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1. Accounting(The trend of “Accounting standard for Financial Instruments” (1))

The ASBJ, or Accounting Standards Board of Japan, has started to develop and amend the standard for financial instruments. Under the current Japanese accounting standards, securities (trading securities, held-to-maturity bonds, stocks of subsidiaries and affiliates, and available-for-sale securities) are classified based on the intent of the company and measured on its balance sheet. Unrealized gain or loss is also accounting for under it.

From the viewpoint of consistency with the IFRS, if a company chooses the OCI option for their securities of listed companies, gains or losses may not be recognized at the time of sale, and impairment losses also may not be recognized (non-recycling). In other words, when extraordinary losses are recognized, it may become impossible to control the bottom line results by adding unrealized gains of securities that the company holds.

2. Tax (Automatic information exchange of Country-by-Country Reporting)

On 12 October 2018, Japan and the United States (US) signed an agreement for the automatic information exchange of Country-by-Country (CbC) Reporting. The agreement is effective as of the end of October. It was an outstanding issue that the agreement had not been concluded between Japan and the US. It is good news that the local filing of CbC reporting will no longer be required by the tax authorities of both countries.

3. Labor Management (Nov. 2018: Changes to Year-end Tax Adjustment Effective 2018)

There are some changes to the year-end tax adjustment effective 2018.
One of the application forms, “Application for deduction for insurance premiums/Application for special exemption for spouse of employment income earner” (combined form until 2017) was separated in to 2 forms; “Application for deduction for insurance premiums” and “Application for exemption for spouse of employment income earner”.

Changes to deduction amounts, etc. relating to the form change:
1. Spouse Deduction
In addition to the changes in the deduction amounts, a person is no longer eligible for the deduction if estimated annual income exceeds 10,000,000 yen.

2. Special Spouse Deduction
In addition to the changes in the deduction amounts, the range of eligible annual income of spouse was changed to between 380,000 yen and 1,230,000 yen. 4. This Month’s Words of Wisdom

Le vent se lève, il faut tenter de vivre」(Paul Varely)

“The wind rises, it must try to live.” This is a poem by the author Varely that was translated by Tatsuo Hori and has been well known to Japanese through Hori’s translation. I read this poem for the first time when I was a student, and I remember how much it moved me.



For more details, please refer to Nagamine & Mishima JC Accounting K.K.

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