A bill requiring financial institutions to submit records of incoming and outgoing overseas remittances of 1 million yen or more to taxation authorities is expected to be enacted during this fall's extraordinary Diet session, ruling Liberal Democratic Party lawmakers said June 26.

Such a law is needed to prevent possible tax evasion since recent revisions to the Foreign Exchange and Foreign Trade Control Law will enable individuals and firms to freely set up overseas deposit accounts starting from April, they said. A basic draft for the bill says that information such as the name and address of the sender or receiver, the name and location of the counterpart, and the amount, date and reasons for the remittance should be preserved by financial institutions and post offices. These records, with the exception of transactions such as those clearly related to regular import and export trade, should be submitted to tax authorities by no later than the end of the month after the remittance took place, the draft says.

Although the details have not been finalized, some skeptics fear that placing too many restrictions on these transactions could defeat the purpose of revisions to the foreign exchange law -- to liberalize transactions and reinvigorate Tokyo's financial markets. The LDP's Research Commission on the Tax System agreed that the details of the bill, which was drawn up by officials of the Finance Ministry, should be worked out in upcoming months for submission to the legislature when it convenes this fall, probably sometime in September.