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Cross-border Tax Talks
July 07, 2026
Japan Tax Update: Tea, Tariffs and Top-up Taxes
Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Shin Yamaguchi, a tax partner at PwC Japan, the Japanese inbound tax leader, and host of the English-language podcast Dial in Japan. Doug and Shin discuss Japan’s current inbound and outbound investment environment, the role of supply-chain diversification and energy security in Japanese outbound strategy, and why Japan remains an active market for inbound acquisitions and carve-outs. They also explore Japan’s Pillar Two implementation timeline, readiness for compliance, the interaction between Pillar Two and Japan’s CFC rules, practical administrative and substantive challenges for Japanese-parented groups, tariff-related uncertainty for US investment, and the tax controversy environment in Japan, including the continued focus on transfer pricing.
- [01:15] Shin’s new podcast, Dial in Japan, and his role as a PwC Japan tax partner and Japanese inbound tax leader
- [03:20] What makes Japan unique from an international tax perspective
- [04:05] Japan’s three-month corporate tax return deadline and compliance culture; why Pillar Two is pushing Japanese tax functions toward greater centralization
- [07:05] Japan’s current outbound expansion and inbound deals environment
- [09:10] Supply-chain diversification, geopolitics, and energy and critical minerals investment
- [11:00] Japan’s Pillar Two implementation status and effective dates; Section 899 created concern for Japanese businesses
- [13:55] Japan’s tax reform calendar, OECD guidance, and the side-by-side package
- [15:00] How ready Japanese multinationals are for Pillar Two compliance
- [17:35] How Pillar Two compares with Japan’s CFC regime
- [19:40] Administrative burdens and substantive mismatches for Japanese-parented groups
- [23:45] Why non-retroactive legislative changes can still create year-one friction
- [26:00] Whether Pillar Two changes behavior or mainly adds compliance complexity
- [29:45] How Japanese multinationals are responding to tariff uncertainty
- [32:30] Japan’s $550 billion package and longer-term US investment commitments
- [33:30] US incentives, immediate expensing, and Pillar Two top-up-tax considerations
- [35:45] Tax controversy trends in Japan, with transfer pricing front and center
- [37:15] Rapid fire: coffee or tea? Cardinals or Dodgers? Favorite podcast? Most underrated skill in tax? and one word to describe the future of international tax?
Speakers
International Tax Services Global Leader, PwC US
Partner, PwC Tax Japan
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