Application of Tax Effect Accounting Following the Transition to the Group Tax Sharing System

「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 consolidated accounting period. Accordingly, accounting and disclosure for corporate income taxes, local corporate taxes and tax-effect accounting follow the Practical Solution on Accounting and Disclosure when Applying the Group Tax Sharing System.」

「The Company and its domestic subsidiaries will transition from the consolidated taxation system to the group tax-sharing system from the next consolidated fiscal year.” “In addition, from the beginning of the next consolidated fiscal year, we plan to apply the “Treatment of Accounting and Disclosure under the Group Tax-Sharing System,” which sets out the accounting and disclosure treatment for corporate tax, local corporate tax and tax-effect accounting when applying the group tax-sharing system.」

「With respect to the transition by the Company and its domestic 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 the items for which the stand-alone tax-payment system was revised in connection with that transition, the amounts of deferred tax assets and deferred tax liabilities are calculated based on the provisions of the tax laws before amendment, in accordance with paragraph 3 of “Treatment of the Application of Tax Effect Accounting in Connection with the Transition from the Consolidated Taxation System to the Group Tax-Sharing System” (Practical Response Report No. 39, 31 March 2020), without applying paragraph 44 of the “Implementation Guidance on Accounting Standard for Tax Effect Accounting” (ASBJ Guidance No. 28, 16 February 2018).」