Mata - ToyotaMotors - Powerpoint Presentation

An analysis of the legal
& tax aspects of Toyota

Motors Corporation
Japan
Presenter: Hanna Mae M. Mata
Background on Japan’s Toyota Motors
Corporation
- Founded in 1933 by Toyoda Kiichiro
- Its first car was produced in 1936 (a sedan

called “Model AA”)
- One of the largest automobile brand &

manufacturer in the world
- Headquarters is in Toyota City, Japan

Source: Encyclopædia Britannica, inc. (2023, March 3). Toyota Motor
Corporation. Encyclopædia Britannica. Retrieved April 11, 2023,
from https://www.britannica.com/topic/Toyota-Motor-Corporation
Overview of the Corporate Structure of Toyota Motors Japan
Source: Corporation., T. M. (n.d.). Overview: Profile: Company. Toyota Motor Corporation Official Global Website. Retrieved April 11, 2023, from
https://global.toyota/en/company/profile/overview/
636 billion yen
or
4.7 billion US
dollars
CAPITAL
(as of March 31, 2022)
Number of Employees:
372, 817 employees
Corporate Stock Summary
- Has issued 16,314,987,460 shares *Pursuant to a resolution of the Board of Directors on

May 12, 2021.
- Has 813,254 shareholders
- At 100 shares per unit
- It has stock listings in Japan, New York, and London
Ownership Breakdown
Tax Rates, Set-ups, and
Reliefs available to Toyota
Motors in Japan
Corporate Taxation
in Japan
1. A domestic corporation in Japan is taxed on its
worldwide income.
2. The existing corporate tax varies from year to year.
3. Current tax rate is 30.62 %
source: Japan corporate tax Rate2022 Data - 2023 forecast - 1993-2021 Historical -
Chart. Japan Corporate Tax Rate - 2022 Data - 2023 Forecast - 1993-2021 Historical - Chart.
(n.d.). Retrieved April 15, 2023, from https://tradingeconomics.com/japan/corporate-tax-rate
Tax Incentives
1. To avoid double taxation of foreign-source income, Japanese corporations

are allowed to claim a tax credit against the corporation and inhabitant’s taxes for
foreign income taxes paid directly.
2. Further credits and incentives for research and development costs
3. Salary increase credits (for a corporation with increased domestic investments)
Source: Japan. Corporate - Tax credits and incentives.

(n.d.). Retrieved April 15, 2023, from
https://taxsummaries.pwc.com/japan/corporate/tax-credits-and-incentives
Covid-19 effects to
Toyota Motors Japan
At the start of the pandemic (2020)
1. A worse-than-expected slump of 42% in the first quarter of 2020

2. Operating profit:
First Quarter of 2019 First Quarter of 2020
997.4 billion yen 578.66 billion yen
Source: Person, & Sugiyama, S. (2022, August 4). Hit by rising costs and supply snarls,
Toyota Profit tumbles 42%. Reuters. Retrieved April 15, 2023, from
https://www.reuters.com/business/autos-transportation/toyota-q1-profit-slides-42-falls-short-
estimates-2022-08-04/
1. Higher Costs: Rising prices of materials cost Toyota 315 billion
yen.
2. Supplier problems: It had cut monthly output goals due to the

global chip shortage and COVID-19 curbs on plants in China.
3. Consumer demand went slow
4. Cut its monthly production targets three times during the April-June
2020 quarter, falling 10% behind its initial goals, due to shortages of
semiconductors and the impact of COVID-19 lockdowns in China
5. Toyota shares closed down 3% at 2,091 yen

Mid-pandemic (2021)
Vehicle sales dropped

even further by 15% as
compared to 2020
Source: Corporation., T. M. (2022, May 10). Feature Stories ｜

breaking: FY2022 Toyota financial results and its strengthened profit
structure ｜ Toyota Times. TOYOTA TIMES. Retrieved April 15, 2023,
from https://toyotatimes.jp/en/report/financial_results_2022/180.html
Toyota remained
profitable even with
the drop in the
operating income.
Source: Corporation., T. M. (2022, May 10). Feature Stories ｜
breaking: FY2022 Toyota financial results and its strengthened profit
structure ｜ Toyota Times. TOYOTA TIMES. Retrieved April 15,
2023, from
https://toyotatimes.jp/en/report/financial_results_2022/180.html
Tax Reliefs by the Japan
Government
to address the Covid-19
pandemic
Tax Payment Deferral
If a taxpayer's gross income for a given period (at least one month)
on or after 1 February 2020 decreases by 20% or more as
compared to the previous year's corresponding period and the
taxpayer is experiencing difficulty making payments in a timely
manner, tax payment deferrals are available for up to one year upon
application by the taxpayer.
This measure applies to taxes due between 1 February 2020 and 31
January 2021, including such taxes due before the Measures take
effect.
Net operating loss (NOL) carry-back
The carryback applies to NOLs incurred in

fiscal years ending between 1 February 2020
and 31 January 2022. This measure provides
distressed companies with an opportunity to
receive a cash tax refund (at a rate of c. 25%)
of taxes paid in the prior fiscal year if NOLs are
incurred in the current fiscal year.
In the PH: NOLCO from 2020 and 2021 can be carried over for the next 5
years (Revenue Regulations No. 25-2020 )
• Pursuant to Section 4 (bbbb) of Bayanihan II and as implemented

under RR No. 25-2020, the net operating loss of a business or
enterprise incurred for the taxable years 2020 and 2021 can be carried
over as a deduction from gross income for the next five (5)
consecutive taxable years following the year of such loss.
• Ordinarily, NOLCO can be carried over as a deduction from gross
income for the next three (3) consecutive years only.
Property tax and city planning tax
relief
Property tax and city planning
tax are payable at a rate of
1.4% and 0.3% respectively on
the appraised value of certain
tangible assets.
New Normal (2022)
1. Toyota continued to deal with challenges brought by the
Covid-19 pandemic (spread of the virus, soaring material
prices and logistics costs, and chip shortages)
2. However, by 2022, Toyota reported an increase in sales
and profits from the previous year
Profit structure change
•Toyota compared the Covid-19 crisis to the 2009

financial crisis which made it come up with a
profit structure change.
•This is something Toyota found useful during the
Covid-19 pandemic
•In both cases, sales volume decreased by 15
percent compared to the previous year. But at the
time of the global financial crisis, profits
decreased significantly, pushing Toyota into the
red, while in the fiscal year ended March 2021, we
were able to secure a profit.
In-house company system
1. Aims to restructure its functions-based organization

into a product-based one
2. Toyota introduced a structure for overseas business
led by regional CEOs with the aims of closely
connecting with local customers
Profit has increased despite major negative
factors such as foreign exchange rates,
2016- 2022 sales volume, and increases in materials
prices.
shared vehicle platform to improve the
basic performance and product appeal of
their vehicles and enhance the reflection
of regional characteristics with the aim of
not being the best in the world but the
best in town.
Toyota New Global
Architecture or
TNGA continuously evolving their long-time,
best-selling cars, such as the Yaris and
Corolla, to keep them current so that they
can go on being long-time, best sellers.
Toyota overcame the pandemic
because:
1. While it occurred loses during the pandemic,

it remained profitable.
Conclusion 2. Pre-pandemic measures which helped it
during and after the pandemic.
3. Its experiences in financial loses before the
pandemic, made it more prepared.
4. It has sustainable strategies which are
conducive to be carried out during crisis.
Which practices could be
beneficially applied here in the
Philippines?

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An analysis of the legal

& tax aspects of Toyota

- Its first car was produced in 1936 (a sedan

- One of the largest automobile brand &

- Headquarters is in Toyota City, Japan

- Has issued 16,314,987,460 shares *Pursuant to a resolution of the Board of Directors on

2. The existing corporate tax varies from year to year.

3. Current tax rate is 30.62 %

1. To avoid double taxation of foreign-source income, Japanese corporations

Source: Japan. Corporate - Tax credits and incentives.

1. A worse-than-expected slump of 42% in the first quarter of 2020

2. Supplier problems: It had cut monthly output goals due to the

3. Consumer demand went slow

5. Toyota shares closed down 3% at 2,091 yen

Vehicle sales dropped

Source: Corporation., T. M. (2022, May 10). Feature Stories ｜

The carryback applies to NOLs incurred in

• Pursuant to Section 4 (bbbb) of Bayanihan II and as implemented

•Toyota compared the Covid-19 crisis to the 2009

1. Aims to restructure its functions-based organization

1. While it occurred loses during the pandemic,

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