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January featured business affairs

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1. Accounting(Trends in accounting standards for financial instruments (Part2))

The ASBJ has undertaken to develop revision (amendments) on the accounting standards for financial instruments. Under current Japanese GAAP, securities that are deemed to have an extremely difficult to grasp market value, such as unlisted shares, are not reported at a market value. However, from the viewpoint of consistency with the IFRS, market value measurements are required for unlisted shares on a balance sheet (the valuation difference is generally recorded in profit and loss and OCI options are applicable). There is a possibility that this will have a big influence on accounting practices.

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

Regarding the implementation of automatic information exchange of Country by Country Reporting (hereinafter referred to as “CbCR”), the National Tax Agency announced the situation as of October 31, 2018. According to this report, Japan currently carries out automatic information exchange of CbCR with 58 countries or regions. However, the People’s Republic of China is not included in these countries.

Therefore, at this point, the ultimate parent companies etc. that directly provide CbCR to the National Tax Agency of Japan should provide CbCR to the Chinese tax authorities via Chinese subsidiary companies. Since China is participating in the framework of automatic information exchange, we need to pay attention to future trends.

3. Labor Management (Employer obligation to keep track of employee working hours objectively)

The amended Industrial Safety and Health Act will be enacted in April 2019.

Previously, employers were required by the Administrative Circular to keep track of employees’ working hours, but employees under the discretionary working hour system and supervisors were outside the scope of this circular. With this amendment, employers are now required by law to keep track of working hours for all workers, including the employees under the discretionary working hour system and supervisors, in an objective and appropriate manner from the viewpoint of workers’ health management.

This amendment aims to ensure that workers who work long hours have advice from industrial doctors. Employers are required to conduct interviews with industrial doctors if so requested by employees when their overtime hours exceeded a certain number of hours. The overtime hours here include the hours worked on statutory holidays.(Source: Japan Pension Service “Realization of Dynamic Engagement of All Citizens”)

4. This Month’s Words of Wisdom

Dreams only have wings. With feet, letting walk. (Shigesato Itoi)

When talking about dreams, one often thinks vaguely about something in the far future, so it always seems impossible to come true. I think this is pointed out in this well-defined and extremely good quotation.



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

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