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Japan Tobacco Inc. has been fined 350 million yen in penalty taxes for failing to declare income totaling 900 million yen over fiscal 1997 and fiscal 1998, industry sources said Thursday.

The Tokyo Regional Taxation Bureau claims the world’s third-largest tobacco provider concealed the income mainly through false accounting entries regarding a market research contract with a consulting company.

Japan Tobacco, the country’s only tobacco provider, was a completely state-owned body until it was nominally privatized in 1985. The government still holds 66 percent of JT’s stock and guides it as a special administrative corporation subject to inspection by the government’s Board of Audit.

According to the sources, Japan Tobacco falsified its books while dealing with tens of millions of yen paid to the consulting company.

Japan Tobacco, which employs some 16,000 workers, has extended its operations to food items and beverages as more people are giving up smoking.

A company spokesman said “there were differences of opinion” between the corporation and the tax authorities, adding that they had already paid all the penalty taxes.

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