Nagamine & Mishima Consulting

Accounting practice since 1989

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26th “Accounting Standard for Presentation of Comprehensive Income”, the Foreign Dividend Exclusion System, “English words of wisdom to enrich life”

August 13, 2010

1. Accounting (Source: “Keiei Zaimu Magazine”)

On June 30, 2010, the Accounting Standards Board of Japan (ASBJ) published the “Accounting Standard for Presentation of Comprehensive Income”.

According to this standard, listed companies will be required to disclose comprehensive income in their consolidated financial statements for fiscal years ending on or after March 31, 2011.

  Companies can elect to present its profit & loss statement and components of comprehensive income in a single combined statement or in two separate statements.

The new standard does not require disclosure of comprehensive income in the separate financial statements.

In the first year of application, companies are required to disclose in their notes to the financial statements the comprehensive income of the immediately preceding year.

2. Taxation (Source: “Zeimu Tsushin Magazine”)

 Under the Foreign Dividend Exclusion System, foreign withholding taxes on qualifying distributions are treated as non-deductible expense.

 Foreign withholding tax in this context includes foreign corporate taxes attributable to domestic companies.

 In the case of a US LLC which elects to be taxed as a pass-through entity under the US check-the-box provisions,

 foreign withholding tax imposed on the portion of LLC income attributable to a domestic corporate member will be considered as non-deductible expense

 because a US LLC is regarded as a foreign company for Japanese tax purposes.

3. This Week’s Words of Wisdom (Source: “English words of wisdom to enrich life”)

 “You can only protect your liberties in this world by protecting the other man’s freedom. You can only be free if I am free” (Clarence Darrow).

 The United States was able to exert its influence as a world leader up until the Lehman crisis presumably

 because this kind of mentality was still prevalent among the American people.

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People are Talking

  • “Our Group operates worldwide in the fashion and luxury goods sector and is active in the design, production and distribution of a wide range of products that includes prêt-a-porter, footwear and leather goods.

    We started our collaboration with Nagamine & Mishima Accounting Office since we decided to establish our subsidiary Aeffe Japan in November 2008. N&M supported us during the start up of this company in particular with the accounting, payroll, cash management and tax services and gave their total collaboration when Aeffe Japan built-up Its own financial department. We found a very high quality support and punctual answers to different one-shot questions that also helped us to understand, in an easy way, a really different way to operate.

    After the start up phase, we decided to confirm to N&M the tax and payroll services for Aeffe Japan and for Moschino Japan, our other Japanese subsidiary, and the daily relationship with them passed from the Italian HQ to the Japan subsidiaries in a very simple way.

    We are very satisfied to have chosen N&M.”

    Andrea Pagliarani, Group Financial Controller

    Aeffe Japan KK