Matsushita Pays $4.8 Million to Settle Dispute With IRS
TOKYO — A giant Japanese electronics company Tuesday announced an agreement with the U.S. Internal Revenue Service to head off disputes over whether it is over-reporting costs to evade American taxes.
Other Japanese companies are expected to follow suit amid expectations in Japan that President-elect Bill Clinton will impose tougher tax requirements on U.S. units of Japanese companies.
Japanese press reports said Matsushita Electric Industrial Co. paid a $4.8-million tax supplement in response to IRS charges that the company had set prices of video recorders imported by its subsidiary too high to try to evade U.S. corporate taxes.
Under the Advance Pricing Agreement, which took effect in March, 1991, the IRS can analyze corporate data to decide appropriate prices for parts and products imported by U.S. subsidiaries. Once such prices are decided, it cannot raise any dispute over them to seek additional tax payments.
A Matsushita spokesman said the company believed avoiding future tax disputes was worth compromising some classified data on prices. The IRS and Japan’s National Tax Agency agreed to grant Matsushita the new taxation formula in August.
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