The Japanese Cabinet approved the 2016 tax reform proposal (2016 Tax Reform) on December 24, 2015. The proposal contains modifications to Japanese transfer pricing (TP) documentation requirements. The modifications are based on recommendations in the final report on Transfer Pricing Documentation and Country-by Country Reporting, Action 13 of the project on base erosion and profit shifting (BEPS) carried out by OECD and G20.
According to the tax reform proposal the preparation and filing of a Master File and a Country-by-Country Report (CbC Report) principally will be required from the ultimate parent company of a multinational enterprise (MNE). The new rules also will require the concurrent preparation of a Local File by all taxpayers that meet a transaction threshold.
