Entertainment firm in tax evasion tangle

Entertainment production firm Rising Production Co., which counts pop stars Namie Amuro and Da Pump in its stable, was found by tax officials to have evaded taxes on income of 2 billion yen in the three years to August 1999, sources said Tuesday.

The Tokyo Regional Taxation Bureau plans to file a criminal complaint as the amount of unpaid taxes is excessively large at over 500 million yen and the Tokyo-based firm used “malicious” means as logging fictitious expenses to hide its income, the sources said.

The firm revised its tax report after the discrepancies were discovered.

Rising Production announced Tuesday that its president, Tetsuo Taira, would step down to take responsibility for the matter.

“An inspection by tax officials showed that several things were wrong with our tax declaration, such as having costs listed in the wrong time period,” the firm said. “In future, we would like to ensure that such things do not happen.”

This is the third time Rising Production has failed to pay the proper amount of corporate taxes on its earnings, according to tax officials.

Of the 2 billion yen in question, 1.4 billion yen was improperly declared, for example, by purposely making misleading records of advertising costs and concert production fees, according to sources close to the firm.

The firm also claimed it had shouldered costs that did not exist, the sources said.

Rising Production did not properly declare the remaining 500 million yen to 600 million yen by falsely claiming it had placed outside orders with other companies. The firm then received margins from these companies in return, the sources added.

Taira used a portion of his firm’s hidden income to gamble at casinos in Las Vegas and Hong Kong, according to the sources, who added Taira would give money to acquaintances after taking the money from the company in the name of “loans.”

Rising Production was set up by Taira in 1985 with initial capital of 10 million yen, according to a private credit research firm. Its earnings surged as Amuro’s popularity took off.

The firm was ordered to pay taxes on undeclared income in 1997 and again in 1998. Taira, who paid around 400 million yen in taxes in fiscal 2000, was ranked 64th among the nation’s top 100 taxpayers. He is estimated to have earned roughly 1 billion yen in that period.

This incident comes just two months after the Tokyo-based production firm behind pop music duo B’z was found to have failed to declare 840 million yen in income.