Toyota ordered to pay 300m yen in back taxes

Toyota Motor Corp was ordered to pay Japan’s tax agency 300 million yen ($2.7 million) in back taxes that the automaker had failed to withhold, mainly in relation to its motorsports operations, sources with knowledge of the matter said Friday.

The carmaker failed to retain tax on 3 billion yen in payments to overseas and local companies between 2015 and 2016, including royalties paid to a German subsidiary and a Finnish firm that operate factory Toyota motorsports teams, the sources said.

Based on Japan’s tax laws, a certain percentage of royalties paid to companies abroad must be withheld as tax to domestic authorities. In Toyota’s case, the German and Finnish firms paid taxes to local authorities.

The company also had not retained taxes on severance pay for Japan-based employees who retired while being seconded to overseas companies.

Toyota declined to comment on the matter.

In other Toyota news, the automaker under President Akio Toyoda returned to the World Rally Championship this year after a 17-year hiatus.

It left Formula One racing in 2009 to cut costs but maintains its participation in the World Endurance Championship, which is holding its annual Japanese race at the Fuji Speedway this Sunday.

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