AIG-affiliated insurer, Alico Japan is facing a back tax bill in the region of JPY17.8bn regarding its failure -- in the eyes of the Tokyo tax authority -- to properly declare corporate taxes in its valuation of foreign currency-denominated assets.
According to reports in the national media, the dispute between Alico and the Tokyo Regional Taxation Bureau centers over investments made by the company in foreign assets which lost value following the economic crisis, leading the life insurer to claim the loss which resulted from the depreciation of the foreign currency against the yen as a deduction for tax purposes.
The regional tax authority disagrees, however, with Alico's application of the so-called 15% rule, which provides for exchange rate valuation losses at the end of the financial year which exceed book values by 15% or more to be counted as losses.
Alico Japan is expected to appeal the back tax bill.
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