier, a reverse charge
mechanism, shifting the tax liability for a supply by a foreign supplier to
the local customer, has been conferred.
This will serve to make many products more expensive for Japanese consumers
and may prove to be an unpopular measure.
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