4 temp firms ‘in 300 mil. yen tax dodge’

Four temporary staffing agencies in three prefectures have been accused of evading more than 300 million yen in consumption tax by establishing dummy companies to which they pretended to outsource job placements, The Yomiuri Shimbun learned Thursday.

The revelation comes at a time when the national tax authorities have been stepping up investigations into evasion of consumption tax due to the public’s high interest in the tax, which accounts for about 20 percent of the total state tax revenue.

Three of the four job placement agencies are located in Hadano and Ebina, Kanagawa Prefecture, and in Numazu, Shizuoka Prefecture, and are operated under the same name, AA TOPIC. The other agency is located in Osaka Prefecture.

The Tokyo and Nagoya regional taxation bureaus have filed a tax evasion complaint with the Yokohama and Shizuoka district public prosecutors offices against the three firms and their former president, Tomoyuki Sato, 48.

The three companies allegedly made it appear that they had dispatched personnel to clients through dummy outsourcing firms though they actually sent their employees directly to the clients, thereby evading consumption tax totaling about 230 million yen over four years until the business term ended in March last year.

They allegedly repeated the practice of establishing and liquidating dummy outsourcing companies to conceal instances of tax evasion.

According to a private credit research company, the three companies sent about 1,000 temporary factory and clerical workers to major carmakers and precision machine makers in Kanagawa and Shizuoka prefectures.

An executive of the Numazu company, whose name has been changed to Area Staff, admitted that the company had been investigated for tax evasion, but would not elaborate, saying, “Only former President Sato knows the details.”

The special investigation squad of the Osaka District Public Prosecutors Office has arrested Seiji Fujiwara, 48, president of job placement company Interu in Tadaokacho, Osaka Prefecture, on suspicion that the company evaded a total of about 82 million yen in consumption tax.

The Osaka Regional Taxation Bureau has joined the prosecutors office to conduct a probe into the case.

According to the investigation, the company dispatched its employees to a pachinko parlor for three years until the business term that ended in June 2005, but it evaded payment of the due consumption tax by making it appear that it outsourced the dispatch of temporary staff to a dummy job placement firm.