1. Accounting (Source: “Keiei Zaimu Magazine”)
[Explanation made on the transition to IFRS by Japan Tobacco Inc.]
Japan Tobacco Inc. (JT) made an explanation on the voluntary application of IFRS in the Business Accounting Council (Kigyo Kaikei Shingikai) held on June 14th. JT is one of the top four companies in the global share. Accordingly, in view of comparability, investors have required the company to disclose their financial information in the IFRS form so that they can compare it with that of Philip Morris (applying IFRS), British American Tobacco (same) and Imperial Tobacco (same). JT started an internal project in August 2009, walking through analysis of difference and investigation of influence in the first year, arranging plans such as the manner of collection and adjustment of the financial data and amending the system in the second year before finishing the advanced review of the information comparability by the auditor in June of the third year, 2011. It cost them a total of 1.1 billion yen for the amendment of the system and the fee for external advisors.
What affected financial figures the most by the application of the IFRS was the drop in sales, which fell from 6 trillion to 2 trillion due to the deduction of tobacco tax from gross sales. On the other hand, the net profit increased from 149.6 billion to 248.7 billion by ceasing the depreciation of goodwill, selecting the OCI approach in the pension accounting and changing the depreciation method.
2. Taxation (Source: “Zeimu Tsushin Magazine” )
As per the 2012 tax reform, residents of Japan whose overseas assets exceed 50 million yen (fair value) on December 31st of a given year have to file the “report on overseas assets” to the tax office by March 15th of the following year. This system will begin to be applied to those who meet the 50 million yen criterion on December 31st, 2013. A penalty will be imposed on those who ignore the filing obligation.
Overseas assets are classified into 12 types, such as land, securities etc., whereas it is not necessary to include debt, as debt is not accounted for at all. In addition, the National Tax Agency is planning to provide the manner of the computation of the fair value of the overseas assets in a notification in the near future.
3. Labor Management
Amended Child Care Leave and Family Care Leave Act has come into full force effective July 1st, 2012!
“Act on the Welfare of Workers Who Take Care of Children or Other Family Members Including Child Care and Family Care Leave” was amended in 2009. However, a grace period of 2 years has been allowed to business entities with fewer than 100 employees who meet the following three requirements:
1. Establishment of short-time working system
2. Establishment of overtime-exemption system
3. Implementation of new Family Care Leave
The above provisions are now applicable to every business entity, effective July 1st, 2012. We recommend that you review your company’s Rules of Employment, and revise them if necessary.
Below are the details of each requirement.
1. Establishment of short-time working system (Article 23)
* An employer must establish a short-time working system which is available for employees who are raising children under 3 years of age upon their application.
* The system must be instituted; e.g., stipulated in Rules of Employment, etc. Just being operated without an official mandate is insufficient.
* The system must include a measure to shorten prescribed working hours to 6 hours (between 5 hours and 45 minutes and 6 hours) per day in principle.
2. Establishment of overtime-exemption system (Article 16-8)
* When claimed by an employee who is raising a child under 3 years of age, an employer may not compel such an employee to work overtime.
3. Implementation of new Family Care Leave (Article 16-5)
* When claimed by an employee who is taking care of a family member who is in care-requiring condition, an employer must grant a minimum of 5 days of leave per year (or 10 days per year if caring for two or more family members), on an as needed basis.
* Family care leave must be granted to employees in addition to annual paid leave, as prescribed in the Labor Standards Law.
Please contact our HR Consulting Group for any inquiries regarding amendment of Rules of Employment.
4. This Week’s Words of Wisdom
“I think we may safely trust a good deal more than we do.”
(Henry D. Thoreau, American essayist, poet)
Overseas media, by and large, approve of the attitude of Mr. Noda, the Prime Minister of Japan, for the proposed increase in the rate of the consumption tax (though most Japanese media outlets incomprehensibly ignore this issue).
I think it quite hard to accomplish anything at all in the current environment of such complex and conflicting political interests. If I were in Prime Minister Noda’s position, I seriously doubt I could play his role. I think he is standing firm, and rightly so.