Every year for the past eight years I have been the light entertainment at the end of a series of lectures on company law, employment law and the duties of directors given by one of the Big Four, to a group of newly appointed Japanese directors and company secretaries.
They are usually fast asleep by the time they are jerked awake by the sight and sound of a British woman speaking Japanese and cracking jokes about the crazy Brits they now have to work with. I felt particularly sorry for the partner who used to precede my session, with an impassioned plea to the assembled directors to take a more radical approach to the way they organised their European structure, in order to cut down on the amount of tax they were paying, which was met every year with a wall of indifference and closed eyes.
On the other hand, I found it secretly pleasing that Japanese companies were so resolutely uninterested in tax avoidance. I remembered when I lived in Japan it was almost a point of corporate pride to be high up the rankings that were published every year of which company paid the most tax – Toyota was top almost every year I believe.
The Big Four have not given up on their siren call to Japanese companies to use their “tax planning” services, despite all the current outrage in the US and Europe regarding the way that multinationals use offshore companies to minimise their tax bills. Daisuke Horiguchi, partner of KPMG Japan is at it again the current issue of the Nikkei Business. He claims that although transfer price taxation was of no interest 10 years ago, Japanese companies have suddenly woken up to it as an issue, particularly in Asia, now that Asian governments are beginning to crack down on the subsidiaries of multinationals in Asia.
According to Horiguchi, Japanese companies usually combine tax and accounting functions and rarely have dedicated tax experts. “‘We must pay all taxes we owe, without any errors’ is the usual stance, and they resist out of some kind of Confucian sense of duty any suggestions about being more creative in limiting the amount of tax they pay” he complains.
If Japanese companies want to keep their moral, reputational edge over other multinationals, this should be a siren call to ignore.
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