• With the passage of the 2016 tax reform bills on 29 March 2016, the effective corporate tax rates for a company which is liable to size-based business taxes (generally speaking, company with stated capital of over JPY 100M) will be reduced.
  • In line with recommendations contained in the OECD BEPS report on Action 13, Japan will follow the three-tiered transfer pricing documentation rules:
  1. for tax years beginning on or after 1 April 2016 a country-by-country report must be filed by Japanese MNE group with global revenue of not less than JPY100 billion for the year immediately preceding the reporting year. It is due within one year after the reporting fiscal year-end. The reporting language is English.
  2. for tax years beginning after 1 April 2016 a master file must be filed by Japan-based companies that are members of a MNE group with revenue of not less than JPY100 billion for the year immediately preceding the reporting year. It is due within one year after the reporting fiscal year-end. The reporting language is Japanese or English.
  3. for taxable years beginning after 1 April 2017 a local file must be filed by Japanese companies and Japanese permanent establishments which have at least JPY5 billion of related-party transactions or JPY300 million of related-party intangible property transactions in the previous fiscal year (the current fiscal year if the previous year does not exit). It is due by the filing due date of the Japanese income tax return.
  • Reporting requirement for Japanese subsidiary or Japan branch of a foreign company who pays stock-based compensation is expanded to include not only Japanese resident who is a former director or employee of a Japanese subsidiary or Japan branch of a foreign company; but also a non-resident who is or a former director or employee of a Japanese subsidiary or a Japan branch of a foreign company.

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