Income Taxes (Tables)

12 Months Ended

Mar. 31, 2026

Profit (Loss) Before Income Taxes and Income Tax Expense

Profit (loss) before income taxes and income tax expense for the years ended March 31, 2024, 2025 and 2026 consist of the following:


	Yen (millions)
	2024								2025									2026
	Japan		Foreign			Total			Japan			Foreign			Total			Japan			Foreign			Total
Profit (loss) before income taxes	¥	148,651	¥	1,493,733		¥	1,642,384		¥	180,912		¥	1,136,728		¥	1,317,640		¥	(800,827	)	¥	397,527		¥	(403,300	)

Income tax expense (benefit):
Current taxes		19,081		606,077			625,158			28,922			499,076			527,998			(17,268	)		231,347			214,079
Deferred taxes		34,265		(199,629	)		(165,364	)		(3,821	)		(109,571	)		(113,392	)		(187,375	)		(76,981	)		(264,356	)

Total	¥	53,346	¥	406,448		¥	459,794		¥	25,101		¥	389,505		¥	414,606		¥	(204,643	)	¥	154,366		¥	(50,277	)

Reconciliation of Statutory Income Tax Rate to Average Effective Tax Rate

The statutory income tax rate in

Japan is approximately 30.2% for each of the years in the three-year period ended March 31, 2026. The Japanese statutory income tax rate for the years ended March 31, 2024, 2025 and 2026 differs from the average effective tax rate for the following reasons:


	2024			2025			2026
Statutory income tax rate		30.2	%		30.2	%		30.2	%
Difference in statutory income tax rates of foreign subsidiaries		(5.4	)		(5.2	)		14.5
Effects of investments accounted for using the equity method		(2.0	)		0.0			(12.0	)
Effects of undistributed earnings and withholding taxes on royalty		6.1			7.0			(23.0	)
Changes in unrecognized deferred tax assets		0.1			1.1			(9.8	)
Effects of income and expense not taxable and deductible for tax purpose		0.0			0.5			0.1
Effects of tax credit		(2.6	)		(2.2	)		3.9
Other adjustments relating to prior years		(0.1	)		(2.1	)		3.7
Adjustments for the uncertain tax treatments on income taxes		0.1			0.6			2.8
Adjustments for the changes in income tax laws		0.2			0.4			0.3
Other		1.4			1.2			1.8

Average effective tax rate		28.0	%		31.5	%		12.5	%

Components by Major Factor in Deferred Tax Assets and Deferred Tax Liabilities

The components by major factor in deferred tax assets and deferred tax liabilities as of March 31, 2025 and 2026 are as follows:


	Yen (millions)
	2025			2026
Deferred tax assets:
Inventories	¥	62,292		¥	100,609
Accrued expenses		64,632			88,280
Provisions		243,174			349,210
Property, plant and equipment		55,231			29,954
Intangible assets		91,540			24,796
Retirement benefit liabilities		60,634			65,601
Lease liabilities		82,117			83,511
Carryforward of unused tax losses		36,057			289,535
Carryforward of unused tax credit		4,932			31,182
Other		137,622			192,744

Total	¥	838,231		¥	1,255,422

Deferred tax liabilities:
Property, plant and equipment	¥	151,402		¥	166,998
Intangible assets		236,577			145,488
Other financial assets		62,934			109,506
Operating leases		721,248			969,049
Undistributed earnings		71,781			64,126
Retirement benefit assets		44,309			40,709
Receivables from financial services		34,337			32,874
Other		90,228			103,052

Total	¥	1,412,816		¥	1,631,802

Net deferred tax assets (liabilities)	¥	(574,585	)	¥	(376,380	)

Changes in Deferred Tax Assets and Deferred Tax Liabilities Recognized as Income Tax Expense in the Consolidated Statements of Income

The changes in deferred tax assets and deferred tax liabilities recognized as income tax expense in the consolidated statements of income for the years ended March 31, 2024, 2025 and 2026 are as follows:


	Yen (millions)
	2024			2025			2026
Inventories	¥	(8,335	)	¥	(2,284	)	¥	(36,309	)
Provisions		(26,423	)		(75,290	)		(95,600	)
Property, plant and equipment		(41,544	)		(16,389	)		34,336
Retirement benefit liabilities (assets)		(1,840	)		3,308			(16,131	)
Operating leases		(93,321	)		(46,698	)		186,390
Undistributed earnings		8,355			(537	)		(7,146	)
Carryforward of unused tax losses		17,652			59,300			(242,704	)
Carryforward of unused tax credit		4,238			6,400			(24,419	)
Other		(24,146	)		(41,202	)		(62,773	)

Total	¥	(165,364	)	¥	(113,392	)	¥	(264,356	)

Deductible Temporary Differences, Carryforward of Unused Tax Losses and Unused Tax Credit for which Deferred Tax Assets are not Recognized

Deductible temporary differences, carryforward of unused tax losses and carryforward of unused tax credit for which deferred tax assets are not recognized as of March 31, 2025 and 2026 are as follows:


	Yen (millions)
	2025		2026
Deductible temporary differences	¥	461,089	¥	546,073
Carryforward of unused tax losses		436,674		566,262
Carryforward of unused tax credit		124,850		377

Components by Expiry of the Carryforward of Unused Tax Losses for which Deferred Tax Assets are not Recognized

The components by expiry of the carryforward of unused tax losses for which deferred tax assets are not recognized as of March 31, 2025 and 2026 are as follows:


	Yen (millions)
	2025		2026
Within 1 year	¥	12,142	¥	16,853
Between 1 and 5 years		92,042		204,354
Between 5 and 20 years		36,115		49,376
Indefinite periods		296,375		295,679

Total	¥	436,674	¥	566,262

Components by Expiry of Carryforward of Unused Tax Credits for which Deferred Tax Assets are not Recognized

The components by expiry of the carryforward of unused tax credit for which deferred tax assets are not recognized as of March 31, 2025 and 2026 are as follows:


	Yen (millions)
	2025		2026
Within 1 year	¥	4	¥	23
Between 1 and 5 years		124,831		354
Between 5 and 20 years		15		—
Indefinite periods		—		—

Total	¥	124,850	¥	377