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Income Taxes | 12 Months Ended
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Mar. 31, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | 16. Income Taxes Income before income taxes and the provision for income taxes in fiscal 2021, 2022 and 2023 are as follows:
|  | Millions of yen |
|  | 2021 |  |  | 2022 |  |  | 2023 |
Income before income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Japan |  | ¥ | 171,569 |  |  | ¥ | 311,351 |  |  | ¥ | 176,158 |
Overseas |  |  | 115,992 |  |  |  | 193,525 |  |  |  | 191,010 |
|  | ¥ | 287,561 |  |  | ¥ | 504,876 |  |  | ¥ | 367,168 |
Provision for income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Current— |  |  |  |  |  |  |  |  |  |  |  |
Japan |  | ¥ | 45,262 |  |  | ¥ | 136,623 |  |  | ¥ | 30,808 |
Overseas |  |  | 19,967 |  |  |  | 38,433 |  |  |  | 27,490 |
|  |  | 65,229 |  |  |  | 175,056 |  |  |  | 58,298 |
Deferred— |  |  |  |  |  |  |  |  |  |  |  |
Japan |  |  | 10,642 |  |  |  | (631 | ) |  |  | 14,302 |
Overseas |  |  | 14,876 |  |  |  | 12,839 |  |  |  | 14,900 |
|  |  | 25,518 |  |  |  | 12,208 |  |  |  | 29,202 |
Provision for income taxes |  | ¥ | 90,747 |  |  | ¥ | 187,264 |  |  | ¥ | 87,500 |
In fiscal 2021, 2022 and 2023, the Company and its subsidiaries in Japan were subject to a National Corporation tax of approximately 24%, an Inhabitant tax of approximately 4% and a deductible Enterprise tax of approximately 4%, which in the aggregate result in a statutory income tax rate of approximately 31.5%. Reconciliations of the differences between the tax provision computed at the statutory rate and the consolidated provision for income taxes in fiscal 2021, 2022 and 2023 are as follows:
|  | Millions of yen |
|  | 2021 |  |  | 2022 |  |  | 2023 |
Income before income taxes |  | ¥ | 287,561 |  |  | ¥ | 504,876 |  |  | ¥ | 367,168 |
Tax provision computed at the statutory rate |  | ¥ | 90,582 |  |  | ¥ | 159,036 |  |  | ¥ | 115,658 |
Increases (reductions) in taxes due to: |  |  |  |  |  |  |  |  |  |  |  |
Change in valuation allowance |  |  | 6,808 |  |  |  | 11,464 |  |  |  | 2,533 |
Nondeductible expenses |  |  | 2,751 |  |  |  | 4,066 |  |  |  | 4,794 |
Nontaxable income |  |  | (1,629 | ) |  |  | (2,611 | ) |  |  | (3,347 | )
Effect of lower tax rates on certain subsidiaries |  |  | (12,895 | ) |  |  | (16,584 | ) |  |  | (19,631 | )
Effect of investor taxes on earnings of subsidiaries |  |  | 4,590 |  |  |  | 8,155 |  |  |  | 4,789 |
Effect of the tax law and rate changes |  |  | 1,158 |  |  |  | (142 | ) |  |  | 180 |
Effect of sale or liquidation of subsidiaries |  |  | 878 |  |  |  | 25,642 |  |  |  | (16,754 | )
Other, net |  |  | (1,496 | ) |  |  | (1,762 | ) |  |  | (722 | )
Provision for income taxes |  | ¥ | 90,747 |  |  | ¥ | 187,264 |  |  | ¥ | 87,500 |
The effective income tax rate is different from the statutory income tax rate primarily because of certain nondeductible expenses, nontaxable income, changes in valuation allowance, the effect of lower tax rates on certain subsidiaries, effect of investor taxes on earnings of subsidiaries and effect of sale or liquidation of subsidiaries. Total income tax expense recognized in fiscal 2021, 2022 and 2023 was allocated as follows:
|  | Millions of yen |
|  | 2021 |  |  | 2022 |  |  | 2023 |
Provision for income taxes |  | ¥ | 90,747 |  |  | ¥ | 187,264 |  |  | ¥ | 87,500 |
Income tax expense (benefit) allocated to other comprehensive income (loss): |  |  |  |  |  |  |  |  |  |  |  |
Net change of unrealized gains (losses) on investment in securities |  |  | (6,212 | ) |  |  | (21,897 | ) |  |  | (41,961 | )
Net change of debt valuation adjustments |  |  | (349 | ) |  |  | (131 | ) |  |  | 20 |
Net change of defined benefit pension plans |  |  | 2,615 |  |  |  | 4,889 |  |  |  | 1,630 |
Net change of foreign currency translation adjustments |  |  | (13,958 | ) |  |  | (17,347 | ) |  |  | (17,325 | )
Net change of unrealized gains (losses) on derivative instruments |  |  | 1,883 |  |  |  | 4,734 |  |  |  | 3,514 |
Adjustments to retained earnings for changes in accounting principles* |  |  | (17,113 | ) |  |  | (215 | ) |  |  | 0 |
Other direct adjustments to shareholders’ equity |  |  | 1,521 |  |  |  | 214 |  |  |  | 36 |
Total income tax expense |  | ¥ | 59,134 |  |  | ¥ | 157,511 |  |  | ¥ | 33,414 |
* | 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”)).
The tax effects of temporary differences and carryforwards giving rise to the deferred tax assets and liabilities as of March 31, 2022 and 2023 are as follows:
|  | Millions of yen |
|  | 2022 |  |  | 2023 |
Assets: |  |  |  |  |  |  |  |
Net operating loss carryforwards |  | ¥ | 32,914 |  |  | ¥ | 59,516 |
Allowance for credit losses |  |  | 23,381 |  |  |  | 16,382 |
Investment in securities |  |  | 6,685 |  |  |  | 12,745 |
Accrued expenses |  |  | 23,900 |  |  |  | 25,735 |
Investment in operating leases |  |  | 15,099 |  |  |  | 14,999 |
Property under facility operations |  |  | 27,358 |  |  |  | 24,615 |
Installment loans |  |  | 4,361 |  |  |  | 5,445 |
Unrealized losses on investment in securities |  |  | 29,372 |  |  |  | 71,277 |
Lease liabilities |  |  | 77,367 |  |  |  | 79,636 |
Other |  |  | 91,837 |  |  |  | 103,210 |
|  |  | 332,274 |  |  |  | 413,560 |
Less: valuation allowance |  |  | (35,155 | ) |  |  | (37,287 | )
|  |  | 297,119 |  |  |  | 376,273 |
Liabilities: |  |  |  |  |  |  |  |
Net investment in Leases |  |  | 13,501 |  |  |  | 10,599 |
Investment in operating leases |  |  | 121,337 |  |  |  | 137,618 |
Unrealized gains on investment in securities |  |  | 2,505 |  |  |  | 4,779 |
Deferred insurance policy acquisition costs |  |  | 73,077 |  |  |  | 74,211 |
Policy liabilities and policy account balances |  |  | 74,939 |  |  |  | 87,150 |
Property under facility operations |  |  | 21,931 |  |  |  | 22,022 |
Other intangible assets |  |  | 108,257 |  |  |  | 141,864 |
Undistributed earnings |  |  | 59,134 |  |  |  | 76,281 |
Prepaid benefit cost |  |  | 14,483 |  |  |  | 17,290 |
Advances paid |  |  | 8,647 |  |  |  | 8,346 |
Right-of-use assets |  |  | 77,003 |  |  |  | 78,631 |
Other |  |  | 22,081 |  |  |  | 28,772 |
|  |  | 596,895 |  |  |  | 687,563 |
Net deferred tax liability |  | ¥ | 299,776 |  |  | ¥ | 311,290 |
Net deferred tax assets and liabilities at March 31, 2022 and 2023 are reflected in the accompanying consolidated balance sheets under the following captions:
|  | Millions of yen |
|  | 2022 |  |  | 2023 |
Other assets |  | ¥ | 46,065 |  |  | ¥ | 48,292 |
Income taxes: Deferred |  |  | 345,841 |  |  |  | 359,582 |
Net deferred tax liability |  | ¥ | 299,776 |  |  | ¥ | 311,290 |
The valuation allowance is primarily recognized for deferred tax assets of consolidated subsidiaries with operating loss carryforwards. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible and operating loss carryforwards are utilizable. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax-planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company and its subsidiaries will realize the benefits of these deductible temporary differences and operating loss carryforwards, net of the existing valuation allowances at March 31, 2023. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced. The net changes in the total valuation allowance were increases of ¥6,191 million in fiscal 2021, increases of ¥13,595 million in fiscal 2022, and increases of ¥2,132 million in fiscal 2023. The decrease in the total valuation allowance recognized in earnings due to the utilization of net operating loss carryforwards were ¥553 million in fiscal 2021, ¥1,742 million in fiscal 2022 and ¥1,465 million in fiscal 2023. The adjustments to the beginning-of-the-year amount in the total valuation allowance resulting from changes in judgment about the realizability of deferred tax assets in future years were net decreases of ¥743 million in fiscal 2021 (increases of ¥1,032 million and decreases of ¥1,775 million on a gross basis), net increases of ¥436 million in fiscal 2022 (increases of ¥1,947 million and decreases of ¥1,511 million on a gross basis), and net increases of ¥628 million in fiscal 2023 (increases of ¥2,120 million and decreases of ¥1,492 million on a gross basis), respectively. The Company and certain subsidiaries have net operating loss carryforwards of ¥456,985 million at March 31, 2023, which expire as follows:
Years ending March 31, |  | Millions of yen |
2024 |  | ¥ | 17,360 |
202 5 |  |  | 21,183 |
202 6 |  |  | 24,810 |
202 7 |  |  | 13,686 |
202 8 |  |  | 7,993 |
Thereafter |  |  | 279,892 |
Indefinite period |  |  | 92,061 |
Total |  | ¥ | 456,985 |
The unrecognized tax benefits as of March 31, 2022 and 2023 were not material. The Company and its subsidiaries do not believe that it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within 12 months of March 31, 2023. The total amounts of penalties and interest expense related to income taxes recognized in the consolidated balance sheets as of March 31, 2022 and 2023, and in the consolidated statements of income for the fiscal 2021, 2022 and 2023 were not material. The Company and its subsidiaries file tax returns in Japan and certain foreign tax jurisdictions. The Company is no longer subject to ordinary tax examination in Japan for the tax years prior to fiscal 2021, and its major domestic subsidiaries are no longer subject to ordinary tax examination for the tax years prior to fiscal 2018, respectively. Subsidiaries in the United States remain subject to a tax examination for the tax years after fiscal 2019. Subsidiaries in the Netherlands remain subject to a tax examination for the tax years after fiscal 2016.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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