Tokyo tax authorities penalized the Japan unit of U.S. computer maker Compaq Computer Corp. for failing to report 3.6 billion yen in taxable income, industry sources said Tuesday.
Of the 3.6 billion yen, the Tokyo Regional Taxation Bureau has determined that the firm intentionally concealed 1.7 billion yen, the sources said.
The tax bureau is believed to have levied some 1.4 billion yen in back taxes, including surcharges, on Compaq Computer for allegedly hiding the income over a two-year period to December 2000, the sources said.
Tax authorities accuse Compaq Computer, now reorganized into Hewlett-Packard Japan Ltd., of hiding the 1.7 billion yen by claiming it as expenses for fictitious outsourcing of computer system development and by padding raw material costs, the sources said.
A Hewlett-Packard Japan spokesman admitted that the authorities told the company that it has failed to report 3.6 billion yen in undeclared income. He said the firm complied with the order to pay back taxes, although it disagreed with the charge.
The authorities also pointed out other faults in the firm's accounting methods, the sources said.
Hewlett-Packard Japan, reborn following the 2002 merger with Compaq Computer, chalked up 217.4 billion yen in post-merger sales in the year to October 2002.