Income Taxes
 12 Months Ended
Mar. 31, 2022
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, 2020, 2021 and 2022 was as follows:
 202020212022
 (in millions)
Domestic income (loss) ¥89,440 ¥575,101 ¥(886,921)
Foreign income343,780 1,033,241 828,194 
Total¥433,220 ¥1,608,342 ¥(58,727)
Income Tax Expense (Benefit)
The detail of current and deferred income tax expense (benefit) for the fiscal years ended March 31, 2020, 2021 and 2022 was as follows:
 202020212022
 
(in millions)
Current:     
Domestic¥28,128 ¥95,183 ¥243,993 
Foreign147,344 83,492 112,164 
Total175,472 178,675 356,157 
Deferred:
Domestic(18,949)310,490 (308,214)
Foreign(42,018)(44,217)(62,454)
Total(60,967)266,273 (370,668)
Income tax expense (benefit)114,505 444,948 (14,511)
Income tax expense (benefit) reported in Accumulated OCI relating to:
Investment securities(29,747)1,146 (87,628)
Debt valuation adjustments23,908 (36,792)10,296 
Derivatives qualifying for cash flow hedges4,012 12,244 (4,968)
Defined benefit plans(57,685)139,883 19,039 
Foreign currency translation adjustments(20,693)(3,368)96,742 
Total(80,205)113,113 33,481 
Total¥34,300 ¥558,061 ¥18,970 
The MUFG Group files tax returns on a consolidated basis for corporate income taxes within Japan. A consolidated basis for corporate income taxes results in the reporting of taxable income or loss based upon the combined profits or losses of the parent company and its wholly-owned domestic subsidiaries.
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, 2020, 2021 and 2022, 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, 2020, 2021 and 2022 is as follows:
 202020212022
Combined normal effective statutory tax rate30.6 %30.6 %30.6 %
Nondeductible expenses1.2 0.3 (12.0)
Impairment of goodwill26.1 2.4 — 
Foreign tax credit and payments(9.2)(0.9)28.7 
Lower tax rates applicable to income of subsidiaries(3.2)(1.0)30.8 
Change in valuation allowance7.9 (0.9)(90.1)
Realization of previously unrecognized tax effects of subsidiaries(19.8)(1)— — 
Nontaxable dividends received(15.6)(1.9)85.1 
Undistributed earnings of subsidiaries3.6 — (25.6)
Tax and interest expense for uncertainty in income taxes— (0.1)(10.8)
Noncontrolling interest income (loss)(0.1)0.1 (0.7)
Effect of changes in tax laws— (0.1)(2.4)
Expiration of loss carryforward1.9 0.1 (7.0)
Other—net3.0 (0.9)(1.9)
Effective income tax rate26.4 %27.7 %24.7 %
Note:
(1)In October 2019, a wholly owned subsidiary of the MUFG Group was sold. The sale resulted in the realization of tax benefits that were not previously recognized as deferred tax assets, resulting in a ¥85,588 million reduction of income tax expense and a 19.8% reduction in the effective tax rate for the fiscal year ended March 31, 2020
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, 2021 and 2022 were as follows:
 20212022
 
(in millions)
Deferred tax assets:   
Allowance for credit losses¥462,369 ¥462,303 
Operating loss carryforwards97,844 99,566 
Loans790 37 
Accrued liabilities and other300,942 309,017 
Premises and equipment117,322 124,419 
Derivative financial instruments69,039 154,237 
Obligations under operating leases132,443 106,864 
Valuation allowance(137,503)(184,932)
Total deferred tax assets1,043,246 1,071,511 
 20212022
 
(in millions)
Deferred tax liabilities:   
Investment securities (including trading account assets at fair value under the fair value option)1,017,131 605,443 
Intangible assets70,575 69,276 
Lease transactions48,519 47,432 
Defined benefit plans81,282 102,998 
Investments in subsidiaries and affiliates338,713 506,829 
Right-of-use assets of operating leases100,260 77,274 
Other92,306 113,335 
Total deferred tax liabilities1,748,786 1,522,587 
Net deferred tax assets (liabilities)¥(705,540)¥(451,076)
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, 2021 and 2022 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, 2021 and 2022, the undistributed earnings of such foreign subsidiaries amounted to approximately ¥105,934 million and ¥108,311 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, 2022, the MUFG Group had operating loss carryforwards for corporate tax of ¥212,597 million and tax credit carryforwards of ¥54,062 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:   
2023¥4,881 ¥458 
20245,145 328 
202584,109 188 
202653,634 94 
2027543 151 
2028— 55 
2029 and thereafter24,022 45,367 
No definite expiration date40,263 7,421 
Total¥212,597 ¥54,062 
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, 2020, 2021 and 2022:
 202020212022
 
(in millions)
Balance at beginning of fiscal year¥19,160 ¥19,249 ¥13,829 
Gross amount of increases for current year’s tax positions399 202 28 
Gross amount of decreases for current year’s tax positions— (1,919)— 
Gross amount of increases for prior years’ tax positions212 489 6,320 
Gross amount of decreases for prior years’ tax positions— (2,329)(183)
Net amount of changes relating to settlements with tax authorities(81)— — 
Decreases due to lapse of applicable statutes of limitations(297)(116)(8)
Foreign exchange translation and other(144)(1,747)1,808 
Balance at end of fiscal year¥19,249 ¥13,829 ¥21,794 
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, 2020, 2021 and 2022:
 202020212022
 
(in millions)
Balance at beginning of fiscal year¥3,056 ¥2,612 ¥2,417 
Total interest and penalties in the consolidated statements of operations(398)(398)156 
Total cash settlements, foreign exchange translation and other(46)203 275 
Balance at end of fiscal year¥2,612 ¥2,417 ¥2,848 
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:
JurisdictionTax years
Japan2021 and forward
United States—Federal2019 and forward
United States—California2015 and forward
Indonesia2018 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.