Tax-effect accounting following the transition to the group tax consolidation system

「The company and certain domestic consolidated subsidiaries have transitioned from the consolidated taxation system to the group tax sharing system from the first quarter. Accordingly, the accounting and disclosure treatment for corporation tax, local corporation tax and tax effect accounting is conducted in accordance with Practical Solution on the Accounting and Disclosure under the Group Tax Sharing System (ASBJ PITF No. 42, 12 August 2021, hereinafter “ASBJ PITF No. 42”).」

「The Company and certain domestic consolidated subsidiaries transitioned from the consolidated taxation system to the group tax sharing system from the beginning of the first quarter of the current consolidated fiscal year. Accordingly, accounting and disclosure for corporate and local taxes and tax effect accounting comply with the “Implementation Guidance on Accounting and Disclosure under the Group Tax Sharing System” (ASBJ Practical Issues Task Force Report No. 42, 12 August 2021).」

「Beginning at the start of the following consolidated fiscal year, the Company planned to apply the Practical Solution on Accounting and Disclosure under the Group Tax-Sharing System (Practical Solution Report No. 42, 12 August 2021), which prescribes accounting and disclosure treatments for corporate and local corporate taxes and tax-effect accounting when applying the group tax-sharing system.」

「With respect to the transition by the Company and its domestic consolidated subsidiaries to the group tax sharing system established under the Act Partially Amending the Income Tax Act and Other Acts (Act No. 8 of 2020), and matters for which the single-entity tax payment system was revised in conjunction with that transition, the Company applies the treatment prescribed in paragraph 3 of “Treatment of the Application of Tax Effect Accounting Related to the Transition from the Consolidated Tax Payment System to the Group Tax Sharing System” (Practical Response Report No. 39, 31 March 2020). Accordingly, it does not apply paragraph 44 of the “Guidance on Accounting Standards for Tax Effect Accounting” (ASBJ Guidance No. 28, 16 February 2018), and calculates deferred tax assets and deferred tax liabilities based on the provisions of the tax laws before their amendment.」

「For items relating to the transition to the group aggregation system established under the Act Partially Amending the Income Tax Act and Other Acts (Act No. 8 of 2020), and to revisions to the single-company taxation system made in conjunction with that transition, we apply the treatment set out in Paragraph 3 of Practical Solution No. 39, Accounting Treatment for the Application of Tax Effect Accounting Related to the Transition from the Consolidated Taxation System to the Group Aggregation System, without applying Paragraph 44 of the Guidance on Recoverability of Deferred Tax Assets. Accordingly, deferred tax assets and deferred tax liabilities are calculated based on the provisions of the tax laws before amendment.」

「With respect to the transition by the Company and its domestic consolidated subsidiaries to the group tax sharing system established under the Act Partially Amending the Income Tax Act and Other Acts (Act No. 8 of 2020), and matters for which the single-entity tax payment system was revised in conjunction with that transition, the Company applies the treatment prescribed in paragraph 3 of “Treatment of the Application of Tax Effect Accounting Related to the Transition from the Consolidated Tax Payment System to the Group Tax Sharing System” (Practical Response Report No. 39, 31 March 2020). Accordingly, it does not apply paragraph 44 of the “Guidance on Accounting Standards for Tax Effect Accounting” (ASBJ Guidance No. 28, 16 February 2018), and calculates deferred tax assets and deferred tax liabilities based on the provisions of the tax laws before their amendment.」

「With respect to the transition by the Company and its domestic consolidated subsidiaries to the group tax sharing system established under the Act Partially Amending the Income Tax Act and Other Acts (Act No. 8 of 2020), and matters for which the single-entity tax payment system was revised in conjunction with that transition, “Treatment of the Application of Tax Effect Accounting Related to the Transition from the Consolidated Tax Payment System to the Group Tax Sharing System”」

「With respect to the transition by the Company and its domestic consolidated subsidiaries to the group tax sharing system established under the Act Partially Amending the Income Tax Act and Other Acts (Act No. 8 of 2020), and matters for which the single-entity tax payment system was revised in conjunction with that transition, the Company applies the treatment prescribed in paragraph 3 of “Treatment of the Application of Tax Effect Accounting Related to the Transition from the Consolidated Tax Payment System to the Group Tax Sharing System” (Practical Response Report No. 39, 31 March 2020). Accordingly, it does not apply paragraph 44 of the “Guidance on Accounting Standards for Tax Effect Accounting” (ASBJ Guidance No. 28, 16 February 2018), and calculates deferred tax assets and deferred tax liabilities based on the provisions of the tax laws before their amendment.」

「With respect to the transition by the Company and its domestic consolidated subsidiaries to the group tax sharing system established under the Act Partially Amending the Income Tax Act and Other Acts (Act No. 8 of 2020), and matters for which the single-entity tax payment system was revised in conjunction with that transition, the Company applies the treatment prescribed in paragraph 3 of “Treatment of the Application of Tax Effect Accounting Related to the Transition from the Consolidated Tax Payment System to the Group Tax Sharing System” (Practical Response Report No. 39, 31 March 2020). Accordingly, it does not apply paragraph 44 of the “Guidance on Accounting Standards for Tax Effect Accounting” (ASBJ Guidance No. 28, 16 February 2018), and calculates deferred tax assets and deferred tax liabilities based on the provisions of the tax laws before their amendment.」

「For items relating to the transition to the group aggregation system established under the Act Partially Amending the Income Tax Act and Other Acts (Act No. 8 of 2020), and to revisions to the single-company taxation system made in conjunction with that transition, we apply the treatment set out in Paragraph 3 of Practical Solution No. 39, Accounting Treatment for the Application of Tax Effect Accounting Related to the Transition from the Consolidated Taxation System to the Group Aggregation System, without applying Paragraph 44 of the Guidance on Recoverability of Deferred Tax Assets. Accordingly, deferred tax assets and deferred tax liabilities are calculated based on the provisions of the tax laws before amendment.」