NTT DoCoMo Kyushu Inc. failed to declare 2.79 billion yen in taxable income to tax authorities between 1996 and 1998, industry sources said Wednesday.
As a result, the Fukuoka-based regional group firm of NTT DoCoMo Inc. has already paid the Fukuoka Regional Taxation Bureau approximately 1.08 billion yen in back-taxes and penalties, the sources said.
But the company disagrees with the bureau's assessment that it owes additional taxes and on Monday asked the Fukuoka National Tax Tribunal to examine the tax-payment order, they said.
In fiscal 1996 and 1997, NTT DoCoMo Kyushu deducted consultant and research expenses it had incurred during the purchase of a mobile phone station site, according to the sources.
Expenses declared as losses are nontaxable. However, during a tax audit of the company last summer, the bureau determined that the company's expenses should have been included in land-purchase costs, thus making the funds taxable, the sources said. As a result, the bureau said NTT DoCoMo Kyushu failed to declare 680 million yen in taxable income, they said.
The bureau said the company also failed to declare 2.11 billion yen in taxable income which the firm spent on rental fees to connect telephone cables to its personal handy-phone system stations, according to the sources.
NTT DoCoMo Kyushu listed the expenses under tax deductions after taking over the PHS business from another company in December 1998. The bureau said the funds spent on the fees are taxable, the sources said.
NTT DoCoMo Kyushu is contesting the decision, they said.
In March, NTT DoCoMo announced that tax authorities claim that it and its group firms failed to properly declare more than 26 billion yen in taxable income invested in equipment for its PHS network over the one-year period from April 1998.
The company said it was considering appealing the ruling.