Japan Press Weekly

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2016 April 27 - May 10 [ECONOMY]

Japanese billionaires transfer their assets overseas to avoid taxes

At least four Japanese billionaires had transferred their enormous financial assets to foreign countries where tax rates are much lower than in Japan, Akahata reported on May 9. All four persons are in the list of the top-50 Japanese billionaires which was recently released by the American business magazine Forbes.

Yanai Tadashi, president of Fast Retailing Co., deploying Uniqlo outlets around the world, has total assets of two trillion yen, the largest amount among Japanese. According to Akahata, in October 2011, Yanai transferred 5.31 million shares which he owns in his corporation to an asset management company he had set up in the Netherlands.

In the Netherlands, if a company fulfills some requirements such as holding a certain amount of shares of other companies, its stock dividends will be tax free. In 2015, the total dividends from Yanai-owned shares in the Netherlands exceeded 1.8 billion yen. If he had had the same amount in Japan, he should have paid 700 million yen in taxes for his dividend income.

Yasuda Takao, the current senior advisor and founder of the discount retailer Don Quijote Holdings, “sold off” about 15.5 million shares which Yasuda holds in his corporation to his asset management firm in Holland from December 2015 to January 2016. This is the same tax evasion method used by Yanai.

Fukutake Soichiro, top advisor to Benesse Holdings, and his wife in November 2008 shifted 13.61 million shares they own in Benesse to a New Zealand-based property management company, which is represented by Soichiro himself.

Okada Kazuo, chairman of Universal Entertainment Co., a leading maker of pachinko and slot machines, also has a company in Hong Kong manage 54.45 million shares which he holds in his corporation.

The Japan External Trade Organization (JETRO) says that there is neither a gift tax nor inheritance tax in New Zealand. In Hong Kong, the corporate tax rate is only 16.5% and stock dividends are nontaxable.

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JCP calls for international rules to regulate hidden assets in tax havens

Japanese foreign investment in the Cayman Islands, known as one of the world’s major tax havens, reached about 66 trillion yen at the end of 2014. Of the top 50 Japanese companies by market capitalization, 45 have opened 354 subsidiaries in offshore tax havens.

In addition, it is reported that the Panama Papers included several major Japanese corporations.

Oxfam, an international organization working on poverty issues, has claimed that the growing gap between rich and poor and the use of tax havens by individuals and corporations have facilitated the concentration of economic power and wealth in the hands of the few. This international anti-poverty organization is calling on world leaders to take measures to end the continued use of tax havens.

In Japan, however, Abe Cabinet’s spokesperson, Suga Yoshihide at a press conference on April 6 indicated his reluctance to conduct an investigation into the Panama Papers, saying, “I don’t have any intention to do so.” The Japan Business Federation, Japan’s biggest business lobby, expressed its opposition to the EU Commission’s proposal for the disclosure of tax-related information of multinational companies.

President and CEO of Fast Retailing (parent of Uniqlo), Yanai Tadashi ranks at the top on the list of Japan’s billionaires and reportedly hides his assets in a Dutch tax haven. In an Asahi Shimbun article dated April 23, 2013, he said, “In the future, annual income will be divided between 100 million yen and one million yen, and the middle class will decrease.”

In order to solve the issue of rapidly increasing poverty and economic inequalities, it is vital to prevent the business circles and the wealthy from hiding their assets. The Japanese Communist Party is urging the government to tighten domestic taxation rules and take the initiative to create global rules to eliminate tax avoidance.

Past related articles:
> 99% of Japanese subsidiaries in Cayman Islands are shell companies: JCP Daimon [April 26, 2016]
> Panama Papers shed light on dark side of international economy [April 12, 2016]