Seven companies connected to the former president of a real estate firm in Kyoto were accused of concealing about 1.4 billion yen ($9 million) in combined income over more than six years through 2022, sources said.
The Osaka Regional Taxation Bureau is believed to have concluded that the former president of Asuton was effectively running all the companies when the land and other transactions involved were carried out in the ancient capital.
The additional taxes, including severe penalties and other surcharges, totaled about 680 million yen.
The seven companies filed amended tax returns and paid the amounts due, the sources said.
In recent years, Kyoto has seen soaring land prices driven by a strong demand for hotels and apartments.
According to sources, Asuton sold an approximately 2,440-square-meter plot of land near JR Kyoto Station to a major hotel group for about 8.5 billion yen in 2017.
The tax bureau is believed to have determined that the company concealed income by reporting a fictitious commission of about 130 million yen purportedly paid to a firm affiliated with the former president.
Tax authorities also focused on two transactions conducted in 2020.
Fuji Space, a parking lot operator headed by the former president, sold an approximately 890-square-meter plot of land in Kyoto’s Nakagyo Ward to another firm affiliated with the former president for about 500 million yen, the sources said.
Three months later, the land was flipped to a major condominium developer in Tokyo for about 1.1 billion yen.
In another case, a real estate leasing company called Kuraisu, which is affiliated with the former president, sold an approximately 630-square-meter plot and a two-story wooden building in Kyoto’s Higashiyama Ward to Asuton for about 420 million yen, the sources said.
Just 10 days later, the property was resold for about 910 million yen.
The two intermediary companies, which each made substantial profits from the transactions, declared no taxable income.
Both were loss-making corporations that were carrying forward deficits, which appear to have been used to offset the resale gains.
However, the tax bureau determined that the two transactions were designed to “exclude” the resale profits because the sale prices set by Fuji Space and Kuraisu were below market value and the properties were resold within short periods, the sources said.
The bureau is believed to have identified about 600 million yen and 490 million yen in concealed income for Fuji Space and Kuraisu, respectively, based on the differences between the original sale prices and the resale prices.
Including other transactions, the seven companies were found to have concealed a total of 1.4 billion yen in income.
The Asahi Shimbun sent a written inquiry to the former president through a lawyer seeking an explanation on the results of the tax investigation but received no response.
AloJapan.com