Softbank Group fails to declare 93.9 billion yen in taxable income

April 18, 2018

Tokyo (Jiji Press)--Japanese tax authorities have found that Softbank Group Corp. failed to declare 93.9 billion yen in taxable income over the four years through March 2016, it was learned Wednesday.

The National Tax Agency's Tokyo Regional Taxation Bureau concluded that incomes of subsidiaries held in offshore tax havens by US companies that Softbank Group acquired should be included in the income of the parent company.

But the authorities imposed only 3.7 billion yen in back taxes and penalty on Softbank Group, chiefly as the incomes of the subsidiaries were in part offset by past losses, informed sources said.

The Internet and telecommunications conglomerate has already taken corrective steps.

Softbank Group acquired major US mobile carrier Sprint Corp. in 2013 and US mobile device distributor Brightstar Corp. in 2014. Both have subsidiaries in tax havens, such as Bermuda.

The Tokyo bureau decided to apply Japanese tax rules aimed at fighting the abuse of tax havens to incomes that the subsidiaries earned from their insurance operations, the sources said.

The bureau concluded the subsidiaries lacked substance as independent enterprises and sufficient economic rationality for running the insurance operations in tax havens, telling Softbank Group to include the incomes of the subsidiaries in its income.

In a statement, Softbank Group said the US firms have hundreds of companies under their wings.

Softbank Group should have examined all of their group incomes and the tax systems related to them after the acquisitions, but it could not, the statement said. Jiji Press