TOKYO - The Japanese government and ruling Liberal Democratic Party have decided to shelve a plan to change tax codes in fiscal 2013 to levy the consumption tax on digital content including e-books and music downloads from overseas vendors from the following year, sources familiar with the move said Tuesday.
Officials and lawmakers have not been able to work out details for the plan because of a change in government following the December general election, according to the sources. The plan would have imposed the tax on digital products downloaded via the Internet along with a hike in the tax rate to 8 percent in April 2014 from 5 percent now.
The current tax code only allows for taxation on products traded domestically -- digital or otherwise -- and physical goods imported. Japanese vendors of digital content have said it is unfair not to tax digital content from overseas sources such as Amazon.com.
The Finance Ministry was considering requiring overseas vendors to register with the Japanese taxation authority and declare income from their businesses.
The plan would be considered for tax code changes in fiscal 2014 or after, the sources said.