Nagamine & Mishima Consulting

Accounting practice since 1989

55th, Japan Exchange Group, Inc., The 2011 Tax Reform, Leo Tolstoy

 

  1. Accounting (Source: ” Zeiken Weekly Accounting News”)

On November 22nd, 2011, the Tokyo Stock Exchange Group and the Osaka Securities Exchange announced their agreement to merge. Their plans call for the establishment of a holding company tentatively called the “Japan Exchange Group, Inc.” in January 2013. The Tokyo Stock Exchange Group explained that the merger reflects their recognition of increasing global competition across exchanges due to corporations and investors being able to more easily choose the best marketing environment for raising funds and investment more easily. This increased ability is a result of the development of financial transaction systems that have emerged in line with rapid growth of information and communication technology.

 

They expect that the merger will create synergy effects, such as increased transaction fees following on improved user convenience and increased transaction volume from stronger sales effectiveness, and an increase in fees related to the Exchange that can be expected as the number of local and international IPOs choosing the appeal of the larger combined exchange. After the merger, the Japan Exchange Group will be the world’s second-largest bourse after the New York Stock Exchange on the total market value basis.

 

  1. Taxation (Source: ”Zeiken Weekly Tax News”)

 

The 2011 Tax Reform includes the following two changes which relate to transfer pricing.

 

First, following revision of OECD transfer pricing guidelines, Japan’s hierarchy of calculation method of arm’s length price is to be eliminated and the most appropriate method shall be selected case by case following the reform. Consequently, the reform shall formalize the profit split method, more specifically the comparable, contribution, and residual profit split methods.

 

3.　This Week’s Words of Wisdom (Source: English Words of Wisdom to Enrich Life)

 

Every one thinks of changing the world, but no one thinks of changing himself (Leo Tolstoy)

 

Perhaps the first step for changing oneself is to try to listen more earnestly to what others are saying.