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Sony sore over huge bill for additional taxes

  • By Walt Wyman, GameSpot
  • Posted Jun 30, 2006 10:29 am PT

Tokyo tax authority says electronics giant owes an extra $244 million due to underreporting in its games business.

The Tokyo Regional Tax Bureau served Sony and Sony Computer Entertainment with a notice for 74.4 billion yen (about $650 million) in unreported income, ITmedia reported today. As a result, the tax authority claims that Sony owes about 27.9 billion (over $244 million) in additional taxes. Both Sony and SCE plan to protest the taxes, as is evident from the statement they released today condemning the tax bureau's behavior: "We have always made appropriate tax payments in compliance with the tax codes of [the relevant] countries; this notice [from the tax bureau] is unsatisfactory."

The penalty stems from the "transfer price tax system," which is designed to prevent companies from performing transactions between their domestic and overseas affiliates at lower than usual prices. The allegedly unreported revenues are related to transactions between SCE and its US subsidiaries in connection with its game business between FY 1999 and 2004, and CD and DVD disc transactions between Sony and multiple overseas subsidiaries from FY 2003 to 2004. The tax authorities hold that Sony was under obligation to report these transactions as they occurred at lower than normal prices.

For its part, Sony and SCE have stated "we are confident we can avoid this double taxation" by invoking [international] tax treaties to open bilateral talks.

321 Comments

  • Cypher_VR

    Posted Jul 5, 2006 7:55 pm GMT

    sony better not pass the buck to us in terms of higher price products,
    that would alienate sony fans

  • supine

    Posted Jul 5, 2006 2:03 pm GMT

    Sony, you need to slap an Apple sticker on the PS3 and sell it for 2000$!! You said yourself that this was possible, right?

    Also, since it can run ANY OS "Just like any other application". It includes the BD-ROM - the guaranteed next format standard. Can prosess a wooping 2 TFLOPS..... and it has that game with giant crabs!! It's a must buy.... isn't it?

    good luck

  • 0li

    Posted Jul 5, 2006 12:12 pm GMT

    I for one want sony to keep going so they can give us more gold next E3.

    Riiiiiiiiiige Racceeerrrr!

  • SoralinkGS

    Posted Jul 5, 2006 11:40 am GMT

    This isn't good.

  • RanXer0x

    Posted Jul 5, 2006 11:23 am GMT

    There is nothing about this news that is good. I'm not saying that Sony deserves or doesn't deserve the hit. But all the bad news is pointing to Sony doing something wrong down the line.

    If this doesn't tank Sony, I would be surprised. What, with the cuts/downsizing they have had to do recently.

    This is just bad for everyone, if M$ has no competition. There would be no reason for discounted prices, as the demand would be retardedly high. eh.

  • Deimos27

    Posted Jul 5, 2006 10:59 am GMT

    Hehe... Wif de $600 +++ pricetag on their 'next-gen' console, im sure they will be able to pay off that tax. Er, wait a minute, or is bcos of de tax they are making it $600+++???

  • richmini9_basic

    Posted Jul 5, 2006 10:02 am GMT

    I don't think Gamespot is doing anything that the other game sites aren't. I've always thought that 1up had a Sony bias, but they have been posting just as many less than flatering articles about Sony as any other site. Between the $600 price point, and all of the bad PR moves, it's no wonder their is so much negitive press out there. It's not like these story are being made up.

  • thatguytony

    Posted Jul 5, 2006 9:53 am GMT

    claymeow said it so well, all these articles do is bring out all the moronic fanboys. I'm so tired of all the trash talk on this site. If people aren't trash talking other peoples country of birth or nationality, they are bickering over which game company is better. Sure I have become frustrated with Sony's apparent arrogance ( look what happened to Nintendo when they thought they were unbeatable ), but the PS3 isn't even out yet, so lets not write them off yet. I guess its to much to ask that people stop being biased jerks who seem more concerened with starting flamewars then actually posting intelligent comments and being respectful of other peoples opinions.

  • drummerboykhari

    Posted Jul 5, 2006 9:51 am GMT

    too bad for sony.microsoft is better.and always was better

  • ClayMeow

    Posted Jul 5, 2006 9:34 am GMT

    All these articles ever do is bring out the dumbass fanboys making ridiculous dumbfounded comments. Just look at some of the idiotic posts prior to mine. And this goes for MS and Sony fanboys. You're both as bad as the other.

  • chrisdojo

    Posted Jul 5, 2006 7:47 am GMT

    LOL...... how many ways can sony own themselves?

  • Hobosean88

    Posted Jul 5, 2006 7:10 am GMT

    LOL sony is dying a slow death and the PS3 isnt even out.
    Go Microsoft!

  • Autolycus

    Posted Jul 5, 2006 5:43 am GMT

    MS haters are just jealous. Plain and simple. Bill Gates knows how to run a business. Thats why its succesfull. And for all you retards that are in control of other employees, Micrsoft did well because they paid there employees well and understand how important they are. ITS TRUE, DEAL WITH IT.

  • dlp22476

    Posted Jul 5, 2006 1:07 am GMT

    Stop hating on MS like its the evil empire or something. The presence of MS helps our economy in this country greatly. Also MS already went thru this just in a worse form with all the anti-trust lawsuits. MS and sony make good games for the consumer. Like it was said earlier competition only helps the consumer.

  • Fiku42

    Posted Jul 4, 2006 10:15 pm GMT

    now if only if this was M$ instead....o well things happen its not the end of the world anyway

  • Fiku42

    Posted Jul 4, 2006 10:13 pm GMT

    meh....why cant something like this happen to microsoft...there like a big rich evil company to me...

  • greatmagnus

    Posted Jul 4, 2006 9:43 pm GMT

    Sony is going downt he drain by the looks of it. Unless they do something major with the PS3 their game division is going down the drain.

  • maaly81

    Posted Jul 4, 2006 9:37 pm GMT

    Sony might be headed toward a crash in there business--hope they are just getting haggled and its not true--but if it is, then they will have to pay something

  • Omali

    Posted Jul 4, 2006 7:04 pm GMT

    "As for Sony being evil - while I think they're small fries compared to MS (or even the "velvet glove, iron fist" of Apple)"

    I'm pretty sure that would be the velvet glove, chinese-sweatshop-ipod making fist of apple.

  • samuraibambi

    Posted Jul 4, 2006 5:21 pm GMT

    iso läjä kahisevaa tossa kyllä

  • hemakm3

    Posted Jul 4, 2006 4:53 pm GMT

    Sorry Sony

  • calducciano

    Posted Jul 4, 2006 4:15 pm GMT

    While heartbreaking, it's refreshing to know that the U.S. government isn't the only one that steals money that they didn't earn. Taxation without representation anyone? I'm rooting for Sony but whatcha gonna do...

  • Conanfan1

    Posted Jul 4, 2006 1:45 pm GMT

    That really sucks for Sony. I hope this doesn't end up affecting the consumer.

  • evilmonkey998

    Posted Jul 4, 2006 1:39 pm GMT

    happy 4th of July

  • remmbermytitans

    Posted Jul 4, 2006 1:06 pm GMT

    rofl

  • UltimaCloudX

    Posted Jul 4, 2006 12:51 pm GMT

    Ah Sony, how you keep our daily lives entertained with drama. I'm sure PS3 will sellout on the first wave or so, even with the high pricetag... but if the games end up being more than $59.99USD, It's over for them. Some hardcore gamers would pay it, but the average consumer generally has more important things to pay for than high prices for videogames/systems.

    Gamefly ftw.

  • basketcasetct

    Posted Jul 4, 2006 10:41 am GMT

    sony is not doing so well

  • pohlkat

    Posted Jul 4, 2006 9:48 am GMT

    Yep, sony in the bucket
    Go wii

  • AcolyteV1

    Posted Jul 4, 2006 7:39 am GMT

    Given Sony's recent attempts to dodge UK taxes by claiming the PS2 is a PC, somehow, this news does not surprise me in the least.

  • killer_shadow1

    Posted Jul 4, 2006 3:55 am GMT

    sony wont die

  • Ponsardin

    Posted Jul 4, 2006 2:28 am GMT

    Sounds like Sony has problems with the Tokyo tax authority...

  • GeneralFighter

    Posted Jul 3, 2006 11:11 pm GMT

    I don't think SONY will fall~ cause Its got sharers in almost every category!

  • metdevthegamer

    Posted Jul 3, 2006 10:56 pm GMT

    [This message was deleted at the request of the original poster]

  • I_AM_SOLIDSTATE

    Posted Jul 3, 2006 10:27 pm GMT

    [This message was deleted at the request of a moderator or administrator]

  • PSDUDE

    Posted Jul 3, 2006 10:24 pm GMT

    I never knew what a fanboy was until I got to Gamespot. Lots of b*tching and complaining about random, stupid stuff. It's one thing to insult a company you don't support, but throwing insults towards people that buy products from a certain company really shows who the real DUMMIES are. For those that didn't realize, more competition means better products for your buck. *sighs*

    GO ALL SYSTEMS!

  • rynmls

    Posted Jul 3, 2006 10:17 pm GMT

    everything is againsts sony right now...

  • Optimusv2

    Posted Jul 3, 2006 9:30 pm GMT

    Blu ray most important thing?? HAHHAHAHAHHA Its THE most useless thing on the damn console. Stop falling for Sony's marketing bs please...

  • koolgg

    Posted Jul 3, 2006 8:31 pm GMT

    here comes the Wii in the number 1 spot

  • Toomai

    Posted Jul 3, 2006 7:10 pm GMT

    There's pretty much 0 gaming news this time of year, so they need something to report.

  • kaito2

    Posted Jul 3, 2006 6:52 pm GMT

    I'm not a Sony fan, but this is absurd. This seems quite common in Japan, and other countries--the government "discovers" some clause in a subjective law and. . .cha-ching, free money. It's like some sick contest, where the government tries to see how many companies it can tax into bankruptcy.

  • CommonerChaos

    Posted Jul 3, 2006 5:03 pm GMT

    cardiac, get off of sony nuts you fan boy. All 3 companys are great....

  • nev70

    Posted Jul 3, 2006 4:33 pm GMT

    jared81799
    undoubtly sony is getting sum bad press lately. this is just nutz. wonder how many masterchief nipple suckers are going to jump on this. Alright then that is going to to hurt big time if they lose this it may well help to depress their share price further ...ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ...........................

  • SocaWarrior

    Posted Jul 3, 2006 4:22 pm GMT

    dis crap is crazy. I kno they got mad ppl on here makin fun of dem.. TOo bad

  • princeofgames90

    Posted Jul 3, 2006 3:15 pm GMT

    well its a bad thing to sony but for the post that said remove the blu ray Wtf are you saying the blu ray is the most important thing

  • Gunslingers

    Posted Jul 3, 2006 2:18 pm GMT

    ooooooooooooooooo oooooccchhhhhhhhhhhhhhhhhhh ooooooooo that hurts mannnnnn

  • zyxe

    Posted Jul 3, 2006 2:18 pm GMT

    sony must have smited the gods! what a string of badness...

  • Quintox

    Posted Jul 3, 2006 2:02 pm GMT

    PS2 FTW, now I'm getting a 360

  • MrPoKeMoN_2005

    Posted Jul 3, 2006 1:38 pm GMT

    I think the only thing that can save the PS3 if they took out the BLUERAY.

  • Digital-Devil

    Posted Jul 3, 2006 12:18 pm GMT

    I have never seen so many idiots post in one topic

  • mafaka2

    Posted Jul 3, 2006 12:11 pm GMT

    While reading all the comments I made a conclusion: You people just don't know wat you're talking about... . Sincerely it hurts just to know about this punch in sony's stomach, but you people (especialy for the frustated haters) just don't when to give up on saying plain stupid comments: " Ohh sony sucks!, mheee sony is near the end...!!!!."

    Come on!!! Do you realy meant wat you're sayin? Strange is the fact that you guys hate so much a console/trademark for its success!!!!! I don't believe that Sony is going bankrupt just because of this problem, plus, to me PS3 is going to win alot of new followers and I believe that even with such a high price( for the top choice that includes more accessories) isn't going to make the sales down.

    Saying that I only ask for those who hate so much this trademark to shut the hell up and work to buy things which you say that are expensive.

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