The Japanese tax authorities are increasingly active in enforcing Japan’s transfer pricing rules. Unfortunately, dealing with a transfer pricing tax audit requires significant time and expense. If an assessment is made, obtaining relief from double taxation through mutual agreement procedures (competent authority negotiations) also requires significant effort, and in some cases double taxation cannot be eliminated. To cope in this increasingly difficult environment, it is advisable for taxpayers to undertake an analysis of their transfer pricing tax risk, and to prepare documentation supporting their transfer pricing policies and procedures. In appropriate cases, an advance pricing arrangement can be an effective measure for eliminating future transfer pricing tax risk.
The PwC Tokyo Transfer Pricing Consulting Group, in conjunction with PwC transfer pricing teams located worldwide, provides various services to assist our clients in managing their global effective tax rate while limiting their transfer pricing audit exposure.