June 1, 2014
Toyota Motor Corporation paid nothing in national corporation tax between FY 2008 and FY 2012, while distributing more than one trillion yen in total to its shareholders and adding a consolidated earned surplus of 280.7 billion yen to its internal reserves.
Toyota keeps any detail from public view how it was able to get away with paying the tax but it most likely made the best use possible of various preferential tax measures available to large corporations.
For example:
- the foreign tax credit system deducts taxes, which overseas subsidiaries paid outside Japan, from the corporation tax payment in Japan;
- the R&D credit system deducts 10 % of research expenses from the payment for national corporation tax;
- the foreign dividend exclusion system excludes dividends, which overseas subsidiaries received, from taxable revenues in Japan; and
- the loss carry-over deduction system withholds the portion of past deficits in corporate income from the taxable amount.
Auto-giant Toyota no longer makes its earnings from “production at home and exports to other countries”. It has now changed itself to a business establishment “distributing profits made from overseas production and sales as dividends to domestic shareholders”.
While imposing a great deal of tax burdens on the general public, the government is again working on ways to provide further cuts in the corporation tax rate. The need is to correct such preferential tax measures for large corporations.
Toyota keeps any detail from public view how it was able to get away with paying the tax but it most likely made the best use possible of various preferential tax measures available to large corporations.
For example:
- the foreign tax credit system deducts taxes, which overseas subsidiaries paid outside Japan, from the corporation tax payment in Japan;
- the R&D credit system deducts 10 % of research expenses from the payment for national corporation tax;
- the foreign dividend exclusion system excludes dividends, which overseas subsidiaries received, from taxable revenues in Japan; and
- the loss carry-over deduction system withholds the portion of past deficits in corporate income from the taxable amount.
Auto-giant Toyota no longer makes its earnings from “production at home and exports to other countries”. It has now changed itself to a business establishment “distributing profits made from overseas production and sales as dividends to domestic shareholders”.
While imposing a great deal of tax burdens on the general public, the government is again working on ways to provide further cuts in the corporation tax rate. The need is to correct such preferential tax measures for large corporations.
