Sony to contest order to pay additional taxes

Sony Corp. is contesting an order from the Japanese tax office to pay additional taxes related to sales between its Japan and U.S. PlayStation divisions.

Sony is contesting an order from the Tokyo Regional Taxation Bureau to pay additional taxes on profits made from sales of products between its Japanese and overseas units, the company said Friday.

Sony has been asked to pay a total of YEN 27.9 billion (US$239.9 million) in additional taxes related to profits recorded in two areas.

The first relates to sales between Sony Computer Entertainment (SCEI) and Sony Computer Entertainment America (SCEA) between April 1999 and March 2005. And the second is on transactions related to CD and DVD disc manufacturing operations with several overseas subsidiaries from April 2003 to March 2005.

"Sony and SCEI believe that their allocation of income for the periods in question was appropriate and that they have paid the proper amount of taxes in each of the jurisdictions," the companies said in a statement. "Therefore Sony and SCEI disagree with the position of the Tokyo Regional Taxation Bureau and will promptly lodge an objection."

Sony and SCEI said they believe the issue will ultimately be resolved to their satisfaction and as such Sony said it does not expect any material impact on its consolidated profit and loss.

News of the order comes a day after Sharp said tax officials had asked the company to pay an additional YEN 300 million in back taxes related to purchases of electronics components.

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