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Multinational tax operations can be extremely complex. Companies are under increasing pressure to carefully manage their tax footprint through a global lens due to recent BEPS developments and other initiatives undertaken by the OECD and G20 member nations. Additional scrutiny surrounding international tax structuring highlights the importance of which is planning aligned with companies’ business strategies.
PwC’s International Tax Service group, comprised of professionals who have worked internationally with PwC member firms as well as those who are seconded from overseas PwC member firms, works closely with Japanese clients to solve international tax issues using the expertise of the PwC Global Network.
As Japanese companies increasingly invest and grow overseas, the tax issues that they face become increasingly complicated. Common tax issues arising from international expansion include local statutory taxation and compliance, the applicability of tax treaties, withholding taxes, transfer pricing arrangements, foreign subsidiary dividend exclusions, foreign tax credit computations, controlled foreign corporation reporting, and the tax haven rules. Our local country desk consists of team members specializing in the tax laws of different countries around the world. Leveraging our extensive network and expertise, we are able to provide valuable tax advice both from a Japanese as well as foreign tax perspectives to address these issues in the local context and more.
Recent BEPS initiatives represent a historical turning point for international taxation. Country by country reporting will likely increase data gathering and scrutiny of multinational business structures and operations. Companies should closely monitor their ability to comply with the latest standards and plan accordingly. Our professionals have closely followed the latest BEPS developments and are able to assist Japanese companies operating abroad to maintain their compliance with the new standards.
Global tax management has become one of the important management functions for Japanese companies doing business internationally. Corporate leaders are continually tasked to improve shareholder value, which oftentimes is impacted by a company’s tax expense. Effective planning and strategies may have a material impact on a company’s worldwide effective tax rate. We can help companies improve their tax effectiveness by analyzing global tax regulations, tax incentives, and the implications to the bottom line.
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The business environment for Japanese companies has changed drastically, driven in part by globalization, BEPS, the introduction of the Corporate Governance Code (requiring the maximization of shareholder value and the prioritization of return on equity), but also in part by an increase of social and community interests around tax conduct. Companies nowadays are required to explain their conduct to various stakeholders, including employees, customers, and members of the media. Careful and responsible management of these issues may have significant consequences beyond tax and may impact a company’s public brand. Our experience in dealing with highly visible clients places us in a unique position to understand the challenges and best practices in tax risk management. We can support clients by proposing changes to the corporate business processes and assist in the establishment of a globally consistent operational framework for tax risk management/governance.
Shintaro (Shin) Yamaguchi (Inbound Leader, PwC Tax Japan) discusses Japan's Pillar Two legislation and 2023 Tax Reform, including IIR, QDMTT, UTPR and interplay with the CFC regime.
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