1. Accounting (Source:Magazine”Keieizaimu”)
～Survey reveals risk of delay in IFRS planning～
A consulting firm surveyed attendees to a seminar held by its corporation risk research institute, asking them what they considered were the priority risks that need to be addressed. According to the survey, more than 25% of respondents answered “Information leakage” for five years running. “Delay in IFRS planning” which was a newly added choice this year ranked fourth at 17%. This suggests that urgency for IFRS implementation is now being increasingly felt in Japan. Meanwhile, “Fraudulent financial reporting” which ranked second at 26% last year dropped to eighth at 13%. Private-sector interest in this issue possibly declined because efforts to establish the internal control reporting system have made progress to some extent.
２. Taxation (Source:Magazine”Zeimutsuushin”)
Exemption criteria of the Japanese Tax Haven Rules are as follows;
(a) Business purpose test
(b) Substance test
(c) Administration and control test
(d-1) Country of location test (for businesses other than those listed in d-2)
(d-2) Unrelated party test (for wholesale and 6 other businesses)
If an entity satisfies all of the conditions above, the Tax Haven Rules are not applied to that entity.
Under the 2010 Tax Reform, a holding company which meets the requirements of a “Regional Headquarters Company” (RHQ) is considered to fulfill the (a) business purpose test. Further, transactions between a “Controlled Company” and a RHQ engaged in distribution business are regarded as unrelated transactions in the (d-2) unrelated party test.
Accordingly, if a holding company or a distribution RHQ is established not for tax avoidance but for active business purposes, such company will not be subject to Japanese Tax Haven Rules.
３. This Week’s Words of Wisdom (Source: NHK Gift “The World of Famous E-quotes”)
“A desk is a dangerous place from which to watch the world”
(British spy novelist, John le Carre)
A fact that we currently must face is that the Japanese economy is on the decline while other Asian countries are growing at tremendous speed. To ignore this fact is to deny our future and there is no economic development if we do not consider things in the Asian framework.
The best way to recognize this simple but easily forgotten fact is to see for yourself by travelling to Asia. By doing so, you will understand that it is nonsense to delay FTA agreements.