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JOL market update
01 December 2005
By Robert E Melson, Jr & Hisao Hirose of Latham & Watkins.
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JOL
Japanese operating lease
operating lease
The industry has been eagerly anticipating the National Tax Agency's (NTA) response to inquiries made to them by the Japan Leasing Association (JLA) in May regarding changes in Japanese tax regulations that became effective on April 1 2005.
At first glance the regulations had negative implications for the Japanese operating lease (JOL) market. A response was expected towards the end of summer 2005 but that later changed to about October or November. The industry is still sitting tight with the understanding that the NTA's response should come in early 2006.
Uncertainties about the new regulations have resulted in a sluggish JOL market since April 1, but deal flow has started to pick up. A few deals have gone ahead but without residual value guarantees or future fair market value purchase options based on day one valuations. Some JOL market participants, however, are rumoured to be proceeding more aggressively without the...
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