Gap International BV, a subsidiary of U.S. casual wear maker Gap Inc., failed to report around 16.8 billion yen in income from Gap's Japan subsidiary, sources said Thursday.
The Netherlands-based GIBV is believed to have paid more than 5 billion yen, including surcharges, to the Tokyo Regional Taxation Bureau at the bureau's request, they said.
According to the sources, GIBV failed to report the 16.8 billion yen in investment returns from Gap Japan K.K.
GIBV provided Gap Japan with operating funds via its affiliates in the Netherlands, and under a special business contract the affiliates subsequently received returns for their investment in the Japan subsidiary. Under a tax treaty between Japan and the Netherlands, no specifications exist on such returns, and GIBV and the Dutch affiliates did not report the figure to Japanese authorities.
A spokesman at Gap in the U.S. said there were differences in how GIBV and Japanese tax authorities interpreted the law, but it considers the matter closed because GIBV has already reported the taxes.