Archive for March, 2010

IBM Japan – the largest post audit tax assessment in Japan to date

March 18, 2010  |  Transactions  |  No Comments

The Japanese character for 'sake'. Anyone receiving a USD1Bn+ tax assessment deserves a good drink


The Asahi Newspaper today reported that the Tokyo Regional Tax Bureau (‘TRTB’) had assessed IBM Japan (a Japanese company) in respect of JPY400Bn (around USD4.5Bn) of under-reported income, being the largest ever assessment made as a result of a tax audit in Japan.

Transaction overview

The article goes on to report as follows: Shares in IBM Japan had been sold within the IBM group by its parent company giving rise to a large loss for that parent company, IBM APH Holdings (‘APH’), which is also a Japanese company. APH and IBM Japan had formed a consolidated group from 2008 and since that time the loss APH had incurred on its sale of shares in IBM Japan offset the operating income earned by IBM Japan when the companies filed their consolidated tax return. The article suggests that IBM Japan purchased its own shares, this creating a loss at the APH level. Without stating detailed figures the article suggests that the tax liability of IBM Japan was completely eliminated. Read More

Japanese CFCs – “Non Related Person Standard Business”

March 16, 2010  |  Japanese CFC  |  No Comments

The non related business standard and the Japanese CFC regulations.

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Exclusions from the Japanese CFC rules

March 15, 2010  |  Japanese CFC  |  No Comments

Exclusions from the application of the Japanese CFC regulations.

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Scope of the Japanese CFC rules

March 15, 2010  |  Japanese CFC  |  No Comments

Scope of Japanese foreign subsidiaries within the Japanese CFC rules.

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Japanese tax haven rules (CFC, Subpart F) – overview/タックスヘイベン対策税制

March 15, 2010  |  Japanese CFC  |  No Comments

Introduction to concepts and scope of the Japanese tax haven countermeasures (CFC) rules.

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Japanese tax haven rules – Glossary

March 15, 2010  |  International Taxation  |  No Comments

Natto - the foreigner's final frontier

How to use this glossary

This post lists up various terms used in the Japanese tax haven countermeasures taxation law (THCML). The THCML performs the same role in the Japan tax system as the CFC and Subpart F legislation in the US and UK tax systems. Read More

PEs under Japan’s tax treaties

March 6, 2010  |  Tax Treaties, Taxable Presence  |  No Comments

The scope of PEs under different tax treaties.

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Japan’s treaties on the web

March 6, 2010  |  Tax Treaties  |  No Comments

English translations of Japan's tax treaties available on the web.

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TKs – treatment under different tax treaties

Table listing how TK distributions are taxed under Japan's tax treaties.

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Corporation tax – summary of national tax rates/法人税・税率・国税

Lake Toya in Hokkaido

Please check this table for the Japanese rate of national tax for years from 1985 to the present day for different Japanese corporate tax paying entities.

In addition to national taxes on income, Japanese companies also have to pay local corporate taxes such as enterprise and inhabitants tax. Later posts will discuss these taxes and give examples of a typical Japanese corporation tax calculation.