Despite Japan's National Tax Administration denying that there has been any change in policy towards multinational companies, several have been stung with demands for extra taxation in the past week, mostly relating to transactions conducted with foreign subsidiaries.
On Friday, it emerged that four of Japan's largest companies, including Mazda, Mitsui, Mitsubishi and Sony had all received amended tax reassessments for past tax years leaving them with tax bills running into the hundreds of millions of dollars. These came just days after regional tax authorities served similar notices on Sharp and Takeda Pharmaceutical. All companies plan to contest the claims.
In a statement issued on Friday, Mazda Motor Corporation confirmed that it had received notification from the Hiroshima Regional Taxation Bureau of a reassessment for product-related transactions between Mazda and its overseas subsidiary for the year ended March 31, 2004.
Taxable income was reassessed for approximately 18.1 billion yen (US$158 million), and the additional taxes, including local taxes, are estimated to be approximately 7.6 billion yen.
The Taxation Bureau claims that the payments made by Mazda to the overseas subsidiary related to the transactions constitute taxable donations from Mazda to the overseas subsidiary.
Mazda said that it found the tax notice "regrettable."
"Payments related to such transactions should be examined from the standpoint of transfer pricing; however, it has been judged to constitute taxable donations," Mazda stated.
While the company plans to pay the reassessed amount, it also intends to file an appeal and will formally request bilateral consultations between the two countries under the applicable tax treaties.
Mazda said that it is "confident" that it will be able to obtain relief from double taxation.
Mitsubishi Corporation (MC) announced in a report filed with the Tokyo Stock Exchange on Friday that it had received an assessment from the Tokyo Regional Taxation Bureau for the fiscal year ended 2000 related to transactions between the company and its Australian energy subsidiary.
MC previously recorded provisions for a tax assessment of 23.4 billion yen for the period of six years that ended in March 2005 in expectation of receiving an amended assessment for these transactions based on transfer pricing regulations. MC said that it estimates the income taxes based on the amended assessment at approximately 2.2 billion yen.
MC said that it disagrees with the assessment and is "determined to respond appropriately" after reviewing the details of the demand.
Meanwhile, Mitsui & Co. also announced on Friday that it had received a notice of tax assessment from the Tokyo Bureau, in relation to the fiscal year ended March 31, 2000 with regard to an audit on a transfer price taxation in connection with the North West Shelf LNG Project in Western Australia. The audit was made for the period of six fiscal years from the year ended March 31, 2000 to the year ended March 31, 2005.
The corrected income amount is approximately 4.9 billion yen and additional tax liabilities for Corporation Tax, Enterprise Tax and Inhabitant Tax are assessed at approximately 2.5 billion yen, the company explained.
In a statement, Mitsui said that it is "entirely unconvinced" by the assessment and will make a protest to the Tax Bureau.
The firm said it will also request a mutual agreement procedure pursuant to a provision in the tax treaty between Japan and Australia.
Sony's notice for additional tax was also a transfer pricing issue related to profits reported from transactions Sony Computer Entertainment Inc. and its subsidiary Sony Computer Entertainment America Inc. (SCEI). According to the Tokyo Tax Bureau, these transactions resulted in additional Japanese income of 74.4 billion yen, on which is owed approximately 28 billion yen in tax.
Sony and SCEI said that they believe the allocation of income for the periods in question was "appropriate" and they intend to "promptly lodge an objection" with the Tokyo Tax Bureau, as well as formally requesting bilateral consultations to obtain relief from double taxation under the applicable tax treaties of various countries.
According to a report published by CBS News, an official from the National Tax Administration Agency said there is no reason for the apparent upsurge in activity by the country's tax inspectors and that there has been no change in the way that tax departments are interpreting a tax agreement signed with the US in 2003, which aims aims to prevent parent companies from avoiding income taxes in one country by booking profits through a subsidiary in another.
The official noted that companies now have to disclose more tax information in response to demands from investors.
.
Network Tweets
Network BlogsContent
provided by
|
Archive | Resources | Partners | Site Map | Links | Newsletter Archive | Contact | RSS Feeds | About | Syndication | Advertising & Marketing | Recruitment | Terms & Conditions | Privacy & Cookies
Copyright © 2012 - All Rights Reserved - Tax-News.com
IMPORTANT NOTICE: Tax-News.com has taken reasonable care in sourcing and presenting the information contained on this site, but accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, users of the site are advised to take appropriate professional advice before committing themselves to involvement in offshore jurisdictions, offshore trusts or offshore investments.
Write a comment