Income Tax Expense

12 Months Ended

Mar. 31, 2026

37	INCOME TAX EXPENSE

The detail of income tax expense for the fiscal years ended March 31, 2026, 2025 and 2024 was as follows:


	For the fiscal year ended March 31,
	2026			2025			2024

	(In millions)
Current tax:
Charge for period (1)	¥	512,585		¥	448,761		¥	368,050
Deferred tax:
Origination and reversal of temporary differences		(143,209	)		(296,451	)		(53,813	)
Change in the write-down of deferred tax assets on the current fiscal year income tax expense		(9,306	)		1,541			(2,198	)
Changes in Japanese corporation tax rates (2)		—			(16,049	)		—

Total deferred tax benefit		(152,515	)		(310,959	)		(56,011	)

Total income tax expense	¥	360,070		¥	137,802		¥	312,039

(1)	As a result of the adoption of IFRS 9, the current income tax expenses of ¥144,680 million, ¥135,771 million and ¥71,524 million were recognized directly in equity for the fiscal years ended March 31, 2026, 2025 and 2024, respectively.

(2)	Refer to Note 23 “Deferred Income Tax” for additional information on changes in Japanese corporation tax rates.

The following table shows the reconciliations of the effective income tax rates for the fiscal years ended March 31, 2026, 2025 and 2024.


	For the fiscal year ended March 31,
	2026			2025			2024

	(In millions, except percentages)
Profit before tax	¥	1,555,030		¥	654,246		¥	1,207,789
Income tax expense		360,070			137,802			312,039
Effective income tax rate		23.2%			21.1%			25.8%
Effective statutory tax rate in Japan (1)		30.6%			30.6%			30.6%
Tax impact of share of post-tax profit in associates and joint ventures		(2.6%	)		(6.7%	)		(4.1%	)
Tax impact of impairment losses and reversal of impairment losses for investments in associates and joint ventures—net		(1.8%	)		6.2%			2.3%
Non-Japanese earnings		(1.8%	)		(5.7%	)		(1.6%	)
Nontaxable dividends received		(0.7%	)		(2.7%	)		(1.1%	)
Effect of the change in the write-down of deferred tax assets on the current fiscal year income tax expense		(0.6%	)		0.2%			(0.2%	)
Gains on step acquisition of subsidiaries and associates and joint ventures which were not taxable		0.2%			—			—
Changes in Japanese corporation tax rates (1)		—			(2.5%	)		—
Tax impact of impairment losses of goodwill		—			0.4%			—
Others—net		(0.1%	)		1.3%			(0.1%	)

Effective income tax rate		23.2%			21.1%			25.8%

(1)

The effective statutory tax rate in Japan for the fiscal years ended March 31, 2026, 2025 and 2024 is the aggregate of the effective corporation tax rate of 23.2%, the effective local corporation tax rate of 2.4%, the effective inhabitant tax rate of 2.4% and the effective enterprise tax rate of 2.6%, all of which are payable by corporate entities on taxable profits under the tax laws in Japan. The statutory tax rate in Japan has been changed from the fiscal year beginning April 1, 2026 reflecting the changes in Japanese corporation tax rates as mentioned in Note 23 “Deferred Income Tax.”

In June 2023, Pillar Two legislation was substantively enacted in Japan and became effective for annual reporting periods beginning on or after April 1, 2024. The Group has reviewed the published Japan legislation

alongside the OECD model rules and guidance and has performed an assessment of the expected impact of the

new regime. The assessment of the expected impact to Pillar Two income taxes is based on the tax returns,

country-by-country

reports, and financial statements of the entities within the Group. The result of the assessment indicates that the Pillar Two effective tax rates in most of the jurisdictions where the Group operates exceeds

% and a limited number of jurisdictions where the effective tax rates are below

%. The Group does not anticipate a material exposure to Pillar Two income taxes in jurisdictions where the tax rates are below