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— Revisions Related to Corporate Taxation — On December 26, 2025, the Japanese government approved the FY2026 Tax Reform Outline. In this article, we will explain the revised provisions related to Corporate Taxation that are relevant to many multinational companies in Japan. (1) Special Provisions for Document Retention in Intercompany Transactions (i) Overview In cases where transactions are conducted between related parties (such as parent companies, subsidiaries, and affiliated companies), transaction-related documents that state the consideration amount and the basis for its calculation must be obtained and properly retained. (ii) Covered Transactions (iii) Parties Subject to the Rule Domestic corporations that receive claims from related parties for covered transactions and make payments. (iv) Definition of Transaction-Related Documents Documents received or issued in relation to transactions, such as purchase orders, contracts, delivery notes, receipts, quotations, and other equivalent documents, which are required to be retained under the Corporation Tax Act. (v) Penalty If the retention of documents is not recognized as compliant with legal requirements, it may constitute grounds for revocation of blue form tax return approval. (vi) Effective Date Applies to transactions conducted on or after April 1, 2026. (2) Revision of the Wage Increase Tax Incentive Large enterprises and

1.Tax-Exempt Benefits That Can Help Attract and Retain Talent In Germany, from the perspective of attracting and retaining employees, it is becoming increasingly important not only to review salary levels but also to make use of fringe benefits that receive preferential tax treatment. In particular, amid continuing inflation and rising personnel costs, a simple salary increase can easily lead to higher social security contributions and overall personnel costs for the company, while the increase in the employees’ net take-home pay may be limited. In this respect, by making use of benefits in kind and allowances that meet certain requirements, it is possible to increase employees’ effective disposable income while keeping company costs under control. For Japanese companies with German subsidiaries as well, these systems are worth considering when recruiting and retaining local talent, designing compensation packages for expatriates and local management, and reviewing employee benefit programs. Benefits in Kind of up to EUR 50 per Month Employers may provide employees with benefits in kind of up to EUR 50 per month, generally free from wage tax and social security contributions. On an annual basis, this amounts to a benefit of EUR 600, which can effectively increase the employees’ net income.

— Key Points for Multinational Companies and International Taxation — On December 26, 2025, the Japanese government approved the FY2026 Tax Reform Outline. This reform advances measures to respond to rising prices and wage increases, while at the same time promoting capital investment and research & development, and strengthening fairness and transparency in tax administration, all with the objective of realizing a “strong Japanese economy” For multinational companies in particular, a key feature of this reform is that while available tax incentives are being expanded, enhanced controls are also being introduced with respect to international taxation and related-party transactions. It should be noted that the reform emphasizes accountability for intragroup transactions more strongly than mere increases or decreases in tax burdens. We have set out the key points considered particularly important from the perspective of foreign-invested companies and international taxation below. 1. Direction of Reforms Relating to International Tax and Intragroup Transactions Introduction of Documentation Requirements for Related-Party Transactions Under the FY2026 tax reform, as part of efforts to establish an environment for fair and smooth tax compliance, new documentation and record-keeping obligations will be introduced for transactions conducted between companies within the same corporate group. Although this reform does

1. Retention Periods of Commercial and Accounting Documents 2. GmbH Financing: Should Shareholder Loans Bear Interest or Not? 3. Wage Tax Withholding: New Regulations for the Allowance for Social Security Contributions Since January 1, 2026 4. Flat-Rate Wage Taxation for Company Events: Everything New from 2026? . 1. Retention Periods of Commercial and Accounting Documents At the turn of the year, the question often arises as to which documents and data can be disposed of or deleted. There are several aspects to consider here. Background Both commercial and tax law stipulate that business people must retain business and accounting documents — whether in paper form or as electronic data — for a certain period of time (Section 257 of the German Commercial Code, Section 147 of the German Fiscal Code (AO), Principles for the proper management and storage of books, records, and documents in electronic form and for data access (GoBD)). The length of the retention period depends on the type of documents or data: Different Periods for Different Types of Data The longest retention period of ten years applies, in particular, to trading books, inventories, opening balance sheets, and annual financial statements, as well as the work instructions and

1. Tax Return: 2026 Is Just Around the Corner – File Your Voluntary 2021 Tax Return Now and Benefit It feels like 2025 has only just begun, yet the end of the year is already fast approaching.Anyone who was not required to file a tax return for 2021 and has also not submitted a voluntary return should act quickly. The reason is simple: any tax refund for 2021 will be forfeited if the return has not been submitted to the tax office by 31 December, 2025. Applying for a favourable tax assessment under Section 32d (6) of the German Income Tax Act (EStG) after that date will not help. A taxpayer recently learned this the hard way before the German Federal Fiscal Court (BFH). The Assessment Period for Voluntary Tax Returns The tax office may only issue a tax assessment if the relevant assessment period (Festsetzungsfrist) has not yet expired. Once this period ends, the tax claim itself lapses (§ 47 German Fiscal Code – AO). As a result, any tax assessments issued after the expiration of the assessment period are unlawful (though not void) and may be challenged by filing a timely objection. Under § 169(2) no. 2 AO,

The Committee for the Preparation and Review of Accounting Guidelines for Small and Medium-sized Enterprises (hereinafter referred to as the “Committee”), which was established primarily by the Japanese Institute of Certified Public Accountants (JICPA), the Japan Federation of Certified Public Tax Accountants’ Associations, the Japan Chamber of Commerce and Industry, and the Accounting Standards Board of Japan, reviewed the Accounting Guidelines for Small and Medium-sized Enterprises (hereinafter referred to as the “SME Accounting Guidelines”) and, at its meeting on September 19, 2025 and approved the publication of the revised Accounting Guidelines for Small and Medium-sized Enterprises (hereinafter referred to as the “Revised SME Accounting Guidelines”).

Existing or Proposed subsidiaries of Japanese Companies need to meet “Economic Substance Requirements” so that the Japanese Parent Company can demonstrate that it qualifies for an exemption from Japan’s Tax-Haven Rules. Why it Matters To avoid having any income earned via the UAE subsidiary included in its Japanese parent company, and taxed under Japan’s tax rate, the UAE entity must demonstrate real economic presence in the UAE — by merely stating that it is not a shell company or that it does not generate a passive income is not sufficient. Having real economic presence in the UAE strengthens your exemption position under Japan’s Tax Haven Rules – Controlled Foreign Corporation (CFC) Rules.

October 1, 2025 HLS Global Expands to Singapore  Tokyo, Japan / Singapore – HLS Global Co., Ltd. (“HLS Global”), a leading international accounting, taxation and business advisory firm, today announced the expansion of its global presence to Singapore by establishing its new subsidiary, HLS GLOBAL SEA PTE. LTD. (“HLS SG”), in Singapore. This expansion underscores HLS Global’s commitment to serving multinational companies across Southeast Asia. HLS SG will focus on providing a comprehensive range of services, including accounting, audit, tax, due diligence, post-merger support, ESG advisory, CFO services, and financial digital transformation.