Income Taxes

12 Months Ended

Mar. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Income (Loss) before Income Tax Expense (Benefit)

Income (loss) before income tax expense (benefit) by jurisdiction for the fiscal years ended March 31, 2022, 2023 and 2024 was as follows:

	2022		2023 (Restated)		2024
	(in millions)
Domestic income (loss)	¥	(886,921)	¥	(588,227)	¥	611,036
Foreign income	828,194		1,036,449		1,271,558
Total	¥	(58,727)	¥	448,222	¥	1,882,594

Income Tax Expense (Benefit)

The detail of current and deferred income tax expense (benefit) for the fiscal years ended March 31, 2022, 2023 and 2024 was as follows:

	2022		2023 (Restated)		2024
	(in millions)
Current:
Domestic	¥	243,993	¥	250,780	¥	106,951
Foreign	112,164		200,669		301,493
Total	356,157		451,449		408,444
Deferred:
Domestic	(308,214)		(348,997)		88,339
Foreign	(62,454)		(61,278)		4,784
Total	(370,668)		(410,275)		93,123
Income tax expense (benefit)	(14,511)		41,174		501,567
Income tax expense (benefit) reported in Accumulated OCI relating to:
Investment securities	(87,628)		(60,071)		32,665
Debt valuation adjustments	10,296		7,858		(19,707)
Derivatives qualifying for cash flow hedges	(4,968)		(2,142)		(84)
Defined benefit plans	19,039		(10,341)		170,175
Foreign currency translation adjustments	96,742		86,576		156,027
Total	33,481		21,880		339,076
Total	¥	18,970	¥	63,054	¥	840,643

Prior to the fiscal year ended March 31, 2023, the MUFG Group filed tax returns on a consolidated basis for corporate income taxes within Japan, and from the beginning of fiscal year ended March 31, 2023, the MUFG Group applied the Group Tax Sharing System, where the calculation of taxable income or loss is still made based upon the combined profits or losses of the parent company and its wholly-owned domestic subsidiaries, but the tax payments are made by each of these companies.

Reconciliation of Effective Income Tax Rate

Income taxes in Japan applicable to the MUFG Group are imposed by the national, prefectural and municipal governments, and in the aggregate resulted in a normal effective statutory rate of approximately 30.6%, 30.6%, and 30.6% for the fiscal years ended March 31, 2022, 2023 and 2024, respectively. Foreign subsidiaries are subject to income taxes of the countries in which they operate.

A reconciliation of the effective income tax rates reflected in the accompanying consolidated statements of operations to the combined normal effective statutory tax rates for the fiscal years ended March 31, 2022, 2023 and 2024 is as follows:

	2022		2023 (Restated)			2024
Combined normal effective statutory tax rate	30.6	%	30.6	%		30.6	%
Nondeductible expenses	(12.0)		1.1			0.4
Impairment of goodwill	—		2.2			—
Foreign tax credit and payments	28.7		(6.9)			0.9
Lower tax rates applicable to income of subsidiaries	30.8		(4.1)			(1.5)
Change in valuation allowance	(90.1)		(1.3)			(1.4)
Taxation for gain on sale of shares in subsidiary	—		5.0		(1)	—
Nontaxable dividends received	85.1		(21.7)			(4.1)
Undistributed earnings of subsidiaries	(25.6)		(0.4)			0.9
Tax and interest expense for uncertainty in income taxes	(10.8)		—			—
Noncontrolling interest income	(0.7)		0.4			0.6
Effect of changes in tax laws	(2.4)		0.9			—
Expiration of loss carryforward	(7.0)		0.2			0.1
Other—net	(1.9)		3.2			0.1
Effective income tax rate	24.7	%	9.2	%		26.6	%

Note:

(1)In March 2023, MUAH repurchased a portion of the shares in MUAH held by MUFG and MUFG Bank. The transaction resulted in the realization of a difference between the book value of the shares in MUAH for accounting and tax purposes, resulting in a ¥22,250 million increase in income tax expense and a 5.0 percentage points increase in the effective tax rate for the fiscal year ended March 31, 2023.

Deferred Tax Assets and Liabilities

Deferred tax assets and liabilities are computed for each tax jurisdiction using currently enacted tax rates applicable to periods when the temporary differences are expected to reverse. The tax effects of the items comprising the MUFG Group’s net deferred tax assets at March 31, 2023 and 2024 were as follows:

	2023		2024
	(in millions)
Deferred tax assets:
Allowance for credit losses	¥	418,732	¥	456,512
Operating loss carryforwards	99,870		91,893
Loans	561		—
Accrued liabilities and other	413,587		383,888
Premises and equipment	119,395		122,682
Derivative financial instruments	303,644		528,280
Obligations under operating leases	88,088		86,146
Valuation allowance	(153,053)		(130,948)
Total deferred tax assets	¥	1,290,824	¥	1,538,453

	2023		2024
	(in millions)
Deferred tax liabilities:
Investment securities (including trading account assets at fair value under the fair value option)	379,581		728,752
Loans	—		1,936
Intangible assets	65,973		73,942
Lease transactions	12,514		11,619
Defined benefit plans	50,730		221,796
Investments in subsidiaries and affiliates	639,592		838,033
Right-of-use assets of operating leases	64,741		60,199
Other	103,915		72,981
Total deferred tax liabilities	1,317,046		2,009,258
Net deferred tax liabilities	¥	(26,222)	¥	(470,805)

The valuation allowance was provided primarily against deferred tax assets recorded at MUFG and its subsidiaries with operating loss carryforwards. The valuation allowance is determined to reduce the measurement of deferred tax assets not expected to be realized. Management considers all available evidence, both positive and negative, to determine whether the valuation allowance is necessary based on the weight of that evidence. Management determines the amount of the valuation allowance based on future reversals of existing taxable temporary differences and future taxable income exclusive of reversing temporary differences. Future taxable income is developed from forecasted operating results, based on recent historical trends and approved business plans, the eligible carryforward periods and other relevant factors.

For certain subsidiaries where strong negative evidence exists, such as the existence of significant amounts of operating loss carryforwards, cumulative losses and the expiration of unused operating loss carryforwards in recent years, a valuation allowance was recognized against the deferred tax assets as of March 31, 2023 and 2024 to the extent that it is more likely than not that they will not be realized.

Income taxes are not provided on undistributed earnings of certain foreign subsidiaries that are considered to be indefinitely reinvested in the operations of such subsidiaries. At March 31, 2023 and 2024, the undistributed earnings of such foreign subsidiaries amounted to approximately ¥66,897 million and ¥110,552 million, respectively. Determination of the amount of unrecognized deferred tax liabilities with respect to these undistributed earnings is not practicable because of the complexity associated with its hypothetical calculation including foreign withholding taxes and foreign tax credits. MUFG has neither the plan nor the intention to dispose of investments in such foreign subsidiaries and, accordingly, does not expect to record capital gains or losses, or otherwise monetize the undistributed earnings of such foreign subsidiaries.

Furthermore, under the Japanese tax law, 95% of a dividend received from a foreign company in which a domestic company has held generally at least 25% of the outstanding shares for a continuous period of six months or more ending on the date on which the dividend is declared can be excluded from the domestic company’s taxable income. Therefore, if undistributed earnings of certain foreign subsidiaries are repatriated through dividends, only 5% of the amount of dividends will be included in taxable income.

Operating Loss and Tax Credit Carryforwards

At March 31, 2024, the MUFG Group had operating loss carryforwards for corporate tax of ¥194,041 million and tax credit carryforwards of ¥21,530 million for tax purposes. Such carryforwards, if not utilized, are scheduled to expire as follows:

	Operating loss  carryforwards		Tax credit  carryforwards
	(in millions)
Fiscal year ending March 31:
2025	¥	84,613	¥	622
2026	53,952		169
2027	551		170
2028	688		161
2029	14,585		352
2030	2,666		160
2031 and thereafter	7,006		18,120
No definite expiration date	29,980		1,776
Total	¥	194,041	¥	21,530

Uncertainty in Income Tax

The following is a roll-forward of the MUFG Group’s unrecognized tax benefits for the fiscal years ended March 31, 2022, 2023 and 2024:

	2022		2023		2024
	(in millions)
Balance at beginning of fiscal year	¥	13,829	¥	21,794	¥	25,400
Gross amount of increases for current year’s tax positions	28		451		32
Gross amount of increases for prior years’ tax positions	6,320		279		—
Gross amount of decreases for prior years’ tax positions	(183)		(166)		(16,719)
Decreases due to lapse of applicable statutes of limitations	(8)		(116)		—
Foreign exchange translation and other	1,808		3,158		1,808
Balance at end of fiscal year	¥	21,794	¥	25,400	¥	10,521

The MUFG Group classifies interest and penalties, if applicable, related to income taxes as Income tax expense. Accrued interest and penalties (not included in the “unrecognized tax benefits” above) are a component of Other liabilities. The following is a roll-forward of the interest and penalties recognized in the accompanying consolidated financial statements for the fiscal years ended March 31, 2022, 2023 and 2024:

	2022		2023		2024
	(in millions)
Balance at beginning of fiscal year	¥	2,417	¥	2,848	¥	2,167
Total interest and penalties in the consolidated statements of operations	156		(1,052)		(1,218)
Total cash settlements, foreign exchange translation and other	275		371		311
Balance at end of fiscal year	¥	2,848	¥	2,167	¥	1,260

The MUFG Group is subject to ongoing tax examinations by the tax authorities of the various jurisdictions in which it operates. The following are the major tax jurisdictions in which the MUFG Group operates and the status of years under audit or open to examination:

Jurisdiction	Tax years
Japan	2022 and forward
United States—Federal	2019 and forward
United States—California	2016 and forward
Indonesia	2018 and forward

The MUFG Group is currently under continuous examinations by the tax authorities in various domestic and foreign jurisdictions and many of these examinations are resolved every year. The unrecognized tax benefits will decrease since resolved items will be removed from the balance regardless of whether their resolution results in payment or recognition. It is reasonably possible that the unrecognized tax benefits will not increase or decrease during the next twelve months.