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Advance Pricing Agreement Japan

Does the country have an Admission Agreement (ABS) program? If so, is the program widely used? Are there unilateral, bilateral and multilateral ABS? Starting in 2008, ABS applications must be submitted before the beginning of the fiscal year to which the PA is to apply. Several informal prior consultations with NTA examiners are usually required before the formal adoption of an application. According to NTA reports, bilateral ABS applications have an average processing time of between 2 and 3 years. Obtaining a multilateral ABS takes much longer. The submission of an application for an APA by the taxable person shall not stop a transfer pricing examination if it is already in progress. In the context of an APA, the tax administration undertakes not to adjust or review the pricing of certain transactions under an agreed transfer pricing method for a given period (usually 3 to 5 years). For some taxable persons, obtaining an ABS may be an effective solution to the risk of transfer pricing controls. APA applications have continued to increase in Japan. In 2007, 113 bilateral PA applications were filed, more than double those in 2002.

Some factors pose difficulties to the APAs agreement with the DGT: yes, the APA programme is independent of the audit function of the tax administration and the competent administrative staff that deals with other cases of double taxation. All the taxable person`s documents are returned to the taxable person if the taxable person`s ABS application is not approved or cancelled by the DGT. No documentation during the APA process may be used by DGT for tax audit and investigation purposes. Mutual agreement cases were handled by the Directorate of International Taxation. The main advantages of ASAs are the minimization of transfer pricing disputes, legal certainty and the facilitation of tax calculation. An ABS is a solution for taxpayers who are looking for maximum transfer pricing guarantee for future years. Our transfer pricing experts can facilitate and support the entire APA process: how many years can an APA cover prospectively? Are there rollbacks available? Japan has a formal ABS program that can be used for all corporate taxpayers. In practice, as in most countries, tax authorities reserve the right to reject ABS applications in certain cases, for example. B if the application is considered to be part of a tax avoidance scheme or if a local business is still in the start-up phase.

The average time to conclude an ABS is about one year for unilateral SAAs and two years for bilateral SAAs….