v3.25.2
Income taxes
 12 Months Ended
Mar. 31, 2025
Text Block1 [Abstract]  
Income taxes
25.
Income taxes
Income (loss) before income taxes and the provision for current and deferred income taxes attributable to such income are as follows:
 
   
Yen in millions
  
   
Fiscal year ended March 31
  
   
2023
    
2024
    
2025
  
Income (loss) before income taxes:
     1,274,496       1,268,662       1,473,726  
 
 
 
    
 
 
    
 
 
  
Income tax expenses
      
Current
     304,881       271,045       292,287  
Deferred
     (42,158 )      17,123       21,552  
 
 
 
    
 
 
    
 
 
  
Total income tax expense
       262,723         288,168         313,839  
 
 
 
    
 
 
    
 
 
  
For the fiscal year ended March 31, 2023, 2024 and 2025 the domestic components of the amount of income tax expenses were 157,745 million yen, 169,821 million yen and 120,578 million yen, respectively, and the foreign components of the amount of income tax expenses were 104,978 million yen, 118,347 million yen and 193,261 million yen, respectively.
Income tax expenses for the fiscal year ended March 31, 2025 included the impact of decreases in tax expense from the repayment of capital from a subsidiary and the dissolution of a subsidiary. The amounts of decreases
were 48,373 million yen and 35,278 million yen, respectively.

A reconciliation of the differences between the Japanese statutory tax rate and the effective tax rate is as follows:
 
   
Fiscal year ended March 31
  
   
2023
    
2024
    
2025
  
Statutory tax rate
       31.5 %        31.5 %      31.5 % 
Non-deductible
expenses
     0.2       0.3       0.3  
Income tax credits
     (3.0 )      (3.3 )      (1.4 ) 
Change in statutory tax rate
     (0.1 )      0.1       1.3  
Change in unrecognized deferred tax assets
     (1.0 )      (2.1 )      (5.2 ) 
Change in deferred tax liabilities on undistributed earnings of foreign subsidiaries and affiliates
     1.5       0.9       0.4  
Lower tax rate applied to life and
non-life
insurance business in Japan
     (0.9 )      (0.4 )      (0.3 ) 
Foreign income tax differential
     (6.0 )      (4.9 )      (5.9 ) 
Recording or reversal of liabilities for uncertain tax positions
     (0.3 )      0.1       0.1  
Controlled Foreign Company taxation in Japan
     (2.0 )      0.0       0.1  
Other
     0.7       0.5       0.4  
 
 
 
    
 
 
    
 
 
  
Effective income tax rate
     20.6 %      22.7 %      21.3 % 
 
 
 
    
 
 
    
 
 
  
Sony recognizes deferred tax assets, which include temporary differences, net operating losses and tax credits, to the extent that it is probable that taxable profit will be available against which the assets can be utilized. The realization of deferred tax assets is dependent upon the generation of future taxable income in the relevant tax jurisdiction.
In Japan, the Act for Partial Amendment of Income Tax Act, etc. (Act No. 13 of 2025) was promulgated on March 31, 2025, according to which the corporate tax rate will increase from the fiscal year beginning on or after April 1, 2026. As a result, the statutory tax rate from the fiscal year ending March 31, 2027 and thereafter will be approximately
 32.3%.
 
 
The schedules of deferred tax assets and liabilities by major cause of their occurrence are as follows:
 
   
Yen in millions
  
   
Fiscal year ended March 31, 2024
  
   
Beginning
balance
    
Recognized
in profit or
loss
    
Recognized in
other
comprehensive
income
    
Changes
accompanying
business
combination
    
Recognized
directly in
equity
    
Other*
    
Ending
balance
  
Deferred tax assets:
              
Operating loss carryforwards for tax purposes
     81,088       (11,765 )      -       460       -       7,758       77,541  
Defined benefit liabilities
     67,135       16,287       (11,350 )      -       (613 )      4,088       75,547  
Amortization including content assets
     2,217       14,293       -       -       -       3,109       19,619  
Lease liabilities
     118,847       17,154       -       -       -       (271 )      135,730  
Warranty reserves and accrued expenses
     149,982       7,918       -       -       -       9,502       167,402  
Inventories
     44,723       2,892       -       -       -       1,192       48,807  
Depreciation
     40,052       (663 )      -       -       -       2,214       41,603  
Equity securities measured at FVPL
     -       -       17,230       -       -       2,010       19,240  
Debt securities measured at FVOCI
     27,581       74,703       273,954       -       -       6,289       382,527  
Tax credit carryforwards
     36,224       11,698       -         2,991       -       6,733       57,646  
Loss allowances
     6,150       3,525       -       -       -       1,066       10,741  
Impairment of investments
     6,052       2,279       -       -       -       (551 )      7,780  
Deferred revenue
     53,440       (11,697 )      -       -       -       6,711       48,454  
Other
     224,572       47,828       (598 )      (7,352 )      (1,005 )      25,836       289,281  
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Total deferred tax assets
        858,063       174,452       279,236       (3,901 )      (1,618 )      75,686       1,381,918  
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Deferred tax liabilities:
              
Insurance contract liabilities
     (203,719 )      (79,827 )      (219,099 )      -       -       2,936       (499,709 ) 
Right-of-use
assets
     (96,069 )      (16,775 )      -       -       -       (396 )      (113,240 ) 
Equity securities measured at FVOCI
     (4,377 )      4,389       (206 )      -       -       194       -  
Equity securities measured at FVPL
     (24,567 )      (24,753 )      -       -       -       (3,014 )      (52,334 ) 
Intangible assets acquired through stock
exchange offerings
     (23,949 )      -       -       -       -       -       (23,949 ) 
Intangible assets derived from EMI Music Publishing acquisition
     (105,956 )      3,466       -       -       -       (14,501 )      (116,991 ) 
Undistributed earnings of foreign subsidiaries
and affiliates
     (69,590 )      (6,856 )      -       -       -       (8,505 )      (84,951 ) 
Investment in M3, Inc.
     (47,338 )      (5,287 )      -       -       -       -       (52,625 ) 
Other
     (7,012 )      (65,932 )      19       (5,295 )      (20 )      (26,753 )      (104,993 ) 
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Total deferred tax liabilities
     (582,577 )      (191,575 )      (219,286 )      (5,295 )      (20 )      (50,039 )      (1,048,792 ) 
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
 
*
Other mainly consists of exchange differences on translating foreign operations.
 
 
 
 
Yen in millions
 
 
 
Fiscal year ended March 31, 2025
 
 
 
Beginning
balance
 
 
Recognized
in profit or
loss
 
 
Recognized in
other
comprehensive
income
 
 
Changes
accompanying
business
combination
 
 
Recognized
directly in
equity
 
 
Other*
 
 
Ending
balance
 
Deferred tax assets:
              
Operating loss carryforwards for tax purposes
     77,541       2,270       (2 )     567       -       1,015       81,391  
Defined benefit liabilities
  
 
75,547
 
  
 
(475
)
  
 
(4,550
)
  
 
-
 
  
 
-
 
  
 
(7,549
)
  
 
62,973
 
Amortization including content assets
  
 
19,619
 
  
 
8,903
 
  
 
-
 
  
 
-
 
  
 
-
 
  
 
(450
)
  
 
28,072
 
Lease liabilities
  
 
135,730
 
  
 
10,457
 
  
 
-
 
  
 
-
 
  
 
-
 
  
 
(10,913
)
  
 
135,274
 
Warranty reserves and accrued expenses
  
 
167,402
 
  
 
11,737
 
  
 
-
 
  
 
3
 
  
 
-
 
  
 
(4,370
)
  
 
174,772
 
Inventories
  
 
48,807
 
  
 
(3,504
)
  
 
-
 
  
 
-
 
  
 
-
 
  
 
1,174
 
  
 
46,477
 
Depreciation
  
 
41,603
 
  
 
(477
)
  
 
-
 
  
 
-
 
  
 
-
 
  
 
(2,232
)
  
 
38,894
 
Equity securities measured at FVPL
  
 
19,240
 
  
 
(9,781
)
  
 
4,076
 
  
 
-
 
  
 
-
 
  
 
(669
)
  
 
12,866
 
Debt securities measured at FVOCI
  
 
382,527
 
  
 
4,309
 
 
289,625
 
  
 
-
 
  
 
-
 
  
 
(100,198
)
  
 
576,263
 
Tax credit carryforwards
  
 
57,646
 
  
 
4,219
 
  
 
-
 
  
 
57
 
  
 
-
 
  
 
(325
)
  
 
61,597
 
Loss allowances
  
 
10,741
 
  
 
152
 
  
 
-
 
  
 
-
 
  
 
-
 
  
 
1,110
 
 
12,003
 
Impairment of investments
  
 
7,780
 
  
 
51,863
 
  
 
-
 
  
 
-
 
  
 
-
 
  
 
(5,435
)
  
 
54,208
 
Deferred revenue
  
 
48,454
 
  
 
24,147
 
  
 
-
 
  
 
-
 
  
 
-
 
  
 
(1
)
  
 
72,600
 
Other
  
 
289,281
 
  
 
68,523
 
  
 
656
 
  
 
523
 
  
 
3,125
 
  
 
114,347
 
  
 
476,455
 
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Total deferred tax assets
  
 
1,381,918
 
  
 
172,343
 
  
 
289,805
 
  
 
  1,150
 
  
 
3,125
 
  
 
(14,496
)
 
  
 
1,833,845
 
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Deferred tax liabilities:
              
Insurance contract liabilities
  
 
(499,709
)
  
 
(67,854
)
 
  
 
(219,798
)
  
 
-
 
  
 
-
 
  
 
67,524
 
  
 
(719,837
) 
Right-of-use
assets
  
 
(113,240
)
  
 
(8,529
)
  
 
-
 
  
 
-
 
  
 
-
 
  
 
1,239
 
  
 
(120,530
)
Equity securities measured at FVPL
  
 
(52,334
)
  
 
(48,477
)
  
 
-
 
  
 
-
 
  
 
-
 
  
 
660
 
  
 
(100,151
)
Intangible assets acquired through stock exchange offerings
  
 
(23,949
)
  
 
-
 
  
 
-
 
  
 
-
 
  
 
-
 
  
 
-
 
  
 
(23,949
)
Intangible assets derived from EMI Music Publishing acquisition
  
 
(116,991
)
  
 
2,252
 
  
 
-
 
  
 
-
 
  
 
-
 
  
 
1,215
 
  
 
(113,524
)
Undistributed earnings of foreign subsidiaries and affiliates
  
 
(84,951
)
  
 
(16,303
)
  
 
19
 
  
 
-
 
  
 
-
 
  
 
2,009
 
  
 
(99,226
)
Investment in M3, Inc.
  
 
(52,625
)
  
 
(4,346
)
  
 
-
 
  
 
-
 
  
 
-
 
  
 
-
 
  
 
(56,971
)
Other
  
 
(104,993
)
  
 
(50,638
)
  
 
376
 
  
 
(4,702
)
  
 
7
 
  
 
(55,651
)
  
 
(215,601
)
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Total deferred tax liabilities
  
 
(1,048,792
) 
  
 
(193,895
)
  
 
(219,403
) 
  
 
(4,702
) 
  
 
7
 
  
 
16,996
 
  
 
(1,449,789
)
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
 
*
Other includes exchange differences on translating foreign operations and others.
 
 
As of March 31, 2024 and 2025, based on the assessment of recoverability of deferred tax assets, Sony continued not to recognize the deferred tax assets at some entities in Japan, Sony Mobile Communications AB in Sweden, Sony Europe B.V. in the United Kingdom, certain subsidiaries in Brazil, and certain subsidiaries in other tax jurisdictions.
As of March 31, 2024 and 2025, the deductible temporary differences, operating loss carryforwards and tax credit carryforwards for which no deferred tax asset is recognized are as follows:
 
    
Yen in millions
  
    
 Fiscal year ended March 31 
  
    
2024
     
2025
  
Deductible temporary differences
      134,602        131,442  
Operating loss carryforwards
      1,424,553        1,465,002  
Tax credit carryforwards
      16,869        12,139  
As of March 31, 2024 and 2025, the expected expiration period of the operating loss carryforwards for which no deferred tax asset is recognized are as follows:
 
 
  
Yen in millions
 
 
  
 Fiscal year ended March 31 
 
 
  
2024
 
  
2025
 
Within 5 years
      494,989        362,529  
Over 5 years to 10 years
      274,044        459,335  
Over 10 years to 15 years
      28,601        31,198  
Over 15 years
      15,592        16,575  
No expiration period
      611,327        595,365  
  
 
 
     
 
 
  
Total
      1,424,553        1,465,002  
  
 
 
     
 
 
  
As of March 31, 2024 and 2025, the expected expiration period of the tax credit carryforwards for which no deferred tax asset is recognized was mostly within 5 years.
Deferred tax liabilities are not recognized on the taxable temporary differences for undistributed earnings of certain foreign subsidiaries and corporate joint ventures which are not expected to be remitted in the foreseeable future. As of March 31, 2024 and 2025, such taxable temporary differences amounted to 1,122,164 million yen and 1,117,684 million yen, respectively. The tax basis of these undistributed earnings was approximately 17,955 million yen and 17,883 million yen, respectively. In addition, deferred tax liabilities are not recognized on the taxable temporary differences in subsidiaries, including a gain of 61,544 million yen on a subsidiary’s sale of stock arising from the issuance of common stock of Sony Music Entertainment (Japan) Inc. in a public offering to third parties in November 1991 and the remeasurement gain on 116,939 million yen for the
pre-owned
equity interest in EMI Music Publishing acquired in November 2018. Sony does not anticipate any significant tax consequences on the possible future disposition of these investments based on its tax planning strategies.
In addition, the deductible temporary differences arising from the translation adjustments for the foreign operations for which deferred tax assets are not recognized as of March 31, 2024 and 2025 amounted to 275,810 million yen and 173,711 million yen, respectively. The taxable temporary differences arising from the translation adjustments for the foreign operations for which deferred tax liabilities are not recognized as of March 31, 2024 and 2025 amounted to 1,228,503 million yen and 1,047,225 million yen, respectively.
 
 
Sony applies the “International Tax Reform - Pillar Two Model Rules (Amendments to IAS 12)” that the IASB issued in May 2023. Sony does not recognize or disclose deferred tax assets and deferred tax liabilities related to taxes arising from the taxation associated with the Pillar Two Model Rules, applying the temporary exemption provisions stipulated by the Amendments to IAS 12.
In Japan, the Act for Partial Amendment of Income Tax Act, etc. (Act No. 3 of 2023) to implement the global minimum tax in accordance with the Pillar Two Model Rules, was enacted on March 28, 2023. This new tax reform statute applies to Sony from the fiscal year ended March 31, 2025. Sony estimated and recognized corporate income tax expense arising from this global minimum tax based on the financial information available at the reporting date. The impact on the consolidated financial statements was not material.