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Tokyo targets tax avoidance on intellectual property

Companies that underestimate value during transfer overseas could face fresh levy

Japan's Ministry of Finance is planning a crackdown on companies looking to minimize intellectual property taxes.

TOKYO -- Japan's finance ministry looks to crack down on companies that move intellectual property abroad to reduce their tax burden, weighing a plan to make them pay again if those assets prove more valuable than initially estimated.

The government currently taxes businesses on intellectual property, such as patents and trademarks they transfer to overseas subsidiaries, at the time of the transfer, based on companies' own estimates of how lucrative those assets will be. The Ministry of Finance has "no choice but to take companies at their word," even when it suspects they are undervaluing the property, an official said.

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