Archive for August, 2010

Japanese land values – resources

August 16, 2010  |  Real Estate  |  No Comments

The new Modern Art Museum near Roppongi

This article collates together some of the resources on the web that can be used to help assess Japanese land values. Land valuation in Japan is made complicated by the different agencies that issue data on land value combined with the relative lack of liquidity in real estate. Read More

Mergers and qualification for tax purposes – flowchart

Merger criteria flowchart

The flowchart in this article outlines the criteria that determine whether or not a Merger is qualified for Japanese tax purposes. Where a merger is qualified for Japanese tax purposes then, in principle, the Merger is not treated as a taxable event and gains or losses, including the recognition of goodwill, that would otherwise be crystallised in the Ceasing Company in the Merger are deferred. Read More

Donations to foreign related parties

August 15, 2010  |  Domestic, Transfer Pricing  |  No Comments

Shishi odoshi, often seen in Japanese temples or traditional gardens

This article examines an issue that often arises during the course of a corporate tax audit of the Japanese subsidiary of a foreign multinational.  During such an audit the auditors may assert that a Japanese company’s transaction with its Foreign Related Party (‘FRP’) is a “Donation” for Japanese tax purposes (as defined below) Read More

Related parties for transfer pricing purposes

August 13, 2010  |  Group Taxation, Transfer Pricing  |  No Comments

Foreign related parties - capital relationship

This article outlines the definition of Special Relationship and Foreign Related Party (‘FRP’) for Japanese transfer pricing purposes and includes diagrams giving examples of the application of the definition.  Transactions with an FRP with whom a Japanese company has a Special Relationship are subject to Japanese transfer pricing regulations and must be carried out at arms’ length to avoid tax adjustment. Read More

Group relationships in Japanese tax

August 11, 2010  |  basics, Group Taxation  |  No Comments

Group relationships for Japanese tax purposes


The diagram to the right in this post outlines two group relationships defined for Japanese corporate tax purposes. These are the Japanese Consolidated Tax group, that allows offset of losses within the Japanese group, and the IGTS group, that allows the transfer if assets between Japanese corporate members of the group without giving rise to gain or loss. Read More

Tax Controversy – authorities challenge merger qualification

News, information

Softbank’s reported results for the three month period ended 30 June 2010 included JPY26.4Bn in respect of an assessment to taxes raised on its subsidary, Yahoo Japan, received from the Tokyo Regional Tax Bureau (TRTB) on 30 June 2010.  Read More

Tax Controversy – disallowance of related company recharges

News, information

The Asahi Newspaper reported on 11 August 2010 that Hewlett Packard’s Japanese subsidiary (‘Japan HP’) had received an assessment in respect of JPY47Bn (USD550m) unreported income. Read More

Tax Controversy – Panasonic taxed on “donation” to Chinese subsidiary

August 4, 2010  |  basics, Developments, Financing, News  |  No Comments

News, information

The Asahi Newspaper reported on 2 August 2010 that the major household electronics manufacturer Panasonic had been subject to an assessment for JPY22Bn Read More

Dividends and Attributable Interest

Wagashi traditional Japanese sweets often reflecting the seasons

The Japanese Dividends Received Deduction (‘DRD’) helps mitigate the double taxation a company would otherwise suffer through tax on dividends the company receives from other Japanese companies.  However the DRD regulations also include provisions that effectively disallow financing costs that are attributable to dividends to which the DRD is applied.  Read More

Real estate taxation – introduction

August 1, 2010  |  Real Estate  |  No Comments

A Japanese room with traditional features including tatami, shoji

This post is a brief introduction to issues arising in Japanese real estate taxation.   Below is a listing of some of the factors that complicate the taxation of real estate transactions in Japan. At the end of the post is a matrix showing different types of tax that often apply to real estate taxation, the different transactions to which such taxes apply Read More