A friend sent me this article from Nikkei Asia entitled “A Taxing Problem” written by Kawase, Miyakawa, and Suzuki recently.

Essentially the article is trying to address the question as to why SoftBank, being once Japan’s most profitable company, pays so little tax.

My understanding and conclusion after reading the article are as follows. Softbank, as a company in Japan, enjoys these two advantages.

(1) dividend income received is largely tax-free in Japan and;

(2) the capital losses from the share transfers can be carried forward and offset against future profits.

While SoftBank may not be paying much tax within the letters of the law, it does not mean it is a costless affair for Softbank. At the end of the day, it has actually suffered a paper loss in investment eg. the Arm Holdings’ shares, to create the loss to be carried forward.