Pachinko firms said to have failed to declare ¥100 billion income

Kyodo

Tax authorities claim that about 40 corporate groups running pachinko parlors across Japan failed to declare over ¥100 billion in total taxable income with back taxes amounting to several billion yen, sources close to the matter said Sunday.

The authorities found out the income disparity at the groups, whose locations range from the Tohoku region in northeastern Japan to Kyushu in the southwest, in concerted nationwide raids on the industry, the sources said.

Among them, a group based in Tokyo’s Shinjuku Ward failed to declare about ¥15 billion, but declined to comment when contacted by Kyodo News, citing the absence of a person in charge.

On advice by a tax accounting office in Tokyo’s Chiyoda Ward, the groups reduced due tax payments through complex share transactions with subsidiary units.

The method is allowed typically for companies meeting certain conditions to shift shareholdings with other group companies without being subject to taxations in order to reorganize their operations.

The tax authorities deemed the pachinko companies used the method to avoid tax payments, the sources said.

According to the National Tax Agency, illicit activity is frequent in the pachinko industry, where cash transactions are common, with 40.4 percent of the firms investigated by tax authorities in the year to last June found to have engaged in what the authorities considered irregularities.