Apple’s sales in Japan have been skyrocketing quarter after quarter, but then the company reported “dampened” growth during its most recent earnings call.

Japan has been one of Apple’s fastest-growing countries, so what happened? A big increase in Japan’s federal taxes is not only effecting Apple, but competitors like Amazon.

On April 1st, Japan increased its tax from 5% to 8%, and as a result, Japanese customers are buying less stuff. Bloomberg points to Tim Cook’s comments on Japan during Apple’s recent earnings call. The Apple CEO said that “tax increases and the regulatory environment in Japan affected smartphone sales.”

The Japanese tax reform is even hitting high-end retailers like Louis Vuitton. Retail sales in the country slumped last quarter across the board. Amazon’s numbers for last quarter were pretty dismal, and its CFO attributed Japan to slowing the company’s international growth as a whole.

Carriers in Japan have also received regulatory guidance to stop incentivizing customers to switch with hardware discounts, and those discounts have helped sell iPhones in the past.

Apple recently added Japan’s biggest carrier, NTT Docomo, to its roster, and sales there are still strong. But Apple and others will have more hurdles to overcome moving forward as Japanese customers continue to want the latest tech.

Via: Bloomberg