Japanese company, IRS reach agreement Formula for calculating taxes owed

November 11, 1992|By New York Times News Service

TOKYO -- Japan's largest consumer electronics company has reached an agreement with the U.S. Internal Revenue Service on a formula for calculating its American taxes.

The accord uses a new method for reducing disputes over the taxation of multinational corporations, company officials and Japanese tax authorities said yesterday.

The agreement comes as President-elect Bill Clinton and members of Congress have been accusing foreign companies that operate in the United States of avoiding taxes by shifting their profits offshore.

The IRS contends that foreign companies owe $32 billion in such tax payments now.

The Japanese company that reached the agreement, Matsushita Electric Industrial Co., said its decision was unrelated to Mr. Clinton's campaign. The company, known for its Panasonic, Technics, Quasar and National brands, has been negotiating for two years with U.S. and Japanese tax agencies.

The charge against multinational companies is that they artificially inflate the price of goods sold to their American units by their overseas units. That deflates the profits of the American units that are subject to U.S. taxes.

Under the new accord, tax authorities in the United States and Japan will agree in advance on a range of prices that Matsushita's American marketing arm should pay for products it imports from factories in Japan to sell in the United States.

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