Eisai Co., Ltd. (“the Company”) and its affiliates (collectively referred to as “the Group”)
Fiscal year ended March 31, 2021
Notes to Consolidated Financial Statements (Income taxes)(1) Income taxes
Breakdown of income taxes(Unit: Millions of Yen)
Fiscal year ended
March 31, 2021

Fiscal year ended
March 31, 2020

Income taxes – current (Note 1) (Note 2)

12,0693,938

Income taxes – deferred(2,001)

1,659

10,068

5,596

Total(Note 1)

For the fiscal year ended March 31, 2020, Eisai Corporation of North America, the Company’s consolidated
subsidiary in the U.S., paid the Company ¥54,514 million as return of its paid-in capital, in order to resolve cash
imbalance between Japan and the U.S. in the Group. As a result, a decrease in tax expenses of ¥23,297 million
was recorded due to the recognition of taxable items such as capital losses for the Company.

(Note 2)

Movements of liabilities due to valuation of uncertain tax positions are included in “income taxes – current” ineach fiscal year.

Reconciliation between the statutory tax rate and the effective tax rate
The effective tax rate represents ratio of income taxes to profit before income taxes. The Company has been mainly
imposed corporate income taxes, inhabitant taxes and business taxes, and the statutory tax rate based on these items
is 30.5%. Overseas subsidiaries have been imposed corporate income taxes in each jurisdiction.
(Unit: %)Fiscal year ended
March 31, 2021

Fiscal year ended
March 31, 2020

Statutory tax rate

30.5

30.5

Tax credit for experiment and research expenses

(5.5)

(5.2)

Tax rate differences in subsidiaries

(4.8)

(0.0)

Incomes taxes in the past

(2.1)

(0.2)

Business taxes – value-added component

1.1

0.5

Expenses not permanently deductible for income
tax purposes, such as entertainment expenses

1.1

1.0

Uncertain tax positions

0.5

(5.7)

Valuation allowances

(0.5)

0.7

－(18.2)Others(1.0)

0.8

Effective tax rate

19.2

4.4

Repayment of paid-in capital from a subsidiary in
the United States

(2) Deferred tax assets and deferred tax liabilities
Breakdown of deferred tax assets and deferred tax liabilities
For the fiscal year ended March 31, 2021
(Unit: Millions of Yen)
As ofApril 1, 2020

Recognizedthrough P&L

Recognizedthrough OCI

As ofMarch 31, 2021

Deferred tax assets
13,9742,360－

16,33427,323

1,372－

28,696Retirement benefit liabilities

2,300

2,288

(1,401)

3,187

Depreciation and amortization

1,519

998

－

2,517

Accrued bonuses

3,932

(839)

－

3,093

Deferred charges for tax purposes

9,470

349

－

9,818

Unrealized gain on inventories

15,664(2,593)－

13,071

Net operating loss carryforward

1,216(301)－914

Others

18,637(1,175)(54)

17,408Sub-total

94,0352,459(1,455)95,039Intangible assets

18,95796－

19,054

Depreciation and amortization

2,622(749)

－

1,873

5,585

－

965

6,551

Others

1,001

149－

1,150

Sub-total

28,165(503)

965

28,62765,8702,962(2,420)66,412

Entrusted R&D expenses
Tax credit for experiment and researchexpenses

Deferred tax liabilities

Financial assets measured at fair value
through OCIBalance (Note 1)(Note 1)The difference between the balance recognized through P&L and income taxes – deferred is mainly due tomovements of liabilities due to valuation of uncertain tax positions which are offset with deferred tax assets inconsolidated statement of financial position and included in income taxes – current in consolidated statement ofincome, and foreign exchange fluctuations.

For the fiscal year ended March 31, 2020
(Unit: Millions of Yen)
As ofApril 1, 2019

Recognizedthrough P&L

Recognizedthrough OCI

As ofMarch 31, 2020

Deferred tax assets
Entrusted R&D expenses

14,237(263)－13,974

Tax credit for experiment and researchexpenses (Note 1)

19,156

8,167－

27,323Retirement benefit liabilities

4,330(3,307)

1,276

2,300

Depreciation and amortization

1,442

77－

1,519

Accrued bonuses

4,214

(283)

－

3,932

Deferred charges for tax purposes

2,848

6,622

－

9,470

Unrealized gain on inventories

9,682

5,983

－

15,664

Net operating loss carryforward

1,706

(490)

－

1,216

Others

22,764(4,028)(99)

18,637

Sub-total

80,38012,478

1,177

94,035Intangible assets

13,652

5,305－

18,957

Depreciation and amortization

1,802

819

－

2,622

Financial assets measured at fair value
through OCI

9,075－(3,490)

5,585

Others

1,078

(77)

－

1,001

Sub-total

25,6086,047(3,490)28,16554,772

6,431

4,667

65,870

Deferred tax liabilities

Balance (Note 2)(Note 1)For the fiscal year ended March 31, 2020, the Group has retrospectively applied IFRIC 23 “Uncertainty over
Income Tax Treatments” (“this Interpretation”). In accordance with the transition method of this Interpretation, theGroup elects to apply the method to recognize the cumulative effects of the initial application of this Interpretation
at the date of initial application (April 1, 2019). As a result, deferred tax assets decreased by ¥13,570 million in(Note 2)the consolidated statement of financial position at the date of initial application.
The difference between the balance of recognized through P&L and income taxes – deferred is mainly due tomovements of liabilities due to valuation of uncertain tax positions which are offset with deferred tax assets inconsolidated statement of financial position and included in income taxes – current in consolidated statement ofincome, and foreign exchange fluctuations.

Deferred tax assets and deferred tax liabilities(Unit: Millions of Yen)
As of March 31, 2021

As of March 31, 2020

Deferred tax assets

66,92366,438Deferred tax liabilities

511

569

66,41265,870

Balance(3) Deferred tax assets not recognized in the consolidated financial statements
The Group does not recognize deferred tax assets when it is not likely to arise sufficient taxable income in the future
to utilize the benefit.
Breakdown of deferred tax assets not recognized in the consolidated financial statements(Unit: Millions of Yen)
As of March 31, 2021
Deductible temporary difference

3,910

4,040

Net operating loss carryforward (Note 1)

10,752

9,715

Tax credit carryforward (Note 2)

5,304

5,502

19,965

19,257

Total(Note 1)

As of March 31, 2020

Breakdown by timing of expiration of net operating loss carryforward on which deferred tax assets are notrecognized in the consolidated statements(Unit: Millions of Yen)
As of March 31, 2021

As of March 31, 2020

Within one year－－

Over one year, within five years

677

326

10,074

9,389

10,752

9,715

Over five years
Total(Note 2)

Breakdown by timing of expiration of tax credit carryforward on which deferred tax assets are not recognized in
the consolidated statements(Unit: Millions of Yen)
As of March 31, 2021

As of March 31, 2020

Within one year

90134

Over one year, within five years

46

204

5,168

5,164

5,304

5,502

Over five years
Total(4) Temporary differences regarding investments in subsidiaries on which deferred tax liabilities are not recognized in
the consolidated statement
For the fiscal year ended March 31, 2021, the amount of temporary differences regarding investments in subsidiaries
on which deferred tax liabilities are not recognized in the consolidated statements is ¥333,038 million (¥285,551 million
for the fiscal year ended March 31, 2020). The Group does not recognize deferred tax liabilities on the temporary
differences when the Company can control the timing of dissolution of the temporary differences and it is likely not tobe dissolved within foreseeable period.