Kobo and Amazon have each sent out reminders over the past week that, starting 1 October, they will be bundling Japan’s 8% consumption tax into the price of the ebooks sold in that country.
eBooks distributed through KDP and Kobo Writing Life and sold in the local Kobo and Kindle Stores will no longer have the taxes applied at the point of sale. Now the taxes will be reflected in the list price for the ebooks (just like VAT in Europe).
Both Kobo and Amazon have sent out notices so authors have time to adjust their prices. You can read the Kobo notice in their blog post, and you can find a copy of Amazon’s KDP email at the end of this post.
This shift represents the latest stage in Japan’s two-year-old plan to close the ebook tax loophole and tax foreign ebook retailers. It’s unclear whether it will generate additional funds, although it is bound to cause many headaches.
Kobo, for example, say that they were already collecting the required tax. It is unclear whether Amazon was collecting the tax, but given their habits of (legally) avoiding collecting taxes in Europe there’s a good chance they were pulling a similar trick in Japan.
Starting October 1, 2015 an 8% consumption tax will be applied to all ebooks sold to customers living in Japan. No action is required of you, but we are notifying you because you currently have one or more titles available through KDP that may be affected by this change.
One-time Adjustment for Existing KDP Titles
Beginning October 1, list prices set for Amazon.co.jp will be tax-inclusive, meaning that the 8% consumption tax will be included in the list price you give us. For example, if you set your Amazon.co.jp list price at ¥1250, your new tax-inclusive list price would be ¥1250. Tax will be deducted from this price, and your royalties would be calculated on a resulting price of ¥1157. Keep in mind that you can change your price at any time subject to KDP’s Terms and Conditions….
Setting List Prices for Amazon.co.jp
Starting October 1, to make it easier to set customer friendly list prices without having to calculate tax, authors will set list prices for the JP marketplace that include consumption tax. To accommodate this, the KDP pricing grid will be updated to accept tax-inclusive list prices. In the pricing page, authors will also see their suggested price without tax to help them understand how royalties will be calculated. For those authors who set their JP marketplace price automatically from their US list price, we will convert the US list price to local currency and that will be the list price that includes tax.
For more information about this change, visit our Help pages.
image by eblaser