Newsletter
TAX TREATMENT OF UNREAL-IZED GAINS OR LOSSES FROM VALUATION OF FINANCIAL PRODUCTS
In an interpretation issued on 10 January 2006, the Ministry of Finance stated that, any unreal-ized gains or losses arising from the fair valua-tion of financial products by a business enter-prise in accordance with No. 34 "Accounting of Financial Products" of the Financial Accounting Standards (SFAS) No. 34, will not be recognized for tax purposes, except that unrealized loss arising from securities held as short-term in-vestments, as referred to in Article 48 of the In-come Tax Act, may be declared as a tax de-ductible for the then current period.
"Securities held as short-term investments" refer to those invested by a business enterprise that are categorized as the "current assets" under the "financial assets － Changes in Fair Value are Recognized as Profit or Loss － Current" in ac-cordance with SFAS No. 34 and Article 7 of the Guidelines for the Preparation of Financial Re-ports by Securities Issuers.