For the fiscal year ended March 31, 2024, 2025 and 2026 the domestic components of the amount of income tax expenses were 120,758 million yen, 64,219 million yen and 171,666 million yen, respectively, and the foreign components of the amount of income tax expenses were 118,347 million yen, 193,261 million yen and 195,442 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 for continuing operations is as follows:

 

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:

 

 

As of March 31, 2025 and 2026, 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, 2025 and 2026, such taxable temporary differences amounted to 1,117,684 million yen and 1,221,573 million yen, respectively. The tax basis of these undistributed earnings was approximately 17,883 million yen and 19,545 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 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, 2025 and 2026 amounted to 173,711 million yen and 197,149 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, 2025 and 2026 amounted to 1,047,225 million yen and 1,499,571 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.