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Income taxes
 12 Months Ended
Mar. 31, 2022
Text Block [Abstract]  
Income taxes
25.
Income taxes
Income (loss) before income taxes and the provision for current and deferred income taxes attributable to such income are as follows:
 
 
  
Yen in millions
 
 
  
Fiscal year ended
March 31
 
 
  
2021
 
  
2022
 
Income (loss) before income taxes:
          997,965        1,117,503   
    
 
 
     
 
 
  
Income tax expenses
                  
Current
      156,592        238,602  
Deferred
      (202,523 )       (9,505 )
    
 
 
     
 
 
  
Total income tax expense
      (45,931 )       229,097  
    
 
 
     
 
 
  
 
The impact of the changes in tax rates for the fiscal years ended March 31, 2021 and 2022 resulted in deferred tax benefits of 722 million yen and 2,136 million yen, respectively.
The impact of the write-down or reversal of a previous write-down
of the
deferred tax assets for the fiscal years ended March 31, 2021 and 2022 resulted in deferred tax benefits of 287,590 million yen and 33,415 million yen, respectively.
A reconciliation of the differences between the Japanese statutory tax rate and the effective tax rate is as follows:
 
 
  
Fiscal year ended

March 31
 
 
  
2021
 
 
2022
 
Statutory tax rate
      31.5 %            31.5
%
Non-deductible
expenses
      0.2       0.2  
Income tax credits
      (1.4 )      (1.9 )
Change in statutory tax rate
      (0.1 )      (0.2 )
Change in unrecognized tax assets (other than the reversal of a previous write-down
of the
deferred tax assets below)
      (5.5 )      (3.7 )
Reversal of a previous write-down
of the
deferred tax assets of the consolidated tax filing group in the United States
      (6.6 )      —  
Reversal of a previous write-down
of the
deferred tax assets relating to the national tax of Sony Group Corporation and its national tax filing group in Japan
      (21.5 )      —  
Change in deferred tax liabilities on undistributed earnings of foreign subsidiaries and corporate joint ventures
      0.7       1.0  
Lower tax rate applied to life and
non-life
insurance business in Japan
      (0.5 )      (0.4 )
Foreign income tax differential
      (4.4 )      (5.5 )
Adjustments to tax reserves
      (0.4 )      0.8  
Controlled Foreign Company
taxation in Japan
      3.0       (1.8 )
Other
      0.4       0.5  
    
 
 
    
 
 
  
Effective income tax rate
      -4.6 %      20.5
%
    
 
 
    
 
 
  
Sony recognizes deferred tax assets, which include temporary differences, net operating losses and tax credits, to the extent that it is probable that taxable profit will be available against which the assets can be utilized. The realization of deferred tax assets is dependent upon the generation of future taxable income in the relevant tax jurisdiction.
During the fiscal year ended March 31, 2021, Sony assessed the recoverability of deferred tax assets, and reversed a previous write-down
of the
deferred tax assets for general business tax credits and foreign tax credits of the consolidated tax filing group in the United States.
Despite the spread of
COVID-19,
as a result of the acquisition of SFGI in the three months ended September 30, 2020, the taxable income of Sony Group Corporation and its national tax filing group in Japan has increased and is expected to be stable going forward. Based on an assessment of the available evidence, in particular recent profit history and forecasted profitability, in the three months ended September 30, 2020, Sony reversed a previous write-down of a significant portion of the deferred tax assets of the consolidated tax filing group in Japan, primarily for temporary differences and certain net operating losses. As a result, Sony recorded a tax benefit of 214,346 million yen in the three months ended September 30, 2020. On October 1, 2021, SFGI changed its company name from SFH. Remaining deferred tax assets in Japan, primarily foreign tax credits, are continuously not recognized due to restrictions on the use of such assets and their relatively short remaining carryforward periods.
The schedules of deferred tax assets and liabilities by major cause of their occurrence are as follows:
 
     
                  
      
                  
      
                  
      
                  
      
                  
      
                  
      
                  
  
 
 
Yen in millions
 
 
 
Fiscal year ended March 31, 2021
 
 
 
Beginning
balance
 
 
Recognized
in profit or
loss
 
 
Recognized
in other
comprehensive
income
 
 
Changes
accompanying
business
combination
 
 
Recognized
directly in
equity
 
 
Other*
 
 
Ending
balance
 
Deferred tax assets:
 
      
 
      
 
      
 
      
 
      
 
      
 
      
Operating loss carryforwards for tax purposes
  
 
34,308
 
  
 
50,453
 
  
 
—
 
  
 
—
 
  
 
—
 
  
 
1,409
 
  
 
86,170
 
Defined benefit liabilities
  
 
33,601
 
  
 
34,373
 
  
 
(6,301
) 
  
 
—
 
  
 
—
 
  
 
753
 
  
 
62,426
 
Amortization including content assets
  
 
64,465
 
  
 
(20,432
) 
  
 
—
 
  
 
—
 
  
 
—
 
  
 
218
 
  
 
44,251
 
Lease liabilities
  
 
99,360
 
  
 
(9,413
) 
  
 
—
 
  
 
—
 
  
 
—
 
  
 
871
 
  
 
90,818
 
Warranty reserves and accrued expenses
  
 
51,811
 
  
 
76,032
 
  
 
—
 
  
 
—
 
  
 
—
 
  
 
1,806
 
  
 
129,649
 
Inventories
  
 
2,929
 
  
 
26,549
 
  
 
—
 
  
 
—
 
  
 
—
 
  
 
236
 
  
 
29,714
 
Depreciation
  
 
15,973
 
  
 
23,787
 
  
 
—
 
  
 
—
 
  
 
—
 
  
 
471
 
  
 
40,231
 
Tax credit carryforwards
  
 
16,120
 
  
 
31,944
 
  
 
—
 
  
 
—
 
  
 
—
 
  
 
251
 
  
 
48,315
 
Loss allowances
  
 
8,505
 
  
 
(1,391
) 
  
 
—
 
  
 
—
 
  
 
—
 
  
 
51
 
  
 
7,165
 
Impairment of investments
  
 
1,506
 
  
 
5,441
 
  
 
—
 
  
 
—
 
  
 
—
 
  
 
(147
 )  
 
6,800
 
Deferred revenue
  
 
24,420
 
  
 
(326
) 
  
 
—
 
  
 
—
 
  
 
—
 
  
 
408
 
  
 
24,502
 
Other
  
 
95,874
 
  
 
53,236
 
  
 
2,261
 
  
 
—
 
  
 
1,478
 
  
 
(607
 )  
 
152,242
 
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Total deferred tax assets
  
 
448,872
 
  
 
270,253
 
  
 
(4,040
) 
  
 
—
 
  
 
1,478
 
  
 
5,720
 
  
 
722,283
 
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Deferred tax liabilities:
                                                        
Insurance acquisition costs
  
 
(54,312
) 
  
 
(14,978
) 
  
 
(107,445
) 
  
 
—
 
  
 
—
 
  
 
(10
 )  
 
(176,745
) 
Insurance contract liabilities
  
 
(77,359
) 
  
 
(89
) 
  
 
(73,614
) 
  
 
—
 
  
 
—
 
  
 
1
 
  
 
(151,061
) 
Non-current
other receivables in the Pictures segment
  
 
(26,214
) 
  
 
17,984
 
  
 
—
 
  
 
—
 
  
 
—
 
  
 
336
 
  
 
(7,894
) 
Right-of-use
assets
  
 
(96,978
) 
  
 
13,149
 
  
 
—
 
  
 
—
 
  
 
—
 
  
 
(899
) 
  
 
(84,728
) 
Equity securities measured at FVOCI
  
 
(4,916
) 
  
 
2,296
 
  
 
(46,382
) 
  
 
—
 
  
 
—
 
  
 
(2,009
) 
  
 
(51,011
) 
Equity securities measured at FVPL
  
 
(36,160
) 
  
 
(53,736
) 
  
 
—
 
  
 
—
 
  
 
—
 
  
 
  2,178
 
  
 
(87,718
) 
Debt securities measured at FVOCI
  
 
(766,567
) 
  
 
(459
) 
  
 
261,112
 
  
 
—
 
  
 
—
 
  
 
—
 
  
 
(505,914
) 
Intangible assets acquired through stock exchange offerings
  
 
(23,949
) 
  
 
—
 
  
 
—
 
  
 
—
 
  
 
—
 
  
 
—
 
  
 
(23,949
) 
Intangible assets derived from EMI Music Publishing acquisition
  
 
(89,909
) 
  
 
1,556
 
  
 
—
 
  
 
—
 
  
 
—
 
  
 
(5,128
) 
  
 
(93,481
) 
Undistributed earnings of foreign subsidiaries and corporate joint ventures
  
 
(24,498
) 
  
 
(12,740
) 
  
 
—
 
  
 
—
 
  
 
—
 
  
 
(1,928
) 
  
 
(39,166
) 
Investment in M3
  
 
(38,303
) 
  
 
(3,044
) 
  
 
—
 
  
 
—
 
  
 
—
 
  
 
—
 
  
 
(41,347
) 
Other
  
 
(40,530
) 
  
 
(17,669
) 
  
 
(11
) 
  
 
(224
) 
  
 
357
 
  
 
(2,110
 )  
 
(60,187
) 
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Total deferred tax liabilities
  
 
(1,279,695
) 
  
 
(67,730
) 
  
 
33,660
 
  
 
(224
) 
  
 
357
 
  
 
(9,569
) 
  
 
(1,323,201
) 
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
 
*
Other mainly consists of exchange differences on translating foreign operations.
     
                  
      
                  
      
                  
      
                  
      
                  
      
                  
      
                  
  
 
 
Yen in millions
 
 
 
Fiscal year ended March 31, 2022
 
 
 
Beginning
balance
 
 
Recognized
in profit or
loss
 
 
Recognized
in other
comprehensive
income
 
 
Changes
accompanying
business
combination
 
 
Recognized
directly in
equity
 
 
Other*
 
 
Ending
balance
 
Deferred tax assets:
 
      
 
      
 
      
 
      
 
      
 
      
 
      
Operating loss carryforwards for tax purposes
  
 
86,170
 
  
 
(16,573
 )  
 
—
 
  
 
—
 
  
 
—
 
  
 
1,490
 
  
 
71,087
 
Defined benefit liabilities
  
 
62,426
 
  
 
20,721
 
  
 
(9,493
 )  
 
—
 
  
 
1,640
 
  
 
(2,729
 )  
 
72,565
 
Amortization including content assets
  
 
44,251
 
  
 
(20,323
 )  
 
—
 
  
 
—
 
  
 
—
 
  
 
2,831
 
  
 
26,759
 
Lease liabilities
 
 
90,818
 
 
 
5,091
 
 
 
 
—
 
 
 
1,244
 
 
 
 
—
 
 
 
 
(1,053
 
)

 
 
96,100
 
Warranty reserves and accrued expenses
  
 
129,649
 
  
 
8,389
 
  
 
—
 
  
 
134
 
  
 
—
 
  
 
3,172
 
  
 
141,344
 
Inventories
  
 
29,714
 
  
 
(547
 )  
 
—
 
  
 
—
 
  
 
—
 
  
 
379
 
  
 
29,546
 
Depreciation
  
 
40,231
 
  
 
2,539
 
  
 
—
 
  
 
161
 
  
 
—
 
  
 
258
 
  
 
43,189
 
Tax credit carryforwards
  
 
48,315
 
  
 
(12,007
 )  
 
—
 
  
 
—
 
  
 
—
 
  
 
2,576
 
  
 
38,884
 
Loss allowances
  
 
7,165
 
  
 
98
 
  
 
—
 
  
 
2
 
  
 
—
 
  
 
483
 
  
 
7,748
 
Impairment of investments
  
 
6,800
 
  
 
3,418
  
 
—
 
  
 
—
 
  
 
—
 
  
 
(402
 )  
 
9,816
 
Deferred revenue
  
 
24,502
 
  
 
3,779
 
  
 
—
 
  
 
—
 
  
 
—
 
  
 
2,904
 
  
 
31,185
 
Other
  
 
152,242
 
  
 
(32,131
 )  
 
(538
 )  
 
13,304
 
  
 
(125
 )  
 
7,842
 
  
 
140,594
 
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Total deferred tax assets
  
 
722,283
 
  
 
(37,546
 )  
 
(10,031
 )  
 
14,845
 
  
 
       1,515
 
  
 
17,751
 
  
 
708,817
 
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Deferred tax liabilities:
                                                        
Insurance acquisition costs
  
 
(176,745
 )  
 
(13,182
 )  
 
(1,261
 )  
 
—
 
  
 
—
 
  
 
(286
 )  
 
(191,474
 )
Insurance contract liabilities
  
 
(151,061
 )  
 
(10,796
 )  
 
(5,480
 )  
 
—
 
  
 
—
 
  
 
—
 
  
 
(167,337
 )
Non-current
other receivables in the Pictures
segment
  
 
(7,894
 )  
 
8,009
 
  
 
—
 
  
 
—
 
  
 
—
 
  
 
(115
 )  
 
—
 
Right-of-use
assets
    
 
(84,728
)
 
 
 
25,955
 
 
 
 —
 
 
 
 
(1,245
 )
 
 
 
—
 
 
 
 
452
  
 
 
 
(59,566
)
Equity securities measured at FVOCI
  
 
(51,011
 )  
 
1,841
  
 
33,085
 
  
 
—
 
  
 
—
 
  
 
116
 
  
 
(15,969
 )
Equity securities measured at FVPL
 
 
 
(87,718
)
 
 
 
36,915
 
 
 
 
—  
 
 
 
 
—
 
 
 
 
—
 
 
 
 
(2,336
)
 
 
 
(53,139
)
Debt securities measured at FVOCI
  
 
(505,914
 )  
 
9,822
 
  
 
168,937
 
  
 
—
 
  
 
—
    
 
(204
 )  
 
(327,359
 )
Intangible assets acquired through stock exchange offerings
  
 
(23,949
 )  
 
—
 
  
 
—
 
  
 
—
 
  
 
—
 
  
 
—
 
  
 
(23,949
 )
Intangible assets derived from EMI Music Publishing acquisition
  
 
(93,481
 )
 
  
 
(1,209
 )  
 
—
 
  
 
—
 
  
 
—
    
 
(6,904
 )  
 
(101,594
 )
Undistributed earnings of foreign subsidiaries
and corporate joint ventures
  
 
(39,166
 )  
 
(15,031
 )  
 
—
 
  
 
—
 
  
 
—
    
 
(1,834
 )  
 
(56,031
 )
Investment in M3
  
 
(41,347
 )  
 
(1,345
 )  
 
—
 
  
 
—
 
  
 
—
 
  
 
—
 
  
 
(42,692
 )
Other
  
 
(60,187
 )  
 
6,072
 
  
 
(292
 )  
 
(15,230
 )  
 
765
 
  
 
1,262
    
 
(67,610
 )
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Total deferred tax liabilities
  
 
          (1,323,201
 
)		  
 
     47,051
  
  
 
       194,989
  
  
 
(16,475
 
)		  
 
765
 
  
 
    (9,849
 
)		  
 
      (1,106,720
 
)
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
* Other mainly consists of exchange differences on translating foreign operations.
As of April 1, 2020, March 31, 2021 and 2022, based on the assessment of recoverability of deferred tax assets, Sony continued not to recognize the deferred tax assets at some entities in Japan, Sony Mobile Communications
AB 
in Sweden, Sony Europe B.V. in the United Kingdom, certain subsidiaries in Brazil, and certain subsidiaries in other tax jurisdictions.
 
 
As of March 31, 2022, the deductible temporary differences for which no deferred tax assets are recognized aggregated to
 26,600
million yen on a tax basis
(
222,135 
million yen as of April 1, 2020 and
 44,032 
million yen as of March 31, 2021). The amount of the deductible temporary differences is computed using an average tax rate of approximately 21% (an average of approximately 27% as of April 1, 2020 and approximately 11% as of March 31, 2021).
As of March 31, 2022, Sony had operating loss carryforwards and the amount for which no deferred tax asset is recognized aggregated to
 195,091
million yen on a tax basis
(312,499 million yen
 as of April 1, 2020 and
 
217,624 
million yen as of March 31, 2021). The operating loss carryforwards consist of the following amounts and expiration periods:
55,197
million yen with an expiration period of 1 year to 5 years,
 34,207 
million yen with an expiration period of 6 years to 10 years,
4,181 
million yen with an expiration period of 11 years to 15 years, 505 million yen with an expiration period of over 15 years and 101,001 million yen with no expiration period. The operating loss carryforwards with no expiration date as of April 1, 2020 and March 31, 2021 were 
82,106 million yen and 89,420 million yen, respectively. There were no significant changes in the operating loss carryforwards for all expiration periods incurred and expired in each fiscal year. The amount of the operating loss carryforwards is computed using an average tax rate of approximately 14% (an average of approximately 28% as of April 1, 2020 and approximately 13% as of March 31, 2021). 
As of
March 31, 2022, the amount of tax credit carryforwards for which no deferred tax asset is recognized aggregate
d
to 19,066 million yen (78,914 million yen 
as of April 1, 2020 and
15,369 million yen
 
as of March 31, 2021). Except for the amount
 with no expiration period, which was 1,803 million yen as of March 31, 2022, the major portion of the tax credit carryforwards expire within 5 years. The amount of tax credit carryforwards with no expiration date as of April 1, 2020 and March 31, 2021 was 694 million yen and 974 million yen, respectively.
As of April 1, 2020, March 31, 2021 and 2022, deferred income taxes have not been provided on taxable temporary differences for undistributed earnings of certain foreign subsidiaries and corporate joint ventures amounting to 365,925 million yen and which are not expected to be remitted in the foreseeable future. The tax basis of these undistributed earnings was approximately 5,855 million yen. In addition, deferred income taxes have not been provided on the taxable temporary differences in subsidiaries, including a gain of
 61,544
million yen on a subsidiary’s sale of stock arising from the issuance of common stock of Sony Music Entertainment (Japan) Inc. in a public offering to third parties in November 1991 and the remeasurement gain on 116,939 million yen for the pre-owned equity interest in EMI Music Publishing acquired in November 2018. Sony does not anticipate any significant tax consequences on the possible future disposition of these investments based on its tax planning strategies. 
In addition, the deductible temporary differences arising from the translation adjustments for the foreign operations for which deferred tax assets are not recognized as of March 31, 2021 and March 31, 2022 amounted to 50,110 million yen and 92,252 million yen, respectively. The taxable temporary differences arising from the translation adjustments for the foreign operations for which deferred tax liabilities are not recognized as of March 31, 2021 and March 31, 2022 amounted to 164,011
million yen and
 429,930 million yen, respectively.