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Japan Tax Bulletin

Tax Treatment of Foreign Currency Transactions and Points to Consider

For the translation of foreign currency transactions and assets and liabilities held in a foreign currency at the end of the fiscal year, the rate used for conversion and the method of conversion for each asset and liability are defined in detail for Japanese tax purposes.
Although there have been no major revisions to the tax treatment of foreign currency transactions in recent years, it is necessary to consider the advantages and disadvantages for tax purposes, including the applicability of a special treatment (the so-called “15% rule”) in the event of large fluctuations in exchange rates due to the recent sharp depreciation of the Yen.

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