Recoverability of deferred tax assets and valuation allowances
First written in FY2016. 11 of 20 entries say "Mitigated", first in FY2018. Latest entry: FY2026.
Sony Group moved to the "Worse" side of this theme in 2016, 8 years before the typical company in this theme (2024).
The whole theme swung hardest in 2023: 4 of 11 companies on the "Worse" side.
4 other companies' latest entry also says "Worsened".
- FY2026WorsenedAnnual report
「As of 31 March 2026, valuation allowances totaling ¥277.5 billion had been recorded.」
The valuation allowance against deferred tax assets increased from ¥242.1 billion in the previous fiscal year to ¥277.5 billion. - FY2025MitigatedAnnual report
「As of 31 March 2025, valuation allowances totaling ¥232.6 billion had been recorded.」
The valuation allowance against deferred tax assets decreased from ¥242.1 billion in the previous fiscal year to ¥232.6 billion. - FY2024WorsenedAnnual report
「As of 31 March 2024, valuation allowances totaling ¥242.1 billion had been recorded.」
The valuation allowance against deferred tax assets increased from ¥240.8 billion at the end of the previous fiscal year to ¥242.1 billion. - FY2022MitigatedAnnual report
「As of 31 March 2022, valuation allowances totaling ¥240.8 billion had been recorded.」
The valuation allowance against deferred tax assets decreased from ¥276.4 billion at the end of the previous fiscal year to ¥240.8 billion. - FY2021MitigatedAnnual report
「As of 31 March 2021, valuation allowances totaling ¥276.4 billion had been recorded.」
Valuation allowances decreased from ¥608.2 billion at the end of the previous fiscal year to ¥276.4 billion. A substantial portion of the valuation allowances was released by the Japanese and US consolidated tax groups. - FY2021-Q3MitigatedAnnual report
「Income taxes of ¥12.6 billion were recorded for the nine-month consolidated cumulative period, and the effective tax rate was 1.2%, lower than the 24.5% recorded in the same period of the previous year. This was mainly due to the ¥214.9 billion reduction in income taxes in the second quarter of fiscal 2020 resulting from the release of valuation allowances against a substantial portion of deferred tax assets held by the Japanese consolidated tax group, and the ¥13.6 billion reduction in income taxes in the third quarter of fiscal 2020 resulting from the release of valuation allowances against deferred tax assets related to research and development tax credits held by the US consolidated tax group.」
Following Japan, the US consolidated tax group also released valuation allowances, reducing income taxes by ¥13.6 billion. The effective tax rate decreased from 24.5% to 1.2%. - FY2021-Q2MitigatedAnnual report
「As of 30 September 2020, despite the effects of the spread of COVID-19, Sony evaluated the available positive and negative evidence, particularly recent profit trends and forecasts of future profits, in light of expectations for further stable improvement in the profitability of Sony in Japan and its consolidated tax group following the completion of the acquisition of SFH as a wholly owned subsidiary in the second quarter of fiscal 2020. As a result, in the second quarter of fiscal 2020, Sony released valuation allowances against a substantial portion of deferred tax assets in Japan related to temporary differences and certain tax loss carryforwards, reducing income taxes in the consolidated statements of income by ¥214,900 million.」
In light of expected improvements in profitability following the acquisition of SFH as a wholly owned subsidiary, valuation allowances for the Japanese consolidated tax group were released, reducing income taxes by ¥214.9 billion. - FY2021-Q1MitigatedAnnual report
「Income taxes of ¥72.9 billion were recorded for the current quarter, and the effective tax rate was 22.8%, lower than the 28.1% recorded in the same quarter of the previous year. This decrease was mainly because, in the US consolidated tax group, Sony had recorded tax expense in the same quarter of the previous year on the assumption that the base erosion and anti-abuse tax (BEAT) would apply, whereas in the current quarter it recorded tax expense on the assumption that BEAT would not apply and that tax credits for which valuation allowances had been recorded could be utilized.」
The effective tax rate decreased from 28.1% in the same quarter of the previous year to 22.8%, due to BEAT not applying to the US consolidated tax group and the expected utilization of tax credits. - FY2020MitigatedAnnual report
「As of 31 March 2020, valuation allowances totaling ¥608.2 billion had been recorded.」
Valuation allowances decreased from ¥723.1 billion at the end of March 2019 to ¥608.2 billion. However, valuation allowances continue to be recorded in Japan, the United States and other jurisdictions in light of uncertainty regarding future earnings. - FY2020-Q1MitigatedAnnual report
「This was mainly because valuation allowances were no longer recorded against a substantial portion of deferred tax assets held by the US consolidated tax group.」
The fact that the US consolidated tax group no longer recorded valuation allowances against a substantial portion of its deferred tax assets was cited as a factor affecting the effective tax rate. - FY2019MitigatedAnnual report
「In the third quarter of fiscal 2018, valuation allowances were released against a substantial portion of deferred tax assets in the United States, mainly related to tax loss carryforwards, temporary differences and certain foreign tax credits, reducing income taxes in the consolidated statements of income by ¥154,201 million.」
Given the profitability of the US consolidated tax group, a substantial portion of the valuation allowance was released, reducing the valuation allowance balance to ¥723.1 billion. - FY2019-Q3MitigatedAnnual report
「In the third quarter of fiscal 2018, Sony released valuation allowances against a substantial portion of deferred tax assets in the United States, mainly related to tax loss carryforwards, temporary differences and certain foreign tax credits, reducing income taxes in the consolidated statements of income by ¥154,201 million.」
Given the ability of the US consolidated tax group to maintain a certain level of profitability, a substantial portion of the valuation allowance against deferred tax assets was released. Valuation allowances remaining for foreign tax credits continue to be recorded. - FY2018MitigatedAnnual report
「As of 31 March 2018, valuation allowances totaling ¥899.8 billion had been recorded. The net changes in valuation allowances in fiscal 2016 and fiscal 2017 were decreases of ¥3,894 million and ¥152,129 million, respectively.」
Valuation allowances of ¥899.8 billion remained recorded, while the net decrease in fiscal 2017 was ¥152.129 billion. - FY2018-Q3RestatedAnnual report
「Income taxes of ¥138.5 billion were recorded for the nine-month period of the current fiscal year, and the effective tax rate was 20.1%, lower than the 49.4% recorded in the same period of the previous year. This was due, among other factors, to Sony Corporation, the Japanese consolidated tax group and the US consolidated tax group, which had recorded valuation allowances against deferred tax assets, recording a profit during the current nine-month period instead of the loss recorded in the same period of the previous year, and to a tax benefit of ¥13.8 billion recorded in respect of deferred tax liabilities as a result of US tax reform in the third quarter of fiscal 2017.」
The effective tax rate decreased from 49.4% to 20.1%, partly because the groups that had recorded valuation allowances reported profits, although valuation allowances themselves continue to be recorded. - FY2018-Q1MaterialisedAnnual report
「Income taxes of ¥54.5 billion were recorded for the current quarter, and the effective tax rate was 36.6%, higher than the 35.9% recorded in the same quarter of the previous year. This was due, among other factors, to certain overseas subsidiaries that had recorded valuation allowances against deferred tax assets recording a loss in the current quarter instead of the profit recorded in the same quarter of the previous year.」
Losses at overseas subsidiaries that had recorded valuation allowances contributed to the increase in the current-quarter effective tax rate to 36.6%. - FY2017RestatedAnnual report
「As of 31 March 2017, Sony had recorded valuation allowances mainly for (1) local taxes of Sony in Japan, its consolidated tax group and certain Japanese subsidiaries, (2) Sony Americas Holding Inc. and its consolidated tax group in the United States, (3) Sony Mobile Communications AB in Sweden, (4) Sony Europe Limited in the United Kingdom, and (5) several subsidiaries operating in Brazil.」
Valuation allowances continue to be recorded in multiple tax jurisdictions, reaffirming the recoverability risk. - FY2017-Q3WorsenedAnnual report
「Income taxes of ¥80.9 billion were recorded for the nine months of the current fiscal year, and the effective tax rate was 49.4%, higher than the 29.5% recorded in the same period of the previous year. This was due, among other factors, to goodwill impairment that was not deductible for tax purposes being recorded during the nine months, and Sony Corporation and the Japanese consolidated tax group, which had recorded valuation allowances against deferred tax assets, recording a loss during the nine months of the current fiscal year.」
Goodwill impairment and losses at companies and groups that had recorded valuation allowances caused the effective tax rate for the nine months to rise to 49.4%. - FY2017-Q2WorsenedAnnual report
「Income taxes of ¥44.0 billion were recorded for the six months of the current fiscal year, and the effective tax rate was 45.1%, higher than the 30.2% recorded in the same period of the previous year. This was due, among other factors, to Sony Corporation and the Japanese consolidated tax group, which had recorded valuation allowances against deferred tax assets, recording a loss during the six months of the current fiscal year instead of the profit recorded in the same period of the previous year.」
The companies and groups that had recorded valuation allowances reported losses, causing the effective tax rate for the six months to rise from 30.2% in the same period of the previous year to 45.1%. - FY2017-Q1MaterialisedAnnual report
「This was due, among other factors, to Sony Corporation and the Japanese consolidated tax group, which had recorded valuation allowances against deferred tax assets, recording a loss in the current quarter instead of the profit recorded in the same quarter of the previous year.」
The companies and groups that had recorded valuation allowances reported losses, causing the effective tax rate to rise from 28.7% in the same quarter of the previous year to 35.9%. - FY2016First statedAnnual report
「As of 31 March 2016, Sony had recorded valuation allowances mainly for (1) local taxes of Sony in Japan, its consolidated tax group and certain Japanese subsidiaries, (2) Sony Americas Holding Inc. and its consolidated tax group in the United States, (3) Sony Mobile Communications AB in Sweden, and (4) Sony Europe Limited in the United Kingdom.」
Valuation allowances have actually been recorded, with the recoverability of tax loss carryforwards, tax strategies and future taxable income identified as risks.