Overview
In response to a series of Cabinet decisions, legal amendments, and other measures introduced since 2001 to accelerate the resolution of the non-performing loan problems facing the Japanese economy, our company has been required to expand its functions and has consequently focused on business reitalization support operations.
In addition, as part of our loan collection operations, we have been engaged in supporting the rehabilitation and continuation of businesses through measures such as changes to lending terms and conditions.
In undertaking business revitalization support operations, we have established the "RCC Corporate Rehabilitation Scheme", as a set of rules governing rehabilitation procedures and the standards on which they should be based, in order to ensure fairness, objectivity, and transparency in the process of private restructuring.
Where debt forgiveness or other measures are implemented under a rehabilitation plan formulated in accordance with the RCC Corporate Rehabilitation Scheme, the National Tax Agency has recognized the relevant tax treatment, including the application of the corporate rehabilitation tax system to the debtor (such as the recognition of gains or losses from asset revaluation and the preferential deduction of expired tax loss carryforwards) and the treatment of debt forgiveness and related measures as deductible losses for creditors.(*1)
As well as providing business revitalization support in relation to claims held by our company, our Business Revitalization Division also provides services in which, upon request from a main financial institution, we support the rehabilitation of the institution's client businesses by making use of our fair and neutral position. These services are referred to as "coordination-type business revitalization support operations."
We have established the "RCC Corporate Rehabilitation Scheme II" as the set of rules governing the rehabilitation procedures and the standards on which they should be based in coordination-type business turnaround support operations, and, as with the RCC Corporate Rehabilitation Scheme, the relevant tax treatment has been recognized by the National Tax Agency.(*2)
Our coordination-type business revitalization support operations play a supplementary role to public business revitalization support institutions, namely the SME Revitalization Councils throughout Japan and the Regional Economy Vitalization Corporation of Japan. Even in cases which these institutions have assessed to be "difficult to handle," we proceed with the rehabilitation procedures after confirming that the eligibility requirements for rehabilitation are satisfied, including the integrity and commitment of the business operator, the feasibility of rebuilding the business, and economic rationality (i.e., that a greater recovery can be expected than in the event of legal bankruptcy).
For the tax treatment referred to in (＊1) and (＊2) above, please refer to the following written response precedents issued by the National Tax Agency.
| Date of Response | Inquiry Item |
|---|---|
| 2004/3/24 | Tax treatment where debt forgiveness or other measures are implemented pursuant to a rehabilitation plan formulated in accordance with the RCC Corporate Rehabilitation Scheme |
| 2005/8/26 | Tax treatment on the debtor side where debt forgiveness or other measures are implemented pursuant to a rehabilitation plan formulated in accordance with the RCC Corporate Rehabilitation Scheme |
| 2011/9/29 | Tax treatment where debt forgiveness or other measures are implemented pursuant to a rehabilitation plan formulated in accordance with the RCC Corporate Rehabilitation Scheme |
| 2017/6/28 | Tax treatment where financial institutions and other creditors grant debt forgiveness or take similar measures under a rehabilitation plan formulated in accordance with the RCC Corporate Rehabilitation Scheme II in a corporate rehabilitation case in which RCC coordinates among financial creditors and others through the use of a loan claim trust |
- How to locate these materials: National Tax Agency website → Laws and Regulations, etc. → Written Response Precedents → Corporate Tax (in order of response date)