１.Accounting (Source: “Keiei Zaimu Magazine”)
～Recent Developments in IFRS Convergence～
On December 17, 2010, the Accounting Standards Board of Japan (ASBJ) updated its project plan of accounting standard amendments to be undertaken as part of its efforts toward convergence with the IFRS. This is in response to the delay in the development projects addressed in the Memorandum of Understanding (MoU), which the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) had scheduled to complete by June 2011. Priority issues are revenue recognition, financial instruments, fair value measurement and lease accounting. Since MoU items are initiatives aimed at eliminating the material differences between IFRS and USGAAP, there are concerns over how the delay may affect the decision and timing of IFRS adoption in the US and Japan. Future developments should be closely monitored.
２. Taxation (Source: “Zeimu Tsushin Magazine”)
Proposed 2011Tax Reform (Part 2)
The Japanese cabinet approved the proposed 2011 Tax Reform on December 16, 2010.
The main revisions to corporate tax are as follows:
– Group Taxation
Special measures available for small and medium-sized companies will not apply for corporations whose outstanding shares are fully owned by one or more companies with capital exceeding 500 million yen in the same 100% group.
– Inventory Valuation
The cut-off method for inventory valuation will be abolished.
– Interim Tax Filing System
If the interim tax amount calculated based on provisional settlement of accounts exceeds 50% of the final corporate tax amount due in the previous fiscal year, interim tax filing based on such provisional settlement is not acceptable.
Revisions to international taxation provisions are as follows:
– Transfer Pricing
For corporate taxes of fiscal years starting on or after October 2011, the priority of methods applied in calculating arm’s length price for transfer pricing purposes will be abolished. Amendments will be made so that the most appropriate method in calculating arm’s length price can be selected depending on each situation.
Clarification will be made in actual practice so that transfer pricing adjustments will not be made if the price of a foreign related transaction is within the range of arm’s length price.
– Foreign Tax Credit
Under the new reform, foreign taxes imposed in high-tax countries are not eligible for foreign tax credit in Japan for the portion exceeding 35%, a reduction from the current 50% threshold. Furthermore, the amount of non-taxed foreign source income to be excluded from foreign source income used in calculating the creditable limit of foreign tax credit has been raised to 100% from the current two-thirds.
３.This Week’s Words of Wisdom (Edited from: NHK “GIFT – The World of Famous E-Quotes-“)
“There is nothing in the world as all-encompassing as Japanese nature. Religion, art, history and literature are latent within it.”
(Masako Shirasu, Japanese essayist)
And another quote…
“Though Mt. Fuji has a form created by nature, it looks like a work of art that came from the hand of a great master.”
(Bruno Taut, German architect)
In recent years, there is much talk about reevaluating Japanese nature, which is one of its kind in the world. I have an impression that the messages conveyed in the two quotes above are extremely forward-looking in this sense. I think that the inseparability of nature and spirituality of the Japanese people are more keenly felt by those who have traveled or lived abroad.
The inextricable link between nature and the Japanese mind culminates in the following quote.
“The seasons move us deeply each time, as one turns into another.”
(Kenko Yoshida, Japanese essayist)