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1. Accounting (Accounting issues of negative interest rates (the discount rate on the projected benefit obligations calculation)

On January 29 2016, The Bank of Japan (“BOJ”)decided to introduce “Quantitative and Qualitative Monetary Easing with a Negative Interest Rate” and the negative interest rate of 0.1% has been applied since February 16 to some parts of the BOJ‘s saving accounts which the other banks have held.

Recently it can be seen in the JPY LIBOR and the yield on bonds.

Where the discount rate for projected benefit obligations calculation is determined based on the yield on national bonds, it has become an issue if the negative figure can be simply used as the discount rate or if zero should be the lower limit when the yield is negative.

As a result of a discussion among the ASBJ regarding the discount rate based on the yield, it was officially announced that both cases are allowable for the fiscal year ending in March 2016.

2. Tax(The current status of the Japanese government’s reaction to the final reports about BEPS)

Below is a summary of the Japanese government’s reactions as of March 2016 to the final reports about Base Erosion and Profit Shifting (BEPS) released by the OECD in October 2015.

Action Plan General Description Japanese Government’s Reaction
Action 1 Addressing the tax challenges of the digital economy Tax system reformed in FY2015
Action 2 Neutralizing the effects of hybrid mismatch arrangements Tax system reformed in FY2015
Action 3 Designing rules for the effective control of foreign companies To be considered in a future tax reform
Action 4 Limiting base erosion involving interest deductions and other financial payments To be considered in a future tax reform
Action 5 Countering harmful tax practices more effectively, taking into account transparency and substance Covered by the existing tax system
Action 6 Preventing the granting of treaty benefits in inappropriate circumstances Covered by the existing tax system
Action 7 Preventing the artificial avoidance of permanent establishment status Covered by tax conventions (multilateral instrument membership also under consideration)
Action 8 Aligning transfer pricing outcomes with value creation (intangibles) To be considered in a future tax reform
Action 9 Aligning transfer pricing outcomes with value creation (risks and capital) To be considered in a future tax reform
Action 10 Aligning transfer pricing outcomes with value creation (other high-risk transactions) To be considered in a future tax reform
Action 11 Measuring and monitoring BEPS Not applicable
Action 12 Mandatory disclosure rules To be considered in future legislation.
Action 13 Guidance on transfer pricing documentation and country-by-country reporting Tax system reformed in FY2016
Action 14 Making dispute resolution mechanisms more effective Supported
Action 15 Developing a multilateral instrument to modify bilateral tax treaties Multilateral instrument membership under consideration

3. Labor Management(April 2016 Revision of Youth Employment Promotion Act)

As a part of the Youth Employment Promotion Act which has been introduced incrementally from October 2015, a new policy of“providing counseling opportunities to young people and enhancing facilities to support their independence” has come into effect from April 2016.

For the development and improvement of employability skills and the promotion of self-dependence, this new policy provides counseling opportunities to young people who are generally referred to as“ NEET” or “Hikikomori”, and enhances facilities to support their self-dependence in vocational life.

The facility is called “Local Youth Support Station”. It targets unemployed young people aged 15 to 39 and their parents or guardians, and provides them with employment support by providing various opportunities such as private counseling, office tours and internship programs.

4. This Week’s Words of Wisdom(Someone else’s life)

“Living someone else’s life is the worst.” (Kenichi Ohmae)

This is the third time he has been quoted in this newsletter.

According to him, “Living someone else’s life” means a life of your parents’ hopes, a life of your teachers’ rules. It means being a pushover when it comes to your supervisors, that is, living by someone’s rules without question. Then someday, all of a sudden, you will find that your life is not your own; “The moment of Truth” will definitely come to you, he says.

I think that this is some of his greatest wisdom.

The referring page is Nagamine & Mishima JC Accounting K.K.

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