Japanese Tax Tribunal Rules In TDK's Favour

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

02 February 2010

TDK Corporation, the Japanese electronic components multinational, is vindicated in its decision to press for a full refund of a JPY120bn (USD1.3bn) tax fine it paid in 2005 in respect of transfer pricing tax issues.

TDK previously reported that in June 2007 it received a reinvestigation decision from the Tokyo Regional Taxation Bureau rescinding some incremental income assessed by the Bureau in correction notices based on transfer pricing issues dated June 29, 2005. A refund of JPY17bn was paid.

Unconvinced by the details of the reinvestigation decision, TDK filed a request for reconsideration in July 2007 with the National Tax Tribunal, seeking rescission of the full amount of the portion not permitted by the Bureau, as previously announced.

TDK has asserted the legitimacy of its position to the Tribunal over the course of the nearly two and half years since it filed the request for reconsideration and has now received the Tribunal’s decision on the request.

As a result of the decision, the company expects to receive a tax refund, including corporation tax and regional taxes. Bearing in mind the company's earlier announcements, this is not likely to be less than JPY120bn.

TDK says it will make a further announcement regarding the effect of the decision on its earnings, once details become clear, following a review of the written decision and other matters.

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