Capcom today announced that it has lowered its financial projections for the full fiscal year 2005/2006 that ended on March 31st. While the Osaka-based company stuck with its sales forecast of 70 billion yen ($595.56 million US), net profit is now expected to reach only 6.5 billion yen ($55.30 million US) instead of the previously projected 8.9 billion yen ($75.52 million US).
While Capcom acknowledged the negative impact of the current slump in the North American game market and weak sales of several new releases in Europe as reasons for the altered projections, the biggest reason behind the announcement had nothing to do with the performance of its game software.

The Osaka branch of the National Tax Bureau had concluded that Capcom had failed to pay taxes on the transactions between its Japanese headquarters and various overseas subsidiaries from 2000 until 2005. Hence the agency ordered the makers of Mega Man and Breath of Fire to pay an additional 1.7 billion yen ($14.46 million US). The company has called the agency's decision "regrettable" and plans to launch a complaint.