TOKYO -- Japan's Ministry of Finance will widen the taxation net on foreign corporations, with plans to slap levies on online retailers that do not have local branches but operate large-scale warehouses.

A major hurdle to taxing overseas corporations in Japan has been the concept of permanent establishments -- tax lingo for a fixed place of business.

Currently, foreign corporations without an office or similar outpost in Japan are not taxed even if they have warehouses and other depots since these facilities are not considered permanent establishments. An online retailer without a local branch, therefore, cannot be taxed even if it has delivery centers in the country.

The revisions would expand the definition of permanent establishments to include large facilities that handle core business operations, such as warehouses. Foreign companies that have sales agreements with Japanese distributors would also face tax obligations. In this case, local businesses entrusted with sales or other operations would be treated as "agent permanent establishments" subject to taxation.

The revisions will be submitted to the 2018 ordinary session of the Diet. An advisory tax commission to the prime minister confirmed the plan. The change would make the Japanese practice compatible with the Organization for Economic Cooperation and Development's multilateral tax treaty.

U.S. companies like Amazon.com will not be subject to the new rules, however, since Washington is not a signatory to the OECD agreement and has its own tax treaty with Japan.

The European Commission has argued for the EU to introduce its own policy should the international community fail to act, while Japan has been pushing for global cooperation.

(Nikkei)