Undeclared foreign income focus of talks

People will not face fines if they file revised tax papers: agency

JIJI

The National Tax Agency is considering exempting people suspected of failing to declare overseas income from paying back taxes if they file revised tax returns before the authorities investigate, according to sources.

Tax authorities met in Tokyo on Wednesday and Thursday with counterparts from 21 countries, including the United States, Britain and Australia, to study tax-collection measures, the sources said.

Some countries impose reduced or no penalties on those who did not declare taxable income initially but disclose the income later voluntarily.

The U.S. Internal Revenue Service even uses immunity from criminal prosecution to prompt the voluntary income disclosure.

The Japanese tax agency is not planning to adopt a similar system because the move requires a law revision. But the agency thinks current law makes it possible to reduce fines on undeclared overseas income by capitalizing on a rule stipulating no imposition of additional taxes on those who file revised tax returns before tax offices launch inspections, the sources said.

Specifically, the agency aims to encourage voluntary income declarations by Japanese active in asset investment abroad by sending them questionnaires based on information provided by tax authorities in relevant countries about their undeclared interest and dividend income, among others.

If voluntary disclosures of income in other countries increase, it would help the Japanese authorities put more manpower and other resources into cracking down on malicious tax evasion involving overseas funds, the sources pointed out.

Lacking investigatory power outside Japan, the agency is actively collecting information from its foreign counterparts on Japanese money invested abroad.

Housing sector fears tax

The dissolution of the Lower House has caused concerns in the real estate and housing industry about delays in government decisions on measures to ease the burden on home buyers after the consumption tax hikes kick in.

Most industry officials had anticipated a rush in demand from early 2013, ahead of the first-stage consumption tax hike in April 2014 that will be followed by a second one in October 2015.

Such delays “could cause confusion because home developers and sellers will be unable to give explanations on details to customers thinking about home purchases,” an official at a major real estate developer said.

In fiscal 1997, after a hike in the consumption tax, housing starts tumbled about 18 percent from the previous year.

Warning that any substantial drop in housing investment, a mainstay of domestic demand, could have adverse effects on the economy, the industry has asked the government to adopt fresh measures.

These include a reduced tax for home buyers and a program to return taxes above the current rate of 5 percent to them.