Court orders retraction of back taxes on IBM Japan

A Tokyo court ordered authorities Friday to retract back taxes they had imposed on IBM's Japan unit for its alleged failure to declare some $4 billion in income.

In 2010, the Tokyo regional tax bureau slapped the back taxes, worth some 120 billion yen ($1.18 billion), on IBM Japan's holding company, IBM AP Holdings.

The bureau had insisted that the group generated losses by manipulating intra-group trade of IBM Japan shares so as to evade taxation.

But the holding company, denying the allegation that it failed to declare 400 billion yen ($3.9 billion) in income, filed a suit with the Tokyo District Court to seek the retraction of the taxes.

Presiding judge Kazuhiro Yagi said there was no ground to determine that the IBM group had attempted tax evasion.

"We deem that the ruling has accepted our company's position," IBM Japan's public relations office said in a statement.

"IBM takes the taxpayers' responsibility very seriously and will continue fulfilling its tax obligations not only in Japan but also in every country it does business."