Tokyo Tax Authorities Clamp Down On Tax Evasion By Expat Workers

by Mary Swire, for LawAndTax-News.com, Hong Kong

05 October 2004

According to reports in the Japanese media, the Tokyo Regional Taxation Bureau has ordered some 180 expatriate employees of foreign banks located in Japan to pay back taxes on millions of yen in under-reported income.

Citing sources close to the Tokyo tax authority, the Asahi Shimbun revealed that the workers, employed by the Japanese branches of banks such as Credit Suisse First Boston and ING Securities, were found to have misleadingly declared bonuses paid to them after they left the country to work in outplacement firms elsewhere in the region as retirement allowances, which are taxed at significantly less than the individual income tax rate.

Finding that this mis-attribution of income for the purposes of calculating tax liability constituted cross-border tax evasion, the Tokyo Regional Tax Bureau ordered the workers in question to pay back taxes and penalties.

The liabilities per person range from tens of millions of yen to almost 1 billion yen, according to the Asahi Shimbun.

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