Accounting (Source: “Keieizaimu Magazine”)
IASB proposed a new definition of “control” for revenue recognition. Accordingly, if a construction contract meets the requirements, revenue recognition based on the percentage of completion method which has been widely discussed might be permitted.
Taxation (Source: “Zeimutsushin Magazine”)
The Second Thought on Tax Treatment of US LLCs
Under the previous Japan’s tax haven rules, US LLCs applying pass-through taxation in the United States were classified as Specified Foreign Subsidiaries since the tax burden rate on earnings of LLCs is 0 percent. However, the earnings of the LLCs were considered to be distributed and taxed in the United States when the Japanese domestic companies are members of the LLCs. As a result, the earnings of the LLCs were not required to be included in the taxable income of the Japanese domestic companies since the LLCs were considered not to reserve the earnings.
However, double taxation on retained earnings of LLCs could result under the 2009 Tax Reform since earnings of LLCs are required to be included in taxable income of Japanese domestic companies and withholding taxes on dividends received from LLCs has become ineligible for direct foreign tax credit. Therefore official opinion from National Tax Agency is expected to be issued.
This Week’s Words of Wisdom
“Better be the head of a dog than the tail of a lion” (“Record of the Grand Historian” (Shiji))
I learned that Chinese like this saying at Chinese classics lesson during high school.
I like it as well.