|Deloitte Tohmatsu Tax|
|Ernst & Young Tax Co|
|PwC Tax Japan|
|Nagashima Ohno & Tsunematsu|
|Tokyo Kyodo Accounting Office|
|Kojima Law Offices, Taxand Japan|
When the Japanese Prime Minister Shinzo Abe returned to office in 2012, his government implemented economic policies aimed at rejuvenating Japan's lacklustre economy. Policies included lowering corporation tax to 31% from 38% to increase the country's competiveness and attract foreign investment. However, Japan is a country that still faces long-term challenges. One of these challenges is an aging population that requires a social security system. However, with a lowered corporation tax, the Japanese government needs to expand its tax base in other areas. Homing in on transfer pricing is one significant way the Japanese tax authority is looking to achieve this.
On April 1 2016, the Japanese government introduced new TP rules based on BEPS Action 13. Taxpayers are now required to prepare and file the master file, the local file and country-by-country reporting (CbCR).
The Japanese government has made efforts to provide guidance and practical assistance to taxpayers concerning TP documentation. In June 2017, the National Tax Agency (NTA) published the 'Transfer Pricing Guidebook: Maintaining and Improving Voluntary Tax Compliance'. The guidebook informs taxpayers of the NTA's initiatives that came into effect shortly after in July 2017. These initiatives include the setting up of help desks across Japan and tax bureau officials visiting businesses that need advice on TP documentation. These initiatives are aimed at giving tax authorities information about any difficulties that taxpayers face when preparing TP documentation and enables the NTA to make informed assessments about the compliance process. The initiatives are intended to give confidence to taxpayers about preparing TP documentation and encourage them comply with the new reporting regime.
National Tax Agency (Japan)
Tokyo Regional Taxation Bureau
3 Chome-1-1 Kasumigaseki, Chiyoda-ku, Tokyo-to 100-0013, Japan
Tel: +81 3-3581-4161
(As of August 2017)
|Corporate income tax rate||23.9% (a)|
|Capital gains tax rate||23.9% (a)|
|Branch tax rate||23.9% (a)|
Withholding tax (b)
|Royalties from patents, know-how, etc.||20% (c)|
|Branch remittance tax||n.a.|
Net operating losses (years)
Source: EY 2017 Worldwide Corporate Tax Guide and Deloitte