Based on the structure of the Japanese Consumption Tax (CT) and estimates of losses in similar taxes in other jurisdictions, this paper estimates that approximately \26,532 million has not been collected each year for the past eight to ten years, even though these taxes have been paid by hotel guests to reservation agents when on-line reservations were made with virtual travel agents.This is a comparative assessment.It is focused on the Japanese CT, but it draws solutions from observations of what has been done in Europe’s VAT, and American sales taxes.

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Skimming cash receipts is an old fashioned tax fraud. Modern technology is changing how businesses skim. The agents of change are software applications – Phantom-ware ("hidden," pre-installed programming option(s) in ECRs) and Zappers (add-on programs for POS systems). These programs are a serious problem in Canada, the Netherlands, Germany, Brazil, Australia and Sweden. Why are they not a concern in Japan?Although it may be that they are not used in the Japan, it seems more likely that they are simply not being detected, because of insufficient (or technologically limited) audit resources. The authors hope to focus attention on this issue.

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Significant change is anticipated in the Japanese Consumption Tax.The Japanese Tax Commission is recommending that the rate should double, multiple rates should be employed, and the bookkeeping method of accounting should be abandoned in favor of the European invoice method. The Tax Commission faces a tax policy dilemma.The aging population drives the need for a tax increase (making the Consumption Tax an obvious target for revenue enhancement) at exactly the same time the population is shrinking in overall size, thereby reducing the number of working-consumers who can pay the higher tax.This paper proposes a way out of this dilemma.It proposes the adoption of certified transaction tax software at the point of (final) sale, and the distribution (for voluntary use by the needy) of IDs embedded with (a) digitally recognized biometric identifiers and (b) digital tax exemption certificates.Rates could then rise without excessively burdening the poor, elderly and handicapped.

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Place of taxation rules are the seminal cross-jurisdictional provisions of any consumption tax regime.They determine where among competing jurisdictions a particular service is taxed.It is therefore of considerable importance to Japanese businesses and consumers when the European Union undertakes a wholesale revision of the place of taxation rules for services and intangibles.The OECD has recently observed that a general ”lack of international consistency and coherence” in these rules is erecting global trade barriers (double taxation), and provided opportunities for global tax avoidance.This paper compares current and proposed EU place of taxation rules for services and intangibles with companion rules under the Japanese Consumption Tax.It concludes that the OECD observation is correct, and that the proposals do not alleviate EU-Japan ”inconsistencies.”

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The Sarbanes-Oxley Act of 2002 is US legislation that mandates wide-ranging reforms in the public company financial reporting process.The central concern is with auditor independence.Similar legislation has been enacted in France, Australia and Japan.This paper pays specific attention to the provision of non-audit transaction tax services by the auditor as an example of the US approach.The US approach is contrasted with that of France, Australia and Japan.France and Japan represent extreme positions.The paper considers whether difference in approach to auditor independence will prompt US regulators to exercise extra-territorial regulatory powers over foreign accounting firms that audit firms listing on US exchanges.

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Modern technology is dramatically changing the way consumption taxes are collected, but it is also changing the way policymakers assess the operation and impact of these taxes.Whether the design is a standard credit-invoice value added tax (VAT) of European design, or a retail sales tax (RST) of American design, or the credit subtraction VAT without invoices type of consumption tax (CT) of Japanese design, technology is having a profound impact.This book begins and ends with a tax reform.It starts with a proposal to the President's (George W. Bush's) Advisory Panel on Federal Tax Reform, and ends with a proposal for the consideration of Prime Minister Junichiro Koizumi's Tax Commission.Neither tax reform commission appears at the moment to be considering technological solutions, although both are critically interested in consumption taxes. In the U.S. case both of the identified structural barriers to a federal level VAT (federal-state coordination and regressivity) can be answered technologically.In the Japanese case a wholesale transformation of the CT is under consideration; one that would move the Japanese CT to an invoice system with multiple rates and a standard rate of 10 percent or higher.The structural departure that this proposal makes from the traditional Japanese CT need not be taken if technological solutions are applied, although the double digit rate increase seems to be a given for revenue reasons.

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”An Entrusted Research on 'Creative Business Activities' and Competition”, Fair Trade Commission 19950901-19960331

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