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Yomiuri Shimbun file photo The Tokyo Regional Taxation Bureau
The Yomiuri Shimbun
16:17 JST, July 23, 2024
Kazuo Okada, the founder and former chairperson of Universal Entertainment Corp., failed to report approximately ¥5 billion in income over a three-year period up to 2020, sources have revealed.
The Tokyo Regional Taxation Bureau determined that, based on an anti-tax haven regulation designed to prevent tax evasion using foreign corporations, Okada should have reported as personal income part of the profits from an asset management company he established in Hong Kong.
The tax regulation is mostly applied to corporations and rarely to individuals.
The additional income tax amount, including penalties for non-filing, is about ¥2.7 billion. Okada appealed the decision to the National Tax Tribunal but was rejected at the end of 2023.
According to the sources, the Hong Kong asset management company was established in 2010, and Okada and his relatives have held shares in it. The company’s assets were approximately ¥100 billion as of 2011, and significant income was believed to have been generated from interest and other streams.
The company also acquired shares in Universal Entertainment Corp., a major pachinko slot machine manufacturer listed on the Tokyo Stock Exchange Standard Market, becoming its parent company and receiving dividends from it.
The ant-heaven tax regulation applies to foreign corporations in which (1) Japanese corporations or residents hold more than 50% of the shares, (2) the local corporate tax burden is less than 20%, and (3) there is no actual business activity.
Hong Kong’s corporate tax rate is about 16% — significantly lower than Japan’s approximately 29% — and the taxation bureau determined that the asset management company had no substantial business activities.
The bureau pointed out that approximately ¥3 billion of the income from the Hong Kong company, corresponding to Okada’s 46% shareholding, should have been reported in Japan.
Including the dividends to Okada from The Hong Kong company, the total unreported income is estimated to be around ¥5 billion.
The Yomiuri Shimbun requested an interview with Okada through his lawyer but received no response.
Universal Entertainment Corp. stated, “Okada is no longer connected to our company.”
