1. Taxation (Source: “Zeimu Tsushin Magazine”)
Under the current consolidated tax return filing system, pre-consolidation tax losses of subsidiaries before joining their existing consolidated group may not be carried forward and used to offset the consolidated income. The purpose of this rule is to prevent companies from implementing tax avoidance scheme by consolidating their subsidiaries with deficit.
However, this rule has been an impediment to adoption of the consolidated tax return scheme and economic organizations have requested its relaxation.
Under the 2010 Tax Reform, subsidiaries which are not required to recognize built-in gains/losses upon consolidation before joining their existing consolidated group will be permitted to carry forward pre-consolidation tax losses and the amount of the losses will be available for use to the extent of the income of the subsidiaries.
2. Taxation (Source: “Zeimu Tsushin Magazine”)
The main points of the 2010 Tax Reform relating to international taxation are as follows:
1) Amendment to anti-tax haven rule
2) Amendment to transfer pricing
3) Strengthening information exchange with foreign competent authorities
4) Introduction of tax exemption scheme for interest on book-entry corporate bonds received by non-residents
3. This Week’s Words of Wisdom (Source: “English words of wisdom to enrich life”)
The ones who have common interests come to hate each other, but the ones who share love become bonded more closely. (“The Stratagems of the Warring States” (Zhan Guo Ce))
I sometimes encounter power struggles between the board members who started their business together. In many cases, the companies are built for the sole purpose of pursuing their interest, and business philosophies and goals generally come second. It seems to me that it is a sign of the contradiction between words and actions.