Risk of Retroactive Collection of Withholding Income Tax on Trust-Type Stock Options

「Based on the National Tax Agency’s view, the company held discussions and conducted reviews with internal and external specialists regarding the trust-type stock options it had introduced, decided to pay the withholding income tax relating to exercised trust-type stock options, and made the payment. It also decided to seek reimbursement from current officers. Because employees and others would incur an additional burden that had not been anticipated initially, the company decided to waive part of its reimbursement rights to the extent that doing so would prevent such additional burden, taking into account its previous communications and the circumstances surrounding the introduction of the trust-type stock options. As a result of these decisions, the company recorded a loss of ¥326.368 million related to trust-type stock options as an extraordinary loss in the third quarter of the current consolidated cumulative period.」

「Based on the National Tax Agency’s view, the company held discussions and conducted reviews with internal and external specialists regarding the trust-type stock options it had introduced, decided to pay the withholding income tax relating to exercised trust-type stock options, and made the payment. It also decided to seek reimbursement from current officers. Because employees and others would incur an additional burden that had not been anticipated initially, the company decided to waive part of its reimbursement rights to the extent that doing so would prevent such additional burden, taking into account its previous communications and the circumstances surrounding the introduction of the trust-type stock options. As a result of these decisions, the company recorded a loss of ¥358.824 million related to trust-type stock options as an extraordinary loss in the second quarter of the current consolidated accounting period.」

「On 30 May 2023, the National Tax Agency published “Taxation of Stock Options (Q&A)” and stated that trust-type stock options are effectively treated as salary when officers and employees exercise rights granted by the company and acquire shares. Accordingly, the company is required to collect withholding tax retroactively from officers and employees who have already exercised their rights. For the first quarter under review, ¥233.516 million, equivalent to the amount of withholding income tax payable, was recorded under other current liabilities on the consolidated balance sheet, along with the corresponding receivable under other current assets. Following the National Tax Agency’s view, the company is considering its future response after discussions with internal and external specialists. Depending on developments, this may affect the company’s financial position and operating results.」