Triggered by research into the Sprint acquisition, this chapter examines SoftBank Group’s consideration of relocating its headquarters to the UK, comparing tax rates, global investment access, and Western corporate tax strategies.

2016-04-02
The following is from https://zuuonline.com/archives/93815.
Last night, while casually searching for information about the acquisition of Sprint, I came across this material.
It was reported in major Japanese newspapers that SoftBank Group Corp. had considered relocating its headquarters to the United Kingdom.
This was a re-report of information that the Wall Street Journal had once covered in October 2015, after Japanese newspapers independently confirmed it.
While there are various moves by Japanese companies to globalize—such as adopting English as an internal common language, as Rakuten has done—consideration of relocating a headquarters overseas is rare.
Why was such a move considered? Let us examine this question in the context of global trends.
SoftBank Group Corp. is the holding company that oversees the entire SoftBank group.
It is said that there were two main reasons for considering relocation.
The first was to reduce the corporate tax rate.
Japan’s corporate tax rate was approximately 32 percent, whereas the UK’s was about 20 percent.
Relocating the headquarters from Japan to the UK would lower the rate by roughly ten percentage points.
If taxes are regarded as a cost, this difference is significant.
The second reason was convenience for international investment.
At the time, SoftBank Group was making large-scale investments in Indian IT companies and solar power.
India was once part of the British Empire, and the UK is its former colonial ruler.
It was therefore considered that engaging with India as a UK-based company might offer advantages over doing so as a Japanese company.
Ultimately, however, it was concluded that even if the headquarters were relocated, the outcome would largely depend on decisions by Japanese tax authorities, making the actual tax-saving effect uncertain.
Additionally, returns from investments in India and elsewhere were still some time away.
For these reasons, relocation was deemed premature and abandoned.
In Japan, relocating headquarters overseas for tax reduction is extremely rare, whereas it is common among Western global corporations.
Starbucks used affiliated companies in Switzerland and the Netherlands to manipulate costs and compress taxable income.
Apple employed the so-called “Double Irish” scheme to consolidate profits in Ireland and avoid corporate taxation.
While tax strategies to reduce burdens are viewed by investors as cost-cutting measures,
from the perspective of the state and its citizens, criticism arises when companies generate large revenues domestically while paying little tax locally.
In the SoftBank case as well, it is said that difficulty in gaining public and administrative understanding was one reason for abandoning the move.
Given its close involvement with government and the reputational risks in Japan’s competitive mobile phone market,
the decision was made not to relocate.
However, since the reason given was that the timing was premature, it appears that relocation may be reconsidered if conditions become favorable.