Denso sues over tax haven back taxes order related to Singapore unit

Automobile equipment maker Denso Corp. filed a suit Monday seeking nullification of tax authorities’ 2012 order for the payment of around 6.1 billion yen in back taxes on the income of its Singapore unit in a tax haven countermeasure.

Denso brought the case to the Nagoya District Court after paying the sum in June 2012 in connection with roughly 13.8 billion yen in income the subsidiary received as dividends from its subsidiaries in other parts of Asia over two years to March 2011.

The Nagoya Regional Taxation Bureau found at the time that the income should have been reported as the National Tax Agency had set up a system to counter tax evasion by companies with subsidiaries in tax havens.

The system does not apply if overseas subsidiaries run a real business or there is an economic reason, according to the agency.

Denso has said the operations of its Singapore subsidiary are substantial as it manages distribution and financial affairs in the Asian region.