Taxman Nabs Leading Japanese Execs Of Foreign IT Cos

[Mulboyne]

Yomiuri: Ex-computer execs 'evaded tax' on stock option gains
A former president and a vice president of the Japan units of major U.S. computer-related firms were found to have evaded 80 million yen and 60 million yen in income tax, respectively, by hiding gains from exercising stock options awarded from their parent firms, sources said Saturday. The Tokyo Regional Taxation Bureau has filed criminal accusations against the two on suspicion of violating the Income Tax Law at the Tokyo District Public Prosecutors Office and the Yokohama District Public Prosecutors Office...One of the accused is Miki Ishii, 46, of Mitaka, Tokyo, who was president of software development firm Adobe Systems Inc. Japan, the Japan unit of Adobe Systems Inc. of the United States, from 2002 to 2005. The other is Makoto Baba, 63, of Kamakura, Kanagawa Prefecture, who was former vice president of personal computer manufacturer Hewlett-Packard Japan, Ltd., the Japan unit of information technology giant Hewlett-Packard Co., from 2005 to 2006...more...

Yomiuri: Tax authorities probe hiding of income in foreign bank accounts
"But how did they know?" Makoto Baba's words of surprise were said to have been uttered when he learned that the Tokyo Regional Taxation Bureau had launched an investigation over his alleged tax evasion, according to sources close to him...The two invested gains made from their stock options in the United States and used overseas credit cards and ATM withdrawals from foreign bank accounts to pay when shopping in Japan to limit their cash flow inside the country and conceal from the tax authorities the fact that they had accumulated a large amount of money overseas, the sources said...The taxation of gains from stock options has been a contentious issue, with taxation authorities and taxpayers going to court over whether the gains are considered salaried income or occasional income, which carries lower tax rates...The battle eventually reached the Supreme Court, which ruled that stock option gains should be regarded as salaried income. But the tax authorities revised its guideline in June 2002 and nullified only penalty taxes imposed before the revision. The case against Baba is the first related to tax evasion on stock options since a case in 2002 in which a former managing director of Microsoft's Japanese unit was investigated...more...