Japan’s national tax agency has released guidance concerning new transfer pricing documentation rules. The guidance released on 30 June 2016 and under Japan’s 2016 tax reform, amendments were made to the Japanese transfer pricing documentation rules. These changes are in line with the recommendations under Action 13, Transfer pricing documentation and country-by-country reporting, of the OECD’s base erosion and profit shifting (BEPS) project. The Japanese rules provide a three-tiered approach country-by-country (CbC) reports, Master files and Local files for certain “specified” multinational enterprise (MNE) groups.
Local files are subject to contemporaneous documentation, and the items to be provided in the Local files have been revised. Also taxpayer companies are to maintain Local files if engaged in transactions with foreign related parties, even if the company does not belong to a “specified” MNE group satisfying the JPY100 billion thresholds.
