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

「The Company and its consolidated subsidiaries have transitioned from the consolidated taxation system to the group relief system from the first quarter of the current fiscal year. Accordingly, accounting and disclosure for corporate income taxes, local corporate taxes and tax-effect accounting are conducted in accordance with "Accounting Treatment and Disclosure for Applying the Group Relief System."」

「The Company and its consolidated subsidiaries have transitioned from the consolidated taxation system to the group tax sharing system beginning with the first quarter of the current consolidated fiscal year. Accordingly, the accounting treatment and disclosure for corporate tax, local corporate tax and tax effect accounting are prepared in accordance with the Practical Solution on Accounting Treatment and Disclosure When Applying the Group Tax Sharing System (Practical Response Report No. 42, 12 August 2021; hereinafter, “Practical Response Report No. 42”).」

「The Company and its consolidated subsidiaries will transition from the consolidated taxation system to the group aggregation system from the next consolidated fiscal year. They plan to apply, from the beginning of the next consolidated fiscal year, Practical Response Report No. 42, "Accounting and Disclosure under the Group Aggregation System" (12 August 2021), which prescribes the accounting treatment and disclosures for corporate tax, local corporate tax and tax-effect accounting when applying the group aggregation system.」

「The Company and its consolidated subsidiaries apply the treatment prescribed in Paragraph 3 of the Practical Response Report No. 39, "Accounting for Tax Effect Accounting When Transitioning from the Consolidated Taxation System to the Group Aggregation System" (31 March 2020), to items for which the single-entity taxation system was revised in connection with 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). Accordingly, they do not apply the provisions of Paragraph 44 of the Guidance on Application of Tax Effect Accounting (ASBJ Guidance No. 28, 16 February 2018), and calculate deferred tax assets and deferred tax liabilities based on the provisions of the tax laws before the amendments.」

「The Company and its consolidated subsidiaries apply the treatment prescribed in Paragraph 3 of the Practical Response Report No. 39, "Accounting for Tax Effect Accounting When Transitioning from the Consolidated Taxation System to the Group Aggregation System" (31 March 2020), to items for which the single-entity taxation system was revised in connection with 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). Accordingly, they do not apply the provisions of Paragraph 44 of the Guidance on Application of Tax Effect Accounting (ASBJ Guidance No. 28, 16 February 2018), and calculate deferred tax assets and deferred tax liabilities based on the provisions of the tax laws before the amendments.」