Business / Corporate

Tax bureau says Nissan failed to declare ¥20 billion in taxable income at Bermuda subsidiary

JIJI

Tax authorities have found that Nissan Motor Co. failed to declare over ¥20 billion in fiscal 2016 income related to a tax haven-based subsidiary, informed sources said Thursday.

To fight the allegation, the automaker has filed an appeal with the National Tax Tribunal.

According to officials of Nissan and other sources, the Tokyo Regional Taxation Bureau has imposed additional taxes on the automaker in connection with the insurance unit based in Bermuda, where tax rates are low.

An arrangement was made for part of the auto loan insurance premiums paid by Nissan to insurance companies to be transferred to the subsidiary in question.

Through the application of Japan’s tax rules designed to fight abuses of tax havens, the bureau claimed that the income at the subsidiary should be added into the income at the parent.

Back taxes, including a penalty for understating the amount, are thought to surpass ¥5 billion ($44 million), the sources said.

Nissan insists that the subsidiary is not subject to the application of the anti-tax haven rules because its customers are mainly those outside the Nissan group, they said.

The automaker released a comment saying that there was a difference in interpretation and that the company believes its handling of the issue was appropriate.