1. Accounting (Source:“Keiei Zaimu Magazine” NO.3144)
On November 29th, 2013, the government approved Companies Act amendment in a cabinet meeting to enhance corporate governance. In accordance with this amendment, a company auditor has the right to elect and dismiss accounting auditors. Since a manager of the audited party has the same rights, as well as a right of decision on remunerations for accounting auditors, it’s criticized as a lack of independence due to the apparent absence of transparency. However, this amendment has partially set things straight.
2. Taxation (Source:“Large package of tax revisions in 2014”)
On December 24th, 2013, the large package of tax revisions for 2014 was approved in a cabinet meeting. This will cause a significant change in international tax affairs. Under domestic law, the entire income principle has been applied to foreign companies, but under these new revisions, it will be changed to the attributable income principle in line with OECD model conversion. Accordingly, a drastic amendment for the creation of the attribution of profits to PE and the abolition of the tax exemption principle of mere purchases will be made.(To be continued.)
3. Labor Management(Using employees’private cars for commutation and work）
The revised Road Traffic Act was partially enforced from December 1st, 2013. The major changes include the requirement for light vehicles (bicycles) to travel on roadside zones and countermeasures against malicious, dangerous drivers. By June 2014, additional amendments will be implemented as countermeasures against drivers who have certain illnesses or other conditions that impair them.
If an employee has a car accident during work, the employer (company) may not only be liable for damages, but also may lose its social credibility as the accident itself could severely damage its public image. If an accident occurs during work and the company had even tacitly signed off on the use of the employee’s private car, the company may be held responsible for liability on behalf of the driver, known as employers’ liability. Therefore, it is recommended for employers to have sufficient understanding and preparation before implementing a system which allows employees to use their private cars for commuting or in the course of their work-related duties.
For commuting by private cars, employers should first establish operational rules, including advance approval processes and prohibited acts. It is strongly recommended that advance approval be secured, and that employees be required to submit copies of their drivers’licenses to the company and also have automobile insurance. It is also desirable that the company, as a condition of approval, require the employees to sign an agreement stipulating compliance with the company’s rules on commutation and traffic regulations.
If employees use their private cars for work, it is likely that the distinction between private use and business use will become blurred; hence, the company could be held liable on behalf of the driver even for accidents occurring outside work. As with the case of commutation, it is very important for employers to establish rules on the use of private cars for business purposes.
The most important step for a company to take is to establish its rules in advance to minimize the likelihood that any accidents will happen. Furthermore, in case of an accident, the company needs to be prepared to take appropriate actions to shield itself from any possible liability. Of course, it is needless to say that these would apply to the use of company cars also.
For consultations on operations or establishing rules, please contact HR Consulting group.
4. This Week’s Words of Wisdom(100 words in the world)
“Everyone sees what you appear to be, few experience what you really are.”
(Niccolo Machiavelli, a political thinker)
The way I understand this proverb is that we should spend enough money to maintain a positive appearance. Thirty years ago, when I joined an auditing firm, I was disillusioned when I saw my boss driving a battered car. This reaction was a result of my astonishment that he wouldn’t care about appearance, making me reluctant to follow CPA’s whom I felt my boss represented. I felt that such conduct would never occur at the top of the medical or legal professions.