Japan vs Cayman Islands Corp, 2008, Tokyo District Court 2011 ( Gyou ) nr 370

Posted on | By Courts of Japan
Category: General Anti-Avoidance Rules (GAAR) | Tag: ,
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In this case a tax assessment based on Japanese CFC rules (anti-tax haven rules) had been applied to a Japanese Group’s subsidiary on Cayman Islands.

According to Japanese CFC rules, income arising from a foreign subsidiary located in a state or territory with significantly lower tax rates is deemed to arise as the income of the parent company when the principal business of the subsidiary is holding shares or IP rights.

However, the CFC rules do not apply when the subsidiary has substance and it makes economic sense to conduct business in the subsidiary in the low tax jurisdiction.

The Court upheld the tax assessment.

 

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084760_hanrei Cayman

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