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Nissan notified that it failed to declare $177m in income

Automaker disputes taxation bureau's ruling that it used Bermuda insurer as haven

Nissan Motor is the latest Japanese company to be told by authorities that it has run afoul of an anti-tax-haven rule.

TOKYO -- Nissan Motor has been told by the Tokyo Regional Taxation Bureau that it failed to declare income of over 20 billion yen ($176.7 million) in the fiscal year ended March 2017, sources told Nikkei on Wednesday.

The undeclared income was made by an insurance subsidiary located in the tax haven of Bermuda, the sources said. Nissan now faces a total tax bill of over 5 billion yen -- a combination of additional taxes levied on the Bermuda income as well as the automaker's corporate taxes.

Nissan, which says it has acted appropriately and that the matter is "a difference in interpretation," has requested a hearing with the National Tax Tribunal.

Japanese tax collectors are strengthening their investigations into multinational companies and tax haven usage. In April, they said tech giant SoftBank failed to declare income of 93.9 billion yen parked at tax havens in the four years through fiscal 2015.

It remains unclear how Nissan's case will turn out due to the increasing complexity of cross-border corporate transactions.

Bermuda, an island in the Atlantic Ocean, is a well-known tax haven. Nissan takes out insurance on the auto loans it extends to buyers, and some of its insurance payments end up at the subsidiary in Bermuda.

The Tokyo Regional Taxation Bureau, citing an anti-tax-haven rule, says Nissan should have included the subsidiary's profit in its consolidated corporate profit, the sources said.

But the rule includes some exemptions for subsidiaries that operate independently.

Nissan is arguing that the majority of the subsidiary's clients are not Nissan group companies and that the subsidiary is in compliance with Japanese tax rules.

A Nissan representative said the company has received a notice regarding the matter from the tax bureau.

"There have been differences in the interpretation of the exemption," the representative said. "It is our understanding that our filings were appropriate."

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