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Companies

SoftBank fails to report 93.9 billion yen income from tax haven units

  © Reuters

TOKYO (Kyodo) -- Japanese authorities have told SoftBank Group Corp. it has failed to declare income of some 93.9 billion yen ($875 million) from its tax haven-based units in the four years through fiscal 2015, sources close to the matter said Wednesday.

The Japanese telecommunications and internet services giant has paid an additional tax of some 3.7 billion yen including a penalty for understatement after its deficits were offset, they said.

"We have already submitted a revised report to the Tokyo Regional Taxation Bureau and have taken appropriate responses," SoftBank said.

SoftBank had failed to report income from subsidiaries of U.S. telecom unit Sprint Corp. and U.S. mobile device distributor Brightstar Corp. acquired in 2013 and 2014, respectively.

The subsidiaries are located in Bermuda, a British island territory known as a tax haven.

Sprint and Brightstar had shifted part of their insurance fees paid for business operations to the Bermuda-based units, which Japanese authorities recognized as shell companies, to benefit from low tax rates, the sources said.

The Tokyo Regional Taxation Bureau has apparently judged that the shifted fees at the Bermuda units should be added to SoftBank's income under Japanese regulations to prevent proceeds from being transferred to low-tax countries or regions.

Accounting mistakes over stock sales are also responsible for some parts of the non-declared 93.9 billion yen, the sources said.

Brightstar's subsidiary in Singapore that distributes second-hand cell phones is also believed to have been regulated under Japanese tax haven countermeasure rules.

In total, the Japanese authorities saw some 74.7 billion yen of income from subsidiaries as SoftBank's income. However, as no coverups were found, the Japanese company was able to avoid heavy additional taxes, the sources said.

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