November 6, 2015
Consolidated business results
IWATA, November 6, 2015—Yamaha Motor Co., Ltd. (Tokyo: 7272) has recognized the estimated corporate taxes pertaining to the Advance Pricing Agreement (APA) for the consolidated business results of the first nine months of the fiscal year ending December 2015. The company has also recognized the loss for the Transfer Pricing Taxation Adjustment and the additional deferred tax assets relating to the non-consolidated accounting for the first nine months of the fiscal year ending December 2015, and includes them together in this announcement.
1. Notifications Regarding Recognition of Estimated Corporate Taxes Associated with the APA
(1) Recognition of Income taxes for prior periods
Regarding transfer pricing relating to transactions between Yamaha Motor and its U.S. subsidiaries from the December 2009 fiscal year to the December 2013 fiscal year, an APA application was made in 2008 based on the U.S.-Japan Tax Treaty to competent authority for taxation regarding determination of arm’s length price etc. Due diligence in each country and Mutual Agreement Procedure (MAP) between both competent authorities for taxation have subsequently continued, and recently, due to the progress of the MAP, it is forecast that written confirmation will be received that Yamaha Motor's income will be decreased, and the income of its U.S. subsidiaries will be increased by the same amount. Due to this, the forecast 34.946 billion yen of additional corporate taxes to be paid by U.S. subsidiaries has been estimated and recognized to the "Income taxes for prior periods" for the consolidated business results of the first nine months of the fiscal year.
However, although there will be no corporate tax refund accompanying income reductions for the current fiscal year due to losses carried forward for taxation, Yamaha Motor is striving to resolve all losses carried forward for taxation arising from income earned in subsequent fiscal years.
(2) Recognition of Transfer Pricing Taxation Adjustment
The 34.946 billion yen forecast to be paid from Yamaha Motor to its U.S. subsidiaries pertaining to the additional corporate taxes forecast to be paid by the U.S. subsidiaries has been recognized as “Transfer Pricing Taxation Adjustment” in the form of extraordinary losses to the non-consolidated accounting for the first nine months of the fiscal year.
2. Recognition of the Deferred Tax Assets
As a result of a review of future recovery of deferred tax for the non-consolidated accounting for the first nine months of the fiscal year, Yamaha Motor has recognized additional "Deferred tax assets" due to forecast taxable income generated in the future. Accordingly, "Income taxes-deferred" has been reduced by 16.132 billion yen, in turn increasing the net income by the same amount.
(Reference) Effects on Consolidated Business Results
Due to recognitions for "Income taxes for prior periods" and reductions in "Income taxes-deferred ", the amount of the reduction in third quarter net income of consolidated accounting period as a result of the above events is 18.336 billion yen.