KLab Inc., the Tokyo-based mobile game developer, will record a special loss of 114 million yen ($760,000) after waiving its right to collect tax-related claims from employees over trust-based stock options.
The decision follows Japan’s National Tax Agency’s May 2023 guidance that clarified taxation rules for trust-based stock options. The agency determined that companies must withhold taxes when employees exercise their options, considering such gains as effective compensation.
KLab had previously paid withholding taxes on exercised options granted between its 15th and 17th stock option programs. The company decided to absorb the costs rather than pursue reimbursement from employees, citing its original intention of providing incentives for corporate value enhancement.
The special loss includes 73 million yen in receivables already recorded on its books, plus additional expenses related to the waiver. KLab will book these charges in its fourth-quarter results.
The company noted that all relevant trust-based stock options have reached their exercise deadline, marking the end of this tax-related issue.
