Abstract

Whether the evaluation gain and loss of currency derivatives of financial institutions are included in the tax base of education tax had been not clear since relevant regulations were revised in 2015. However, when it comes to the “before－revision” period, conflicts of interpretation of the then current reguations between the tax authority and financial institutions have made several lawsuits filed. Regarding the validity of tax cases based on the judgement that the evaluation gain and loss of currency derivatives be allowed in grouping with the transaction gain and loss of foreign exchanges and derivatives, a recent court case decided that the grouping should not be allowed to make the evaluation gain and loss included in the tax base solely, not combinedly. However, based on a thorough analysis of the court case, it is thought of as problematic in that it lacks in rational legal interpretation, and ignores purposes of previous regulation revisions, and removes the computability of expected tax base, and leads to illogical construction of the unrealized gain. Therefore, tax laws which have been enforced since 2015 allowing general grouping among several gains and losses should be identically reflected in the interpretation of relevant regualtions of the “before－revision” period.

Keywords

• Financial institutions
• Education tax
• Evaluation gain and loss of currency derivatives
• Unrealized gain

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