Income Taxes (Tables)

12 Months Ended

Mar. 31, 2022

Income before Income Taxes and Provision for Income Taxes

Income before income taxes and the provision for income taxes in fiscal 2020, 2021 and 2022 are as follows:


	Millions of yen
	2020		2021		2022
Income before income taxes:
Japan	¥	223,327	¥	171,569	¥	311,351
Overseas		189,234		115,992		193,525

	¥	412,561	¥	287,561	¥	504,876

Provision for income taxes:
Current—
Japan	¥	55,577	¥	45,262	¥	136,623
Overseas		35,370		19,967		38,433

		90,947		65,229		175,056

Deferred—
Japan		9,643		10,642		(631	)
Overseas		5,247		14,876		12,839

		14,890		25,518		12,208

Provision for income taxes	¥	105,837	¥	90,747	¥	187,264

Reconciliations of Differences between Tax Provision Computed and Consolidated Provisions for Income Taxes

Reconciliations of the differences between the tax provision computed at the statutory rate and the consolidated provision for income taxes in fiscal 2020, 2021 and 2022 are as follows:


	Millions of yen
	2020			2021			2022
Income before income taxes	¥	412,561		¥	287,561		¥	504,876

Tax provision computed at the statutory rate	¥	129,957		¥	90,582		¥	159,036
Increases (reductions) in taxes due to:
Change in valuation allowance		2,505			6,808			11,464
Nondeductible expenses		4,319			2,751			4,066
Nontaxable income		(3,612	)		(1,629	)		(2,611	)
Effect of lower tax rates on certain subsidiaries		(24,862	)		(12,895	)		(16,584	)
Effect of investor taxes on earnings of subsidiaries		3,039			4,590			8,155
Effect of the tax law and rate changes		(6,642	)		1,158			(142	)
Effect of sale or liquidation of subsidiaries		307			878			25,642
Other, net		826			(1,496	)		(1,762	)

Provision for income taxes	¥	105,837		¥	90,747		¥	187,264

Total Income Tax Expense Recognized

Total income tax expense recognized in fiscal 2020, 2021 and 2022 was allocated as follows:


	Millions of yen
	2020			2021			2022
Provision for income taxes	¥	105,837		¥	90,747		¥	187,264
Income tax expense (benefit) allocated to other comprehensive income (loss):
Net change of unrealized gains (losses) on investment in securities		(7,016	)		(6,212	)		(21,897	)
Net change of debt valuation adjustments		340			(349	)		(131	)
Net change of defined benefit pension plans		448			2,615			4,889
Net change of foreign currency translation adjustments		10,276			(13,958	)		(17,347	)
Net change of unrealized gains (losses) on derivative instruments		(2,163	)		1,883			4,734
Adjustments to retained earnings for changes in accounting principles*		0			(17,113	)		(215	)
Other direct adjustments to shareholders’ equity		0			1,521			214

Total income tax expense	¥	107,722		¥	59,134		¥	157,511

The amount for fiscal 2021 reflects the tax effect of the adoption of Accounting Standards Update

2016-13

(“Measurement of Credit Losses on Financial Instruments”—ASC 326 (“Financial Instruments—Credit Losses”)). The amount for fiscal 2022 reflects the tax effect of the adoption of Accounting Standards Update

2019-12

(“Simplifying the Accounting for Income Taxes”—ASC 740 (“Income Taxes”)). For further information about Income Taxes, see Note 1 “Significant Accounting and Reporting Policies (aa) New accounting pronouncements.”

Deferred Tax Assets and Liabilities

The tax effects of temporary differences and carryforwards giving rise to the deferred tax assets and liabilities as of March 31, 2021 and 2022 are as follows:


	Millions of yen
	2021			2022
Assets:
Net operating loss carryforwards	¥	25,083		¥	32,914
Allowance for credit losses		25,322			23,381
Investment in securities		9,983			6,685
Accrued expenses		24,393			23,900
Investment in operating leases		12,911			15,099
Property under facility operations		8,480			27,358
Installment loans		4,392			4,361
Unrealized losses on investment in securities		7,859			29,372
Lease liabilities		85,422			77,367
Other		61,002			91,837

		264,847			332,274
Less: valuation allowance		(21,560	)		(35,155	)

		243,287			297,119
Liabilities:
Net investment in Leases		9,705			13,501
Investment in operating leases		111,102			121,337
Unrealized gains on investment in securities		2,502			2,505
Deferred insurance policy acquisition costs		69,249			73,077
Policy liabilities and policy account balances		62,274			74,939
Property under facility operations		10,183			21,931
Other intangible assets		112,234			108,257
Undistributed earnings		38,408			59,134
Prepaid benefit cost		12,187			14,483
Advances paid		11,742			8,647
Right-of-use assets		86,064			77,003
Other		19,973			22,081

		545,623			596,895

Net deferred tax liability	¥	302,336		¥	299,776

Net deferred tax assets and liabilities at March 31, 2021 and 2022 are reflected in the accompanying consolidated balance sheets under the following captions:


	Millions of yen
	2021		2022
Other assets	¥	38,954	¥	46,065
Income taxes: Deferred		341,290		345,841

Net deferred tax liability	¥	302,336	¥	299,776

Net Operating Loss Carryforwards Expire Date

The Company and certain subsidiaries have net operating loss carryforwards of ¥278,571 million at March 31, 2022, which expire as follows:


Years ending March 31,	Millions of yen
2023	¥	8,346
2024		17,768
2025		20,038
2026		24,902
2027		12,168
Thereafter		145,823
Indefinite period		49,526

Total	¥	278,571