Nissan Motor Co. failed to declare about 1 billion yen in income over five fiscal years through March 2019, in a case connected to former Chairman Carlos Ghosn, the Tokyo Regional Taxation Bureau pointed out, according to sources close to the matter.
The taxation bureau deemed that the expenses related to Ghosn's use of corporate jets and rent for his Tokyo and overseas residences during the period were for personal use, so Nissan is not allowed to use the amount as a deduction from its corporate income.
The automaker incurred about 250 million yen in back taxes, including an additional tax penalty for underpayment, according to the authority's reassessment.
Ghosn, indicted on charges including misappropriation of funds, has denied all allegations and fled to Lebanon while out on bail.
The bureau had already pointed out that Nissan had failed to declare about 150 million yen in taxable income in the three years up to the fiscal year ended March 2014. Combined with the latest figure, the bureau has deemed the amount personally used by Ghosn to be about 1.15 billion yen over eight years.
Asked to comment on the matter, Nissan said: "The tax investigation up to the year ended March 2019 was completed and we received the reassessment from the tax authority. We'll cope with the matter in accordance with the reassessment."
In February this year, Nissan filed a lawsuit with the Yokohama District Court demanding Ghosn pay about 10 billion yen in damages for an alleged series of misappropriation and misuse of company funds at Ghosn's instruction.
According to sources and Nissan's complaint, Ghosn had allegedly flown the corporate jet -- used by Nissan executives for overseas business trips -- for his or his family's private overseas trips on 93 occasions from April 2014, traveling between Paris and Beirut, among other routes. During the five years up to the fiscal year ended March 2019, Nissan spent more than 200 million yen for this alleged private use.
On top of this, after 2015 Nissan paid 100 million yen as rent for Ghosn's residences in Tokyo, Paris and Amsterdam in addition to the yearly housing allowance between about 30 million yen and 68 million yen given to Ghosn. Between 2003 and 2016, the company paid Ghosn's sister a total of about 80 million yen as compensation for consulting work, which allegedly was not actually performed.
The bureau pointed out that about 1 billion yen was used by Ghosn during the five years up to March 2019 for purposes including donations to a university in Lebanon. As for compensation paid to Ghosn's sister, the bureau imposed an additional tax penalty on the amount, as it was deemed to be a fictitious commission to cover up income.
Ghosn was arrested in November 2018 by the special investigation squad of the Tokyo District Public Prosecutors Office on suspicion of violating the Financial Instruments and Exchange Law by understating his executive remuneration in Nissan's securities reports. He was then indicted on charges of violating that law and the Companies Law. In December 2019, however, he fled to Lebanon while out on bail.
Tax authorities had previously pointed out that Nissan failed to report income of about 1.5 billion yen related to its tax haven-based subsidiary for the five years up to the fiscal year ended March 2019. The company is expected to be levied about 400 million yen in back taxes that includes an additional tax penalty for underpayment.
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