Posts Tagged ‘inheritance tax’

Tax auditors running out of cheaters, ponder purpose in life

Friday, October 12th, 2012

Pandora’s box

You know that the recession is getting serious when even the National Tax Agency is reduced to twiddling its thumbs. The amount of unclaimed income that tax investigators discovered last year was ¥19.2 billion, comprising a measly 189 cases, the lowest since 1978. Moreover, of all the cases they investigated, only 61.9 percent were prosecuted, the lowest rate since 1973.

It should be noted that these numbers actually apply to tax returns or lack of reporting that occurred in 2008, since it takes about three years for the agency to complete an investigation before deciding on whether to pursue prosecution. So these numbers could simply be a temporary dip owing to the fact that 2008 was the year of the Lehman Brothers failure that jump started the whole economic crisis. However, there are other factors at play.

A tax agency official recently told Tokyo Shimbun that “prosecutors’ attitudes” changed after several recent scandals in which the legality of their methods were questioned, in particular that case in Osaka where a prosecutor cooked up evidence to nail a health ministry bureaucrat. Consequently, prosecutors are a bit gunshy about borderline cases that they would have pursued more aggressively in the past. In addition, over the years tax evaders have become more skillful at hiding income thanks to advances in information technology and the globalization of finances.

But a former tax official told Tokyo Shimbun that he thinks the quality of the auditing has also gone down. When he was an investigator, new recruits were trained under the strictest, most punishing circumstances. Veteran auditors put the screws to their underlings to make sure they were tough and relentless in getting as much evidence against tax scofflaws as they could.

Continue reading about a change in tax audits →

All in the family: Keeping inheritances is a tricky business

Tuesday, August 23rd, 2011

A recent story reported by all the major media highlights a peculiar aspect of current household economics in Japan. In March, a home in Fukuoka City was broken into and ¥160 million in cash was stolen. One of the people who lived there, a 26-year-old woman, reported the robbery to the police, who have yet to catch the thief.

Wills are almost unheard of in Japan, which may be the problem

During their investigation the police wondered why the woman had such a huge amount of cash in her home. The usual reason is that there is almost no place to park that money these days. With bank interest rates remaining at zero indefinitely, more and more families just sock their money away in the mattress (or, in the Japanese idiom, the wardrobe). Mutual funds and other investment opportunities are available in Japan, but the average Japanese person tends to be averse to anything with risk attached.

In the case of the burgled party, the reasons were a little different. Investigators eventually learned that the ¥160 million was part of a ¥1.45 billion inheritance that the woman and her two older siblings received from their mother, who died in 2008 at the age of 64. The inheritance was made up of both cash and assets, including real estate, and had they properly reported it the three would have been liable for ¥544 million in inheritance taxes. As it stands now they will have to pay more, what with fines and penalties added on. In their case it’s even worse since they may be paying tax on ¥160 million they no longer have.

Continue reading about wills in Japan →

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