The government and ruling coalition are planning to adjust the corporate tax law to make it possible to tax foreign online retailers that own warehouses inside of Japan, as part of fiscal reforms for FY 2018.  Under the current law, companies that have no production facilities or branch offices (also called Permanent Establishment (PE)) in Japan are being taxed for corporate taxation in the country where their headquarters is located.  

Under the proposed changes, warehouses would also be designated as a PE.  The initiative is seen as a way to deal with large international online retailers, such as Amazon.com, that have warehouses in Japan but are not paying corporate taxes and will be the first amendment to the PE definition since 1962.

 Source: Sankei News (J)