Having written all that, and beaten by the much more succinct jhowell, something else occurred to me.
What font are you using? There are two fonts on the Kobo devices that are intended for use with Japanese and similar languages. When used with epubs in English, they don't display italics or bold text. These are "Kobo Tsukushi Mincho" and "Kobo UD Kakugo". Any of the other supplied fonts should be OK. And if you are sideloading a font, you need to make sure the file names are correct for everything to work correctly.
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