Dentsu said it did not agree with the tax bureau's findings, but it has still decided to pay about $5 million for the back taxes and penalties.
Of the total $11.7 million, Dentsu included about $2.5 million in entertainment expenses which it listed as deductible business expenses.
The taxation bureau sources said Dentsu should have listed the taxi fares and the costs of wining and dining clients in its books as entertainment expenses, which are non-deductible.
Dentsu was also found to have failed to declare about $9.2 in corporate earnings by booking the income into periods not covered in the taxation year, the sources said.
"There was never an intent to do wrong,'' Dentsu President Yutaka Narita told the national daily Asahi Shimbun.'' We and the bureau had our differences on the matter, but in the end we did comply with its guidelines."
Copyright April 1999, Crain Communications Inc.