Tokyo Tax Bureau Seizes H.K. Firm’s Assets Over Back Taxes; H.K. Company Ordered to Pay ¥1.8 Bil. in Back Taxes, Penalty Fees

The Yomiuri Shimbun

2:00 JST, February 19, 2025

The Tokyo Regional Taxation Bureau has seized the assets of a Hong Kong online game distributor after ordering it to pay ¥1.8 billion in back taxes and penalty fees from the three-year period through 2022, sources said.

The Hong Kong company was said to have been uncooperative in the bureau’s tax investigation and was unlikely to make a payment. As a result, the bureau shortened the period in which the company had to make the payment and seized its assets in Japan, moving quickly to prevent the money from being sent overseas.

Tax investigations on overseas corporations are usually difficult, and collecting taxes from them are not easy if they do not voluntarily pay their back taxes and penalty fees.

However, in the latest case, Japan’s tax authorities made full use of their levy system and succeeded in seizing the assets before they were dispersed and lost overseas. The consumption tax owed by the company will be collected from the seized assets.

According to the sources, Hong Kong corporation Yotta Games, established around 2017, distributes games worldwide, including Japan, to make a profit.

Consumption tax is levied on transactions within Japan, including on services provided by overseas businesses. However, the Tokyo tax bureau found that Yotta Games had not declared about ¥1.5 billion in consumption tax incurred from in-game purchases made by users in Japan. The bureau levied a total of about ¥1.8 billion, which includes a penalty for failure to file.

As Yotta Games was uncooperative in the tax investigation and had not appointed a tax agent in Japan, the bureau determined the company was unlikely to pay its back taxes and shortened the period in which the company had to make the payment.

Since Yotta Games did not pay in time, the bureau seized the company’s ¥1.5 billion in accounts receivable held by its Japanese subsidiary in Minato Ward, Tokyo, as assets.

By shortening the payment period, the bureau was able to complete the procedure in about 10 days – from ordering the company to pay to seizing its assets. Usually, it takes more than a month. The bureau is believed to have moved quickly so it could seize the assets before the Japanese subsidiary could pay the money to the Hong Kong corporation.

Yotta Games did not reply to an email interview with The Yomiuri Shimbun, and its Japanese subsidiary declined to comment.