048 Reform of implementation guide on tax effect accounting in consolidated financial statements
Now that group income taxation system has been newly established, accounting system committee’s report 6 “implementation guide on tax effect accounting in consolidated financial statements” and 10 “implementation guide on tax effect accounting in financial statements” has been reformed and issued on September 3, 2010.
This reformed implementation guide clarifies how to deal with the tax effect accounting of the group income taxation system.
In the group income taxation system, they do not impose tax on transactions such as assets transfer between corporations where one is wholly controlled by another. This is a system established according to the reality that corporations in a group administrate their business as one entity such as in the way of a holding company. This taxation system became effective from the transactions made after October 1, 2010.
This makes a huge impact on non-listed companies because not only listed companies but all the companies are obliged to apply it if they have wholly controlling relationship.
