Income taxes (Tables)

12 Months Ended

Mar. 31, 2023

Income Tax [Abstract]

Components of income tax expense

The following table presents components of Income tax expense reported in the consolidated statements of income for the years ended March 31, 2021, 2022 and 2023.

	Millions of yen
	Year ended March 31
	2021			2022		2023
Current:
Domestic	¥	73,534		¥	69,661	¥	35,107
Foreign		17,853			7,323		16,554
Subtotal		91,387			76,984		51,661
Deferred:
Domestic		(19,567	)		1,561		14,356
Foreign		(1,546	)		1,545		(8,219	)
Subtotal		(21,113	)		3,106		6,137
Total	¥	70,274		¥	80,090	¥	57,798

Effective income tax rate reflected in consolidated statements of income

The following table presents a reconciliation of the effective income tax rate reflected in the consolidated statements of income to Nomura’s effective statutory tax rate for the years ended March 31, 2021, 2022 and 2023. The effective tax rate presented in the following table represents total income tax expense for the year as a percentage of Income (loss) before income taxes.

	Year ended March 31
	2021			2022			2023
Nomura’s effective statutory tax rate		31.0	%		31.0	%		31.0	%
Impact of:
Changes in deferred tax valuation allowances(2)		8.7			18.0			11.3
Additional taxable income		0.7			1.0			0.7
Non-deductible expenses		7.1			5.1			7.8
Non-taxable income		(4.5	)		(2.9	)		(4.7	)
Dividends from foreign subsidiaries		0.0			0.0			0.1
Tax effect of undistributed earnings of foreign subsidiaries		0.0			0.1			0.3
Different tax rate applicable to income (loss) of foreign subsidiaries		(4.0	)		0.0			(0.9	)
Effect of changes in foreign tax laws(2)		1.1			(14.4	)		(1.9	)
Tax benefit recognized on the outside basis differences for investment in subsidiaries and affiliates(1)		(8.7	)		0.0			(2.3	)
Other		(0.9	)		(2.6	)		(2.7	)
Effective tax rate		30.5	%		35.3	%		38.7	%

(1) Tax benefit recognized on the outside basis differences for investment in subsidiaries and affiliates during the year ended March 31, 2021 of approximately ¥21 billion (which decreased Nomura’s effective tax rate by 9.1%) arises from the recognition of deferred tax assets from the decision and commitment of Nomura management to liquidate a certain wholly-owned subsidiary within Nomura in the foreseeable future. The valuation allowances of ¥3 billion have been recognized against these deferred tax assets, the impact of which are reported in Changes in deferred tax valuation allowances for the same period.

(2) The U.K. Finance Act 2021, enacted on June 10, 2021, increases the headline U.K. corporation tax rate from 19% to 25% on April 1, 2023. Deferred tax assets and liabilities as of the balance sheet date are calculated by reference to the most appropriate enacted rates as of March 31, 2022. As a result of the change in closing deferred tax rate, Nomura recognized a movement in Effect of changes in foreign tax laws of ¥36 billion (which decreased Nomura’s effective tax rate by 16.0%), which was offset by a movement in Changes in deferred tax valuation allowances of ¥36 billion (which increased Nomura’s effective tax rate by 16.0% ) during the year ended March 31, 2022.

Details of deferred tax assets and liabilities

The following table presents the significant components of deferred tax assets and liabilities as of March 31, 2022 and 2023, before offsetting of amounts which relate to the same tax-paying component within a particular tax jurisdiction.

	Millions of yen
	March 31
	2022			2023
Deferred tax assets
Depreciation, amortization and valuation of fixed assets	¥	30,441		¥	38,596
Investments in subsidiaries and affiliates		21,390			7,458
Valuation of financial instruments		102,021			123,841
Accrued pension and severance costs		20,492			17,308
Other accrued expenses and provisions		79,061			74,043
Operating losses		370,481			414,084
Lease liabilities		49,060			48,329
Other		15,425			19,645
Gross deferred tax assets		688,371			743,304
Less—Valuation allowances		(466,145	)		(515,068	)
Total deferred tax assets		222,226			228,236
Deferred tax liabilities
Investments in subsidiaries and affiliates		91,040			100,335
Valuation of financial instruments		85,301			118,314
Undistributed earnings of foreign subsidiaries		2,745			2,936
Valuation of fixed assets		23,962			22,540
Right-of-use assets		48,519			47,775
Other		7,044			7,524
Total deferred tax liabilities		258,611			299,424
Net deferred tax assets (liabilities)	¥	(36,385	)	¥	(71,188	)

Changes in valuation allowance for deferred tax assets

The following table presents changes in total valuation allowances recognized against deferred tax assets for the years ended March 31, 2021, 2022 and 2023.

	Millions of yen
	Year ended March 31
	2021			2022			2023
Balance at beginning of year	¥	388,411		¥	428,014		¥	466,145
Net change during the year		39,603	(1)		38,131	(2)		48,923	(3)
Balance at end of year	¥	428,014		¥	466,145		¥	515,068

(1) Primarily includes an increase of ¥48,883 million of valuation allowances of certain foreign subsidiaries primarily due to an increase in valuation allowances related to operating loss carryforwards, a reduction of ¥5,871 million of valuation allowances primarily due to an increase in valuation of financial instruments, and a reduction of ¥3,409 million of valuation allowances related to Japanese subsidiaries and the Company primarily due to an increase of valuation of financial instruments and a decrease of accrued pension and severance costs. In total, ¥39,603 million of allowances increased.

(2) Primarily includes an increase of ¥51,706 million of valuation allowances of certain foreign subsidiaries primarily due to an increase in operating loss carryforwards, and a reduction of ¥13,575 million of valuation allowances related to Japanese subsidiaries and the Company primarily due to a decrease of operating loss carryforwards. In total, ¥38,131 million of allowances increased.

(3) Primarily includes an increase of ¥53,851 million of valuation allowances of certain foreign subsidiaries primarily due to an increase in operating loss carryforwards, and a reduction of ¥4,928 million of valuation allowances related to Japanese subsidiaries and the Company primarily due to a decrease of valuation allowances of Investments in subsidiaries and affiliates. In total, ¥48,923 million of allowances increased.

Summarizes major tax jurisdictions subject to examination

The table below presents information regarding the earliest year in which Nomura remains subject to examination in the major tax jurisdictions in which Nomura operates as of March 31, 2023.

Jurisdiction	Fiscal year ended March 31,
Japan		2018	(1)
United Kingdom		2016	(2)
United States		2019

(1) The earliest year in which Nomura remains subject to examination for transfer pricing issues is the fiscal year ended March 31, 2017.

(2) The earliest year in which Nomura remains subject to examination for transfer pricing issues is the fiscal year ended March 31, 2016.