On 24 December 2015, the Japanese Cabinet approved the 2016 tax reform proposal (“2016 Tax Reform”), which includes revised Japanese transfer pricing (“TP”) documentation requirements. The revisions are based on recommendations contained in the “Transfer Pricing Documentation and Country-by Country Reporting, Action 13 2015 Final Report” (“Action 13 Report”) published on 5 October 2015 as part of the BEPS Project carried out by OECD and G20.
This newsletter provides an outline of the revised TP documentation requirements in Japan, with reference to the relevant recommendations in the Action 13 Report, and highlights some of the potential implications for taxpayers in Japan.
Many Japanese taxpayers have encountered difficulties in corporate tax examinations, when what are generally considered transfer pricing issues have been challenged by the Japanese tax authorities not under the transfer pricing legislation, but under the “donation rules” of the Japanese Corporate Tax Act.
To provide some clarity in this area, this article will describe the interaction between the Japanese transfer pricing and donation rules, as well as provide some examples of donation challenges that have arisen in relation to intercompany transactions in recent years. Finally, the article will provide recommendations to taxpayers as to how best to mitigate the possibility of a challenge under the donation rules in future examinations.
On 6 January 2015, the Inland Revenue Authority of Singapore (“IRAS”) released revised Transfer Pricing Guidelines (“Guidelines”), an update to those first published in February 2006.
This article summarises some of the key changes. The closing section then provides insight on the implications of these Guidelines for Singapore taxpayers.
For the benefit of taxpayers in Japan for whom the Berry ratio may be unfamiliar, this article discusses its history and its potential uses, as well as comparing the results derived from an application of the Berry ratio with other transfer pricing methodologies.
This Transfer Pricing News provides a summary of discussion draft on transfer pricing documentation and country-by-country reporting released by Organisation for Economic Cooperation and Development (OECD) on 30 January 2014.
On March 26, 2013, the Internal Revenue Service of the United States issued its 14th Annual Statutory Report on Advance Pricing Agreements. The most interesting point of the report from the Japanese perspective is that 53% of bilateral APAs executed by the IRS in 2012 involved Japan as a counterparty (or 55 bilateral APAs in absolute numbers).
Update on audit procedures [PDF 142KB]
The revision of the Act on General Rules for National Taxes (clarification of audit procedures) and its impact on transfer pricing audits.
NTA Transfer Pricing Update [PDF 114KB]
The NTA has introduced a survey to evaluate taxpayer efforts to manage their transfer pricing.
Amendments to the Japanese transfer pricing law to reflect the 2010 Tax Reform were enacted on March 31, 2010. On June 22, 2010, further guidance on the Tax Reform was published by the National Tax Agency . This update summarizes the contents of this additional guidance.
The 2010 tax reform proposed certain clarifications to the requirements for documentation under the Japanese transfer pricing legislation, Special Taxation Measures Law Article 66-4 (“Article 66-4”).
On September 9, 2009 the OECD released a proposed revision to Chapters I-III of the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (“Transfer Pricing Guidelines”).