National Tax Agency, JapanMAP (Mutual Agreement Procedures) Report 2014
When international double taxation arises from transfer pricing adjustments or other tax adjustments, theNational Tax Agency (“NTA”) enters into Mutual Agreement Procedures (“MAP”) with relevant foreign tax
authorities under the provisions of applicable tax treaties to resolve such double taxation. Also, the NTA
enters into a Bilateral Advance Pricing Arrangement (“BAPA”; an APA accompanied by MAP) in order toensure the predictability of taxpayers and promote the proper and smooth administration of the transfer
pricing taxation.
1. MAP requests received○ During the 2013 business year (from July 2013 to June 2014), the NTA received 197 MAPrequests, of which 152 were for BAPA.
○ The number of MAP requests is on the increase. During the 2013 business year, the NTA
received the most MAP requests since its commencement of MAP operation.
○ BAPA accounts for approximately 80% of total MAP requests.

Chart 1: Trends in the number of MAP and BAPA requests received
Number200

197
183

MAP

167

150

157

149

143
131

135

122

152

112

100

BAPA
80500
2003

2004

2005

2006

20072008

2009

2010

2011

2012

2013

Business Year(Notes)

12The business year runs from 1 July to 30 June in the following year.
The number of MAP requests consists of both cases where the NTA received such requests
from taxpayers and cases where the NTA received such requests from foreign tax authorities.

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National Tax Agency, Japan

2. MAP cases closed
2.1 The number of MAP cases closed○○The NTA has been striving to expedite MAP processes. The number of MAP cases closed in the2013 business year was 174, hitting a record high.
Out of the overall number of MAP cases closed, the number of BAPA cases closed was 141.

(Note) Please see Attachment 1 for the trend in the number of year-end inventories.

Chart 2: Trends in the number of MAP and BAPA cases closed
Number180

164
154

170
157

174

150

MAP
120

90

128
83

129

2011

2012

141105

60

30

135

BAPA
390
2003

2004

2005

2006

2007

2008

2009

2010

2013

Business Year

2.2 Average processing time on a MAP case
○ The average processing time on a MAP case closed in the 2013 business year was 22.6
months (29.3 months in the 2012 business year).
○ Of which, the average processing time on a BAPA case was 20.9 months (29.6 months in the2012 business year).

2National Tax Agency, Japan

3. Year-End Inventories
3.1 The number of Year-End Inventories○ The overall number of year-end inventories increased in the 2013 business year for the first timein four years due to the considerable rise in the number of requests in the same year.

Chart 3: Trends in the number of Year- End Inventories of MAP and BAPA cases

400

380
MAP

350

373

BAPA
305

379

359

356

312

300

289

291

302

250
203
200
150

129

100
500
2003

2004

2005

2006

20072008

2009

2010

2011

2012

2013

Business Year

3.2 Breakdown by region○ In respect of the regional breakdown of year-end inventories in the 2013 business year, thenumber of cases from Asia-Oceania is the largest, followed by the Americas and Europe.
○ By country, the treaty partner with which the NTA has the largest year-end inventories is theUnited States, followed by China, South Korea, India and Germany.
Chart 4: The number of Year-End Inventories by region
200
168
150

139

MAPBAPA

129
115

100
72
58
500The AmericaAsia, Oceania

3EuropeNational Tax Agency, Japan

4. The number of MAP cases with non-OECD economies
4.1 The number of MAP cases○ The share of MAP cases with non-OECD economies is on the increase. In the 2013 businessyear, non-OECD economies accounted for 23% of the overall MAP requests received and 29%of the overall year-end inventories.
Chart 5:
Trends in the number of MAP requests received
concerning non-OECD economies

Trends in the number of MAP cases closed withnon-OECD economies
NumberNumber

50

50

45

40

MAP

30

26

MAP

29

30

2426

20
1040
32

20
18

15

18

10

BAPA

002009

2010

2011

2012

1582009

2013

30

1816

19
1119

28

24

82010

2011

BAPA2012

2013

Business YearBusiness Year

Trends in the number of year-end inventories
concerning non-OECD economies
Numeber
件数

1201008060111
MAP74

BAPA 958256966666

2011

2012

69454020020092010

2013

Business
Year
事務年度

4.2 Average processing time on a MAP case with non-OECD economies○ As far as non-OECD countries are concerned, the average processing time on a MAP case in the2013 business year was 40.0 months (42.5 months in the 2012 business year).
○ Of which, the average processing time on a BAPA case was 33.2 months (40.5 months in the2012 business year).

4National Tax Agency, Japan(Attachment 1)

The number of MAP cases in recent years
Transfer
Business YearBAPA

PricingOthers

Total

Adjustment

20112012

2013（Notes） 1Requests Received

112

2110143

Cases Closed

135

157157Year-End Inventories

289

51

19359

Requests Received

131

288167

Cases Closed

129

33

8170

Year-End Inventories

291

4619356

Requests Received

152378197

Cases Closed

141

2112174

Year-End Inventories

302

62

15379

The business year runs from 1 July to 30 June in the following year.

2The number of MAP requests received consists of both cases where the NTA
received such requests from taxpayers and cases where the NTA received such
requests from foreign tax authorities.

3

MAP cases related to compensating adjustments and amendments to previously
agreed APAs are included in the years when MAP requests on those issues
were made.

4

The number of MAP cases closed includes cases withdrawn by taxpayers aswell as cases settled with treaty partners.

5”Others” includes cases related to permanent establishments (PEs) andwithholding taxes.

5National Tax Agency, Japan(Attachment 2)
Treaty Partners with which the NTA has MAP inventories (as of June 30, 2014)
EuropeAsia/Oceania

The Americas(OECD countries)
Belgium

Australia

CanadaFranceKorea

United States

Germany
Ireland
Italy
Luxembourg
Netherlands
SwedenSwitzerland
United Kingdom(Non-OECD countries)
China
Hong Kong
India
Indonesia
Singapore
Thailand10 countries

8 countries

2 countries(Notes)1

As of June 30 2014, the number of treaty partners with which the NTA had MAP
inventories was 20.

(Notes)2

The number of treaty partners with which the NTA has MAP inventories generally
continued to be the same for the last five years (from 21 in 2009 to 20 in 2013).

6National Tax Agency, Japan(Reference 1)

Terminologies【Mutual Agreement Procedures (MAP)】
Mutual Agreement Procedures (MAP) are a formalized set of procedures between tax authorities oftreaty partners which are provided in tax treaties to resolve international tax disputes such as thoserepresented by double taxation cases arising as a result of taxation not in accordance with theapplicable tax treaties imposed or to be imposed on the taxpayers. 56 tax treaties that Japan has
concluded with treaty partners (67 countries/regions are covered as of the end of June 2014) include
the provisions on the Mutual Agreement Procedures.

【Advance Pricing Arrangement (APA)】
An Advance Pricing Arrangement (APA) is an arrangement whereby, based on an application from ataxpayer, the tax administration confirms in advance an appropriate set of criteria such as methods,comparables and appropriate adjustments thereto, and critical assumptions as to future events for thedetermination of the transfer pricing for 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 tax-treaty partners to ensure the predictability for the taxpayer of the tax
consequence in respect of its transfer pricing practices and the elimination of potential double taxation
through MAP process. The tax administration will refrain from adjusting the transfer pricing set by thetaxpayer if the taxpayer files its tax returns in accordance with the confirmed APA conditions for theyears covered by the APA.

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National Tax Agency, Japan(Reference 2)
Breakdown of MAP cases in the 2013 business year
By industry

Manufacturing
Wholesale/RetailOthers
Total

109
4223
174

(62.7%)(24.1%)(13.2%)(100.0%)

A: Manufacturing (consumer electric equipment, instruments, and bulbs)
B: Manufacturing (transport equipment and instruments)
C: Manufacturing (industrial electric equipments and instruments)
D: Manufacturing (machineries and equipments)
E: Manufacturing (others)
F: Trading (import/export)
G: Other wholesale/retailBy type of transaction

Intangibles,
54(21.6%)
Inventories,
123 (49.2%)
Services,73 (29.2%)(Notes)
1. Total number of MAP cases closed does not correspond to the sum of the numbers in the chart above,
as some cases are counted for multiple types of transactions when applicable.
2. In the case of MAP related to compensation adjustments and amendments to previously agreed
APAs, only transactions in the original APA agreements are included in the chart above.
8

National Tax Agency, Japan

By transfer pricing method
Comparable
uncontrolled price(CUP) method, 10

Resale price (RP)method, 1
Cost plus (CP)method, 10Others, 34
Profit split (PS)method, 12Transactional net
margin method(TNMM), 114(Notes)
1. Total number of MAP cases closed does not correspond to the sum of the numbers in the chart above,
as some cases are counted for multiple transfer pricing methods when applicable.
2. In the case of MAP related to compensating adjustments and amendments to previously agreed
APAs, only transfer pricing methods applied in the original APA agreements are included in the chartabove.

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