Proposed limitation of severance pay for executive officers from 2012

Based on the revised Income Tax Law proposed by the government in September 2011, the severance pay for executive officers would be limited to the amount calculated according to the following formula (effective date to be January 1, 2012).  

■  Limit = Average annual salary for the past three years before the termination date X 1/10 X Number of service years X 3  

The severance pay amount exceeding the above limit will be classified as Salary Income, which may be subject to higher income tax rates than the Severance Income.