Sony 2015 Annual Report Download - page 119

status, residence and beneficial ownership (as applicable) and to provide other information or documents as may
be required by the depositary. A non-resident Holder who is entitled, under an applicable income tax treaty, to a
reduced rate which is lower than the withholding tax rate otherwise applicable under Japanese tax law or an
exemption from the withholding tax, but failed to submit the required application in advance will be entitled to
claim the refund of taxes withheld in excess of the rate under an applicable tax treaty (if such non-resident
Holder is entitled to a reduced treaty rate under the applicable income tax treaty) or the full amount of tax
withheld (if such non-resident Holder is entitled to an exemption under the applicable income tax treaty) from the
relevant Japanese tax authority, by complying with a certain subsequent filing procedure. Sony Corporation does
not assume any responsibility to ensure withholding at the reduced treaty rate or to ensure the absence of
withholding for shareholders who would be so eligible under any applicable income tax treaty but where the
required procedures as stated above are not followed.
Gains derived from the sale of shares of Common Stock or ADSs of Sony Corporation outside Japan by a
non-resident Holder holding such shares or ADSs as portfolio investors are, in general, not subject to Japanese
income tax or corporation tax under Japanese tax law. U.S. holders are not subject to Japanese income or
corporation tax with respect to such gains under the Treaty.
Japanese inheritance tax and gift tax at progressive rates may be payable by an individual who has acquired
from another individual shares of Common Stock or ADSs of Sony Corporation as a legatee, heir or donee even
though neither the acquiring individual nor the deceased nor donor is a Japanese resident.
Holders of shares of Common Stock or ADSs of Sony Corporation should consult their tax advisors
regarding the effect of these taxes and, in the case of U.S. holders, the possible application of the Estate and Gift
Tax Treaty between the U.S. and Japan.
United States Taxation with respect to shares of Common Stock and ADSs
The U.S. dollar amount of dividends received (prior to deduction of Japanese taxes) by a U.S. holder of
ADSs or Common Stock of Sony Corporation will be included in income as ordinary income for U.S. federal
income tax purposes to the extent paid out of current or accumulated earnings and profits of Sony Corporation as
determined for U.S. federal income tax purposes. Subject to certain exceptions for short-term and hedged
positions, the U.S. dollar amount of dividends received by a non-corporate U.S. holder with respect to the ADSs
or Common Stock will be subject to taxation at a reduced rate if the dividends are “qualified dividends.”
Dividends paid on the ADSs or Common Stock will be treated as qualified dividends if Sony Corporation was
not, in the year prior to the year in which the dividend was paid, and is not, in the year in which the dividend is
paid a passive foreign investment company (“PFIC”). Based on Sony Corporation’s audited financial statements
and relevant market and shareholder data, Sony Corporation believes that it was not treated as a PFIC for
U.S. federal income tax purposes with respect to its 2015 taxable year. In addition, based on Sony Corporation’s
audited financial statements and Sony Corporation’s current expectations regarding the value and nature of its
assets, the sources and nature of its income, and relevant market and shareholder data, Sony Corporation does not
anticipate becoming a PFIC for the 2016 taxable year. Holders of ADSs and Common Stock of Sony Corporation
should consult their own tax advisors regarding the availability of the reduced dividend tax rate in light of the
considerations discussed above and their own particular circumstances.
Subject to applicable limitations and special considerations discussed below, a U.S. holder of ADSs or
Common Stock of Sony Corporation will be entitled to a credit for Japanese tax withheld in accordance with the
Treaty from dividends paid by Sony Corporation. For purposes of the foreign tax credit limitation, dividends will
be foreign source income, and will generally constitute “passive” income. Foreign tax credits will not be allowed
for withholding taxes imposed in respect of certain short-term or hedged positions and may not be allowed in
respect of arrangements in which economic profit, after non-U.S. taxes, is insubstantial. Holders of ADSs and
Common Stock of Sony Corporation should consult their own tax advisors regarding the implications of these
rules in light of their particular circumstances.
Dividends paid by Sony Corporation to U.S. corporate holders of ADSs or Common Stock of Sony
Corporation will not be eligible for the dividends-received deduction.
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