business

Travel agency JTB to cut capital to become eligible for tax advantage

8 Comments

Major Japanese travel agency JTB Corp will reduce its capital to 100 million yen, making it eligible to gain a tax advantage accorded to small and medium-sized companies amid the coronavirus pandemic, sources close to the matter said Tuesday.

The planned capital cut from over 2.3 billion yen would mean JTB can receive preferential tax treatment for smaller companies with 100 million yen as the upper limit for capital. A capital of 100 million or less is the corporate threshold for small and medium-sized companies.

The reduction was approved on Feb 12 at an extraordinary general meeting of JTB's shareholders and will be effective on March 31.

According to the sources, JTB sees the move as restoring its financial soundness at a time when it is facing a severe business environment due to the sharp pandemic-induced decline in travel demand.

JTB posted a record net loss of 78.17 billion yen for the April-September period and will reduce its global workforce by 6,500 under broad restructuring.

Although JTB is unlisted, it is a large corporation with sales of 1 trillion yen and more than 20,000 group employees.

In 2015, electronics maker Sharp Corp was considering cutting its capital to 100 million yen, but eventually gave up the plan following government criticism that it was attempting to ease its tax burden.

© KYODO

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8 Comments
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JTB posted a record net loss of 78.17 billion yen for the April-September period and will reduce its global workforce by 6,500 under broad restructuring.

Although JTB is unlisted, it is a large corporation with sales of 1 trillion yen and more than 20,000 group employees.

After being the recipient of generous GoTo subsidies from the struggling Japanese taxpayer that were supposed to be so people could retain jobs in the sector; we are going to squirrel away that capital in a tax evasion scheme, downsize, and set ourselves up for even more largesse downloaded into the executive and shareholder trough.

10 ( +12 / -2 )

So Sharp,s plan to do the same got criticized and withdrawn but JTB with it's amakudari govt links is fine. Nothing to do with Sharp being foreign owned, surely.

11 ( +13 / -2 )

Can companies really just declare how much their capital is? A company like JTB with a trillion in sales can just say they're a small company? And the government doesn't care? Will Toyota be small soon, too?

4 ( +5 / -1 )

It seems completely wrong that a company of this size can be allowed to reduce its capital base (money on the line) from around $23 million to a paltry $1 million. Perhaps they’re setting themselves up for bankruptcy, in which case you would expect to see its share price going through the floor.

2 ( +3 / -1 )

What's going to happen when their capital goes back up to over 20 million dollars after the epidemic, which it inevitably will? Do they get to still be considered a medium/small sized company?

-3 ( +0 / -3 )

Yet another example of government policy having knock-on unintended consequences to economic behavior.

Week after week there are such stories, pretty much any news story you read on JT that mentions government, is a story of government being the origin of the problem.

We’d be better off if we kept government out of our lives and have it quit its attempts to micro manage economic activity.

2 ( +4 / -2 )

This is pure tax evasion and that is a criminal offence.

with all the money received from government, other money funnelled through support campaigns to them, with their near monopoly on government travel, including local governments , they still can not make money. Also they had near exclusivity on the rugby worldcup through a JV with Dentsu and with STH.

this has been one of the last surviving dinosaurs and time to euthanise it.

3 ( +3 / -0 )

Governments really do have a special knack for making things worse.

1 ( +1 / -0 )

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