OSAKA — The Osaka Regional Taxation Bureau has told Sharp Corp. that it failed to declare 400 million yen in income over three years to last March 31, including 100 million yen the firm deliberately hid, sources said Thursday.

The Osaka arm of the National Tax Agency plans to soon order the major electronics maker to pay 140 million yen, including a fine, the sources said.

“It is true that the company has been investigated by tax authorities, and we were told that we had failed to declare income, but the company has yet to receive formal notification of the matter,” a Sharp public relations official said.

Sharp booked the expenses incurred by 200 to 300 employees temporarily sent overseas on market research and other missions over the three-year period as expenses incurred by the Osaka-based parent company, they said.

But a source close to the bureau noted that 10 of those employees submitted reports on their business activities during the overseas assignments to Sharp’s overseas subsidiaries.

“Those subsidiaries should have paid for their expenses,” the source said. “So the company intentionally booked the expenses as those incurred by the parent company in lieu of those of the subsidiaries.”

Judging from these irregular accounting practices, Sharp appears to have concealed the 100 million yen portion of the 400 million yen in question, the sources said.

The bureau also apparently told Sharp that the company failed to declare the 300 million yen in income that it should have declared, they said.

The failure to declare the 300 million yen appears to have resulted from Sharp’s mistakenly selecting the wrong fiscal periods for declaring the income stemming from royalties, they said.

Founded in 1935, Sharp is capitalized at 204.68 billion yen. It posted 1.37 trillion yen in sales in the last business year, which ended last March.

Duskin to face music

OSAKA — Tax authorities are close to accusing Duskin Co. of concealing about 100 million yen in income, sources said Thursday.

The sources said the Osaka Regional Taxation Bureau will probably soon impose additional and penal taxes on the Osaka-based cleaning equipment leasing company, which also operates the Mister Donut chain in Japan, for allegedly hiding income over a two-year period through fiscal 2000.

According to the sources, Duskin falsely reported that it had paid a design firm in Chuo Ward, Osaka, to come up with Mister Donut freebies, saying it paid the firm 3 yen per product through several plastic production firms in Osaka that made the products.

Tax authorities believe Duskin intentionally concealed the income, as it is doubtful the design firm provided any service at all, the sources said.

Duskin has been embroiled in a scandal involving the sale of Chinese-made meat dumplings between April and December 2000 that contained a banned additive. Osaka Prefectural Police turned the case over to prosecutors in January, citing food sanitation law violations.

While Duskin paid some 63 million yen in hush money to firms in return for them not reporting the sale of the meat dumplings, company officials said this does not pose any problem in terms of taxes as the money was already included in a revised income report.

Duskin’s public relations department confirmed that the firm is undergoing tax inspections but refrained from commenting further until formal action is taken.

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