Japanese Tax Cheats Hit By Foundering Economy

by Mary Swire, Tax-News.com, Hong Kong

25 June 2001

An annual white paper released by the Japanese National Tax Administration last week revealed that even tax evaders are suffering the effects of the country's sputtering economy. Tax collectors found 27.1 billion yen in undeclared taxes for fiscal 2000 (which ended on March 31st), down about 4.5 billion yen from the previous financial year.

Although the number of cases of tax evasion uncovered was the same as the year before, the amounts involved in the 205 cases were significantly lower. Criminal complaints were filed in 146 cases, very slightly down from the fiscal 1999 figure of 148. The white paper revealed that while some Japanese citizens were distinctly traditional in their approach to tax evasion, preferring to hide their money in underground vaults, other taxpayers (or not), including companies, employed devices such as padding expenses at foreign units, or simply keeping undeclared funds offshore.

In the face of increasingly globalised and sophisticated tax evasion and money laundering techniques, the Japanese administration has announced that it will be opening up an international investigation unit and a high-tech operations unit at its Osaka bureau. Similar offices were opened at its Tokyo headquarters last year. However, the largest case of tax evasion uncovered last year was decidedly low-tech, revealed the NTA, involving 340 million yen and an unemployed Hokkaido woman trying to dodge inheritance taxes.

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