Universal Music Japan accused of tax avoidance

The Tokyo based arm of Universal Music has been accused of tax avoidance on 9 billion yen ($113.6 million) of taxable income for the last three years.  UMJ borrowed 80 billion yen ($1 billion) from an affiliate in France during its restructure in 2008 and declared 9 billion yen it paid in interest to the French company as an expense. But the Tokyo Regional Taxation Bureau believes the interest payment was an attempt to avoid taxes. It is said to have ordered UMJ to pay 3 billion yen ($37.9 million) in back taxes and penalties.
UMJ has appealed to the National Tax Tribunal and released the following statement this morning (translated):

“It is true that Universal Music Japan was investigated by the Tokyo Regional Taxation Bureau over its organizational restructuring in 2008 and was ordered on March 27, 2012, to make a corrective tax filing.

“As we believe that there was no problem in the procedures related to the reorganization under tax laws, however, we applied to the National Tax Tribunal on May 22, 2012, to examine whether the order is appropriate.

“It was very regrettable that there has been a gap of opinion between the taxation bureau and UMJ, but there is no change in our stance that the reorganization procedures were correct under tax laws, and we hope our argument will be accepted in the tribunal’s investigation.”

Source: Music Week