Microsoft workers dodge stock taxes

Mainichi Shimbun, Wednesday 23 August 2000

About 150 executives and employees of the Japanese subsidiary of the world's top computer software manufacturer, U.S.-based Microsoft Corp., failed to report about 7 billion yen in income they earned for the three years to 1999 via stock options, industry sources said Tuesday.

The employees and executives will face a combined penalty tax of some 3 billion yen, the sources said.

Stock options are an incentive system in which employees receive the right to buy their own company's stocks at fixed prices, in addition to their regular income. If the price of the stock rises, the margin between the new price and the original price are regarded as profits.

The margin must be declared to tax authorities as normal, taxable income, but executives and employees of Microsoft Co. in Tokyo's Shibuya-ku didn't declare their stock-option income, the sources said.