National Tax Agency, Japan
Provisional Translation

MAP Report 2012
When international double taxation arises from transfer pricing adjustments or other taxadjustments, the National Tax Agency (the “NTA”) enters into discussions with the tax treaty
partners to resolve double taxation. Also, the NTA enters into the Bilateral Advance Pricing
Arrangements (BAPA; an APA accompanied by MAP), in order to ensure the predictability oftransfer pricing taxation and promote the proper and smooth administration of the transfer pricingtaxation.
１．Recent Trends in the number of Mutual Agreement Procedures (MAP) cases received○During the 2011 business year (July 2011until June 2012), the National Tax Agency (NTA)
received 143 MAP cases, of which 112 were on BAPA accounting for approximately 80% of
total MAP cases.
○Compared to the statistics of a decade ago (2001 business year), the number of MAP cases
and BAPA cases increased by 1.6 times and 2.7 times, respectively.
○However, the number of total MAP cases received have declined in the last two years, due
primarily to the decrease in BAPA cases.

Chart 1 Trends in the number of MAP and BAPA cases received
Number200MAP150

143
88100112
BAPA

50

420
2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Business Year(Notes)

1
2The business year runs from 1 July to 30 June in the following year.
The number of MAP cases consists of both cases in which the NTA received MAP requests
from taxpayers in Japan, and cases in which the NTA received MAP requests from foreign
tax authorities.

1

National Tax Agency, Japan
２．Summary of the MAP update(1) Number of MAP cases disposed of in the 2011 business year
○The number of MAP cases disposed of is 157 (-4% Y/Y) and the number of BAPA is 135 (+5%Y/Y). While the overall number of MAP cases disposed of decreased slightly, the number ofBAPA cases disposed of hit the record high.

Chart 2 Trends in the number of MAP and BAPA cases disposed ofNumber
180

157
150

MAP

135

120

90

77
BAPA

60

30

250
2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Business Year

(2) Number of MAP cases disposed of by region○The treaty partners with which the NTA disposed of the largest numbers of MAP cases in the2011 business year were (1) United States, (2) Australia, and (3) United Kingdom.
○The number of treaty partners with MAP cases has not changed significantly in the last
several years (from 25 countries in 2006 to 23 countries in 2011).
（Note）Please see Attachment 1 for the treaty partners with MAP cases as of June 30, 2012.
The number of cases by country is not disclosed in consideration of the relationships
with the treaty partners.

2National Tax Agency, Japan

Chart 3 Number of MAP cases Disposed of by Region
Number80

72
62

60
48

44

MAP

37

40

BAPA

2920
Asia,Oceania

North America

Europe and Others(3) Number of MAP cases with Non-OECD countries○The number of MAP cases received with Non-OECD countries is 24 (-25% Y/Y), those disposedof are 11 (-54% Y/Y) and those carried forward are 95 (+16% Y/Y), as shown in Chart 4 below.

Chart 4 Trends in the number of MAP cases received
with Non-OECD countries

Trends in the number of disposed of MAP
cases with Non-OECD countries

NumberNumber4030

32
30

MAP

26

24

24

18

20

1024

MAP

1920

26

1118

15
13

1112

1115

103

BAPA

8BAPA

8

6002007200820092010

2011

2007

BusinessYear

2008

20092010

2011
BusinessYear3

National Tax Agency, JapanTrends in the number of carried forward
MAP cases with Non-OECD countries
Number10082
MAP80

95

7467

6160

66
56

40
2033200745BAPA

2009

2010

382008

2011BusinessYear(4) Average processing time on a MAP case
○The average processing time on a MAP case in 2011 business year was 25.1months, of which on
BAPA was 23.6 months.

4National Tax Agency, Japan(Attachment 1)
Treaty Partners with MAP cases （as of June 30 2012)
EuropeAsia PacificNorth America(OECD member countries)
Belgium※

Australia※

Canada※Czech※

Korea※

United States※

China※

DenmarkFrance※

Germany※Ireland※

Italy※

Luxembourg※

Netherlands※

SpainSweden※

Switzerland※United Kingdom※(OECD non-member countries)

India
Indonesia
Malaysia

13 countries

Singapore※Thailand※

8 countries

2 countries(Notes)1 The number of countries with MAP cases as of June 30 2012 is 23.

(Notes)2 The symbols "※" indicate countries with APA cases (18 countries).

5

National Tax Agency, Japan(Attachment 2)
The number of MAP cases in recent years
Transfer
Business YearBAPA

Pricing

OthersTotal

Taxation

20092010

2011（Notes） 1234

5

Cases Received14927

7183

Cases Disposed1053316154

Year End Inventory

305

58

17380

Cases Received

135148157

Cases Disposed

128279164

Year End Inventory

312

4516373

Cases Received

112

2110143

Cases Disposed

135

157157

Year End Inventory

289

51

19359

The business year runs from 1 July to 30 June of the following year.
The number of MAP cases consists of both cases in which the NTA received MAP
requests from taxpayers in Japan and cases in which the NTA received MAP
requests from foreign tax authorities.
MAP cases related to compensating adjustments and amendments to apreviously agreed APA are counted in the years when MAP requests on thoseparticular issues are made.
The number of MAP cases disposed of includes cases already closed by theagreements with the treaty partners or by the withdrawals of MAP requests by
the taxpayers.
”Others” include cases related to permanent establishments (PEs) andwithholding taxes.

6National Tax Agency, Japan（ Reference 1）
Terminologies【Mutual Agreement Procedures (MAP)】
Mutual Agreement Procedures (MAP) are a formalized set of procedures between tax authoritiesof treaty partners which are provided in tax treaties to resolve the international tax disputes suchas those represented by double taxation cases arising as a result of taxation not in accordancewith the applicable tax treaties imposed or to be imposed on the taxpayers. All 53 tax treatiesthat Japan has concluded with treaty partners (64 countries/regions are covered as of the end ofJune 2012) include the provisions on Mutual Agreement Procedures.

【Advance Pricing Arrangement (APA)】
APA is an arrangement whereby, based on the application from a taxpayer, the tax administration
confirms in advance an appropriate set of criteria such as methods, comparables and appropriate
adjustments thereto, critical assumptions as to future events for the determination of the transfer
pricing for the transactions between the taxpayer and its foreign-related entity/entities over a
fixed period of time. It is often the case that APAs are agreed bilaterally or multilaterally among
the tax-treaty partners to ensure the predictability for the taxpayer of the tax consequence inrespect of its transfer pricing practices and the elimination of potential double taxation through
MAP process. The tax administration will refrain from applying transfer pricing taxation to thetaxpayer if the taxpayer files its tax returns in accordance with the confirmed APA conditions forthe years covered by the APA.

7

National Tax Agency, Japan（ R e fe re n ce 2 ）The breakdown of MAP cases in business year 2011

By industry

A, 13
Others, 27

B, 12

Manufacturing

87 （55.4％）

Wholesale/Retail43 （27.4％）

Other

27 （17.2％）

Total

157 （100.0％）

C, 18

G, 18

A: Manufacturing (consumer electric equipment, instruments, and bulbs)
D, 13B: Manufacturing (transport equipment and instruments)
C: Manufacturing (industrial electric equipments and instruments)

F, 25

E, 31

D: Manufacturing (machineries and equipments)
E: Manufacturing (others)
F :Trading (import/export)
G: Other wholesale/retailBy type of transaction(Notes)Intangibles,
51,(24.8%)

Services,61( 29.6%)Inventories,
94,(45.6%)

1 Total number of MAP cases disposed of does
not correspond to the sum of numbers in theleft chart, as cases are counted for multiple
types of transactions when applicable.
2 MAP cases related to compensationadjustments and amendments to apreviously agreed APA are counted for theoriginally agreed type of transaction only.

8National Tax Agency, Japan

By transfer pricing method
Compareble
uncontrolled
price method(CUP),4(Notes)
1 Total number of MAP cases disposed of does
not correspond to the sum of numbers in theleft chart, as cases are counted for multiple
transfer pricing methods when applicable.

Resale pricemethod(RP), 1Others, 15

Cost plus
method(CP), 5

2 MAP cases related to compensating
adjustments and amendments to apreviously agreed APA are counted for theoriginally agreed transfer pricing method
only.

Profit Spilitmethod(PS), 26

Transactional
net merginmethod(TNMM),709