1. Accounting(Issues on accounting ascribing to the reform in interest rate indicators)
On the reform in interest rate indicators, it is expected that the announcement of LIBOR will be halted permanently by the end of December 2021 and the risk-free interest rate is now considered, which becomes the succeeding interest rate indicator depending on the currency. Also there’s a chance that different interest rates are to be applied to derivatives and non-derivative cash products. This change in the interest rate followed by a reform could have an accounting impact in some ways and hence the Corporate Accounting Standards Committee is now discussing it in detail.
2. Tax
Explanation of FY 2020 Tax Reform Outline (2)
Measures to prevent tax avoidance combined with dividends from subsidiaries and stocks transferred from subsidiaries (2)
Regarding the book value reduction processing of subsidiary stocks mentioned in the last issue, the following is the amount of dividends not applicable to this system.
(1)The eligible dividends in the case where 90% of the issued stocks are owned by a domestic ordinary corporation or resident between the date of the incorporation of related companies and subsidiaries – a domestic corporation – and the date when a controlled company relationship occurs.
(2)The eligible dividends from related companies and subsidiaries in the case where the amount of A below after it is deducted by B exceeds C.
A)The total amount of the retained earnings of related companies and subsidiaries at the beginning date of the fiscal year to which dividend declaration date belongs.
B)The total amount of dividends to the shareholders of related companies and subsidiaries between the above beginning date and the date they get the dividends.
C)The total amount of dividends the shareholders receive from related companies and subsidiaries between the day controlled company relationship occurs and the day they get the dividends.
(3)The amount of dividends received after 10 years from the date of occurrence of the controlled company relationship.
(4)The eligible dividends in the case where the dividends do not exceed 20 million yen.
(Notes)
*Related companies and subsidiaries – other corporations which own a controlled company relationship on the dividend date
*Controlled company relationship – the relationship of a company where more than 50% of the number of voting rights or stocks are directly or indirectly owned by other corporations or related parties
*The eligible dividends – the total amount of dividends received from related companies and subsidiaries between the beginning date of the operations and the day right before they receive it
3. Labor Management (Obligation of Online Social Insurance Application for Specific Businesses)
Effective April 2020, some specific business entities will be obliged to process a part of their social/labor insurance applications online. Specific business entities include; 1. Ordinary corporations whose amount of stated capital, amount of capital contributions or contributions to the Banks’ Shareholdings Purchase Corporation is more than 100 million yen, 2. Mutual companies, 3. Investment corporations and 4. Special purpose companies (TMK). The obligation is effective from the FY starting in or after April 2020. This requirement also applies to the cases where social insurance and labor consultants/corporations are handling those applications on behalf of such business entities. For health insurance societies, online application is expected to be implemented from November 2020 after the necessary environment is established.(Resource: The Ministry of Health, Labor and Welfare website)
4. This Month’s Words of Wisdom
Despite language differences between China and Japan, there shouldn’t be many differences in human emotion and thought since the same moon rises in the same sky.
(Kino Tsurayuki / 9th century poet)
Human nature is universal and therefore makes reading stories such as the World’s Literature Series understandable. Personally Les Miserables was the novel that remained in my heart the most.
For more details, please refer to Nagamine & Mishima JC Accounting K.K.
