Japan Unit of Netflix Fails to Declare 1.2 B. Yen in Profit

Society Politics

Tokyo, March 21 (Jiji Press)--The Tokyo Regional Taxation Bureau found that a Japanese unit of U.S. video streaming service provider Netflix Inc. failed to declare a total of some 1.2 billion yen in profit over three years through 2019, informed sources said Monday.

The company is expected to be ordered to pay about 300 million yen in additional taxes, including those for underreporting.

According to the sources, the Japanese unit of Netflix, based in Tokyo's Minato Ward, paid more than 10 billion yen to multiple production companies in Japan over the three years to 2019 to acquire their movie and anime streaming rights. The company sold the rights to a Dutch unit of Netflix, which then offered online streaming services using the rights.

The taxation bureau saw as a problem the fact that the Japanese unit was only paid the amount spent to acquire the streaming rights and some related expenses. The bureau judged that the Dutch unit, which reaped massive profits thanks to the streaming rights acquired through the Japanese unit's efforts, should have shared its profit with the Japanese unit in line with the degree of contribution, the sources said.

The bureau calculated the amount of undeclared profit by comparing the Netflix case with similar deals.

[Copyright The Jiji Press, Ltd.]

Jiji Press