When Taiwanese companies first establish subsidiaries in Japan, they rarely feel the complexity of the accounting structure right away. Accounting matters on the Japanese side are handled by tax accountants, with corporate tax and consumption tax filed in accordance with local regulations. Required documents are in place, and procedures appear orderly. From a regulatory perspective, operations seem to have entered a relatively stable phase. At this stage, cross-border transactions are usually limited in scope. Interactions between the parent company and the subsidiary tend to focus on capital injection, basic support, or initial management arrangements, making the overall accounting structure appear straightforward.
Because operations run smoothly, companies rarely take the opportunity at this stage to re-examine their overall accounting structure. Whether ongoing involvement from the Taiwan side is necessary is often considered in terms of cost and efficiency. As long as no obvious issues arise, this arrangement tends to function without difficulty and is seldom viewed as a source of risk at the time.
Japanese tax accountants are responsible for ensuring acceptability within the local regulatory framework
The professional role of Japanese tax accountants is clearly defined. Their core responsibility lies in ensuring that accounting treatments comply with Japanese accounting practices, tax filings conform to local regulations, and transaction backgrounds and calculation methodologies can be explained to the tax authorities. As long as the accounting is understood and accepted within the Japanese regulatory system, the operations of the Japanese subsidiary can continue, and the related responsibilities are regarded as having been fulfilled under the institutional framework.
This division of responsibilities works effectively within a single jurisdiction. However, its perspective naturally remains limited to Japan. Whether transactions between the parent company and the subsidiary form a consistent narrative at the group level does not fall within the scope of what Japanese tax accountants are expected to address. As cross-border activities expand, the role that accounting plays gradually extends beyond what can be fully captured by any single regulatory system.
This division of responsibilities works effectively within a single jurisdiction. However, its perspective naturally remains limited to Japan. Whether transactions between the parent company and the subsidiary form a consistent narrative at the group level does not fall within the scope of what Japanese tax accountants are expected to address. As cross-border activities expand, the role that accounting plays gradually extends beyond what can be fully captured by any single regulatory system.
As transactions accumulate, the function of accounting begins to shift
As operations expand, interactions between the Japanese subsidiary and the Taiwanese parent company gradually increase. Management fees, technical service fees, personnel support, and cost allocations become part of routine operations. Within a single regulatory system, these arrangements can generally be explained in a reasonable manner, with filings and records completed accordingly. However, once they exist simultaneously across two systems, the focus of accounting treatment begins to change.
At this stage, accounting gradually takes on an explanatory role toward external parties. Companies need to be able to explain how these arrangements were established, how they are calculated, and how they affect both the parent company and the subsidiary. When transaction volumes remain limited and structures are not complex, the need for such explanations is not particularly apparent and does not immediately create pressure.
Companies tend to truly feel the burden of their accounting structure when a comprehensive explanation becomes necessary. This may arise from internal management reviews, or from requests made during external communications, financing activities, audits, or strategic adjustments to explain the background and rationale of cross-border arrangements. It is often at this point that companies realize decisions made separately under different regulatory systems have not been organized into a continuous narrative, but have merely existed alongside one another.
At this stage, accounting gradually takes on an explanatory role toward external parties. Companies need to be able to explain how these arrangements were established, how they are calculated, and how they affect both the parent company and the subsidiary. When transaction volumes remain limited and structures are not complex, the need for such explanations is not particularly apparent and does not immediately create pressure.
Companies tend to truly feel the burden of their accounting structure when a comprehensive explanation becomes necessary. This may arise from internal management reviews, or from requests made during external communications, financing activities, audits, or strategic adjustments to explain the background and rationale of cross-border arrangements. It is often at this point that companies realize decisions made separately under different regulatory systems have not been organized into a continuous narrative, but have merely existed alongside one another.
The role of the Taiwan side lies in organizing the structure into a state that can be traced and understood over time
Situations like this rarely surface as regulatory violations or accounting errors. Instead, they gradually emerge in the form of increasing explanatory costs. Companies are required to look back through historical records, reconstruct the decision-making context at the time, and reorganize the logic behind transactions in order for the overall structure to be understood. Because the structure has already taken shape, the room for adjustment is limited, and the process of reorganization often takes considerable time and cannot be completed in a single effort.
In practice, Taiwanese accountants or advisors tend to become involved after the accounting has been completed and before any disputes have surfaced. As operations progress, transactions between the parent company and the subsidiary gradually accumulate. Whether management fee calculations remain aligned with actual management activities, whether the recognition of technical service fees corresponds to specific services, and whether personnel support and cost allocations can be reasonably explained over time are all matters that require ongoing review and organization.
As organizational scale expands and transaction frequency increases, previously established approaches may require adjustment in response to changing circumstances. Within this process, the role of the Taiwan side is to help companies consolidate accounting treatments that are scattered across different years and departments into a structure that can be traced over time, ensuring that the rationale behind each transaction is preserved.
In practice, Taiwanese accountants or advisors tend to become involved after the accounting has been completed and before any disputes have surfaced. As operations progress, transactions between the parent company and the subsidiary gradually accumulate. Whether management fee calculations remain aligned with actual management activities, whether the recognition of technical service fees corresponds to specific services, and whether personnel support and cost allocations can be reasonably explained over time are all matters that require ongoing review and organization.
As organizational scale expands and transaction frequency increases, previously established approaches may require adjustment in response to changing circumstances. Within this process, the role of the Taiwan side is to help companies consolidate accounting treatments that are scattered across different years and departments into a structure that can be traced over time, ensuring that the rationale behind each transaction is preserved.
Beyond Systems, Ongoing Oversight Is Still Needed
There is no question that Japanese tax accountants are fulfilling their responsibilities. Tax filings are completed, regulatory requirements are met, and the day-to-day operations of Japanese subsidiaries are maintained as a result. From the perspective of the Japanese regulatory system, these efforts adequately address the fundamental requirements of how a legal entity should be managed and supervised.
The need for continued oversight on the Taiwan side does not stem from any shortcomings on the Japanese side. Rather, cross-border structures do not automatically form a comprehensive perspective on their own. How relationships between parent and subsidiary are established, how resources move across different legal entities, and how decision-making context is preserved are often scattered across different years, departments, and accounting treatments. Relying on a single regulatory system makes it difficult to naturally organize this information into a continuous narrative.
As operations progress, this fragmented state gradually affects how the structure is understood. Internally, management needs to revisit past decisions and assess future actions. Externally, the same structure may become a key reference for others seeking to evaluate corporate risk and stability. At such moments, the focus is rarely on whether accounting tasks have been completed, but on whether there is someone consistently overseeing the overall structure.
For this reason, even when accounting operations on the Japanese side are functioning properly, the role of the Taiwan side remains irreplaceable. The focus is not on whether individual transactions are valid, but on whether someone is preserving a comprehensive view of the entire cross-border structure that can be understood and revisited over time. This is the true meaning behind the phrase “still needs someone to look after it” reflected in the title.
The need for continued oversight on the Taiwan side does not stem from any shortcomings on the Japanese side. Rather, cross-border structures do not automatically form a comprehensive perspective on their own. How relationships between parent and subsidiary are established, how resources move across different legal entities, and how decision-making context is preserved are often scattered across different years, departments, and accounting treatments. Relying on a single regulatory system makes it difficult to naturally organize this information into a continuous narrative.
As operations progress, this fragmented state gradually affects how the structure is understood. Internally, management needs to revisit past decisions and assess future actions. Externally, the same structure may become a key reference for others seeking to evaluate corporate risk and stability. At such moments, the focus is rarely on whether accounting tasks have been completed, but on whether there is someone consistently overseeing the overall structure.
For this reason, even when accounting operations on the Japanese side are functioning properly, the role of the Taiwan side remains irreplaceable. The focus is not on whether individual transactions are valid, but on whether someone is preserving a comprehensive view of the entire cross-border structure that can be understood and revisited over time. This is the true meaning behind the phrase “still needs someone to look after it” reflected in the title.