Archive for March 18th, 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


Introduction

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