National Tax Agency, Japan
Mutual Agreement Procedures Report 2019
When international double taxation arises from transfer pricing adjustments or others, the National 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 upon request fromtaxpayers. Also, the NTA enters into a Bilateral Advance Pricing Arrangement (“BAPA”) in order to ensure
the predictability of taxpayers and promote the proper and smooth administration of the transfer pricingtaxation.
1. MAP requests received○ During the 2018 operation year (from July 2018 to June 2019), the NTA received 219 MAPrequests (BAPA 74%, Transfer pricing adjustment etc. 26%).
○ The number of MAP requests received marked a record high.
(Note) Please see Attachment 1 for the details of type of MAP requests.
Chart 1: MAP requests received
Number of requests received

Total

200

174

197

183
157

150
130

100

149

167

166
131

152

149

219

162

187

143

135

BAPA

206

195

151

163

131

112

Transfer Pricing Adjustment etc.

504402008(Notes)123342009

22201031362011

2012

45201338442014

20155631201640

2017

2018

Operation YearThe operation year runs from 1 July to 30 June in the following year.
The 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 through foreign
tax authorities. In some countries or regions, taxpayers make one request for one taxation
year and, when we count these requests in a collective way, the number of MAP requests
received during the 2018 operation year is 190.
Transfer pricing adjustment etc. includes cases related to permanent establishments (PEs)and withholding taxes.

1National Tax Agency, Japan
2. MAP requests resolved
2.1 The number of MAP requests resolved○ The number of MAP requests resolved during the 2018 operation year amounted to 187 (BAPA
78%, Transfer pricing adjustment etc. 22 %), which was increased to 113% of the 2017 operationyear.
(Note) Please see Attachment 1 for the details of type of MAP requests.

Chart 2: MAP requests resolved
Number of requests resolved

Total

187
164

150

154
128

127

100

105
91

174

170

171
155

157
141

135

129

146

143

141
121

166

126

122

BAPA
Transfer Pricing Adjustment etc.

5049364136332202008

20092010

2011

29282015

2016

202012

2013

2014

4441

2017

2018

Operation Year(Notes)

In some countries or regions, taxpayers make one request for one taxation year and, when we
count these requests in a collective way, the number of MAP requests resolved during the 2018
operation year is 181.

2.2 Average processing time on a MAP case
○ The average processing time on a MAP request resolved in the 2018 operation year was34.1months (29.9months in the 2017operation year).
○ The average processing time on a BAPA case resolved was 34.5 months (30.7months in the2017 operation year).
○ The average processing time on a transfer pricing adjustment etc. case resolved was
32.7months (27.7months in the 2017 operation year).
2National Tax Agency, Japan
3. Year-End Inventories
3.1 The number of Year-End Inventories○ The number of MAP requests received and resolved marked a record high. Also, the number ofMAP requests received was larger than the number of MAP requests resolved. As a result, thenumber of year-end inventories
in theoperationyear increased.
Chart
3:2018YearEnd Inventories(Note)ofPlease
see inventories
Attachment 1 for the details of type of MAP requests.
Numberyear-end
550
500
450
400
350
300
250
200
150
100
500

Transfer Pricing Adjustment etc.
BAPA

351

380
75

373
61

305

312

289

291

302

330

2009

2010

2011

2012

2013

2014

359
70

90

261

2008

(Notes)

425
379

356
65

95

496

465

456

110

113

355

343

2015

2016

109

528
124

77

387

404

2017
2018
Operation YearIn some countries or regions, taxpayers make one request for one taxation year and, when we
count these requests in a collective way, the number of year-end inventories in the 2018
operation year is 464.

3.2 Region-by-region inventories○ In the 2018 operation year, the number of requests with Asia/Oceania accounted for the largest
part of the total year-end inventories.
○ The treaty partner with which the NTA has year-end inventories most is the United States (25%),
followed by India (17%), China (14%), Korea (9%) and Thailand (6%).
(Note) Please see Attachment 2 for a list of treaty partners with which the NTA has MAP
inventories as of June 30, 2019.
Chart 4: Year-End Inventories by region
Number300

302

250

102

Transfer Pricing Adjustment etc.
BAPA200150

139
5100
50200

87
1770

Asia/OceaniaEurope1340The Americas

3National Tax Agency, Japan
4. MAP requests with non-OECD economies
4.1 The number of MAP requests○ In the 2018 operation year, as for the number of the MAP requests with non-OECD economies,
89 were received and 44 were resolved.
○ The number of year-end inventories with non-OECD economies was 245, accounting for 46% ofthe total year-end inventories.
Chart 5:
MAP requests received with non-OECD economies

MAP requests resolved with non-OECD economies

NumberNumber55

8990547680

45705660
50354140

40

Total

44303023202617102014

2015

BAPA

28132016

45254432
Transfer Pricing
Adjustment etc.

1552023BAPA

231912127112014

2017
2018
Operation Year

2844
Transfer Pricing
Adjustment etc.
31Total2015

232182016

2017
2018
Operation Year

Year-end inventories with non-OECD economies
Number250
200

Transfer Pricing Adjustment etc.
BAPA
200
165

150

132

100

52

50

70

178
75

8095103

2014

2015

2016

245
9976

124

14602017
2018
Operation Year

4.2 Average processing time on a MAP case with non-OECD economies○ The average processing time on a MAP request resolved with non-OECD economies in the 2018
operation year was 37.1 months (40.1 months in the 2017 operation year).
○ The average processing time on a BAPA case resolved with non-OECD economies was 43.6
months (52.0 months in the 2017 operation year).
○ The average processing time on transfer pricing adjustment etc. resolved was 29.9 months (31.1months in the 2017 operation year).

4

National Tax Agency, Japan(Attachment 1)
The number of MAP requests in the last three years
TransferOperation YearBAPA

Pricing

Others

Total

Adjustment

201620172018（Notes） 1

Requests Received

131256162

Requests Resolved

143280171

Year-End Inventories3439419456

Requests Received

166373206

Requests Resolved

122

377

166

Year-End Inventories

387

94

15496

Requests Received

163542219Requests Resolved

146

374187Year-End Inventories

404

111

13528

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

2

The 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 through foreign tax authorities.

3MAP requests related to compensating adjustments and amendments topreviously agreed APAs are included in the years when the MAP requests on
those issues were made.

4

The number of MAP requests resolved includes requests withdrawn by taxpayers
as well as requests 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, 2019)
EuropeAsia/Oceania

The Americas

Belgium

Australia

CanadaCzech Republic

Korea

MexicoTotal(OECD countries)

FinlandUnited States

FranceGermany
IrelandItaly

19partners

Luxembourg
Netherlands
Switzerland
United Kingdom
Spain
Hungary
Slovakia(Non-OECD economies)
China
Hong Kong
9 partners

India
Indonesia
Malaysia
Singapore
TaiwanThailand
Vietnam
14 partners

11 partners

63 partners

28 partners

National Tax Agency, Japan
Types of MAP cases in the 20178 operation year

(Attachment 3)

Industry

A
4

H
24
G18

B
35

F
18

C
31
D
12E
45

Manufacturing
Wholesale/RetailOthers
Total

127
36
24
187

(68%)
(19%)
(13%)
(100.0%)

A: Manufacturing (consumer electric equipment, instruments, and bulbs)
B: Manufacturing (transport equipment and instruments)
C: Manufacturing (industrial electric equipmentsequipment and instruments)
D: Manufacturing (machineries and equipmentsequipment)
E: Manufacturing (others)
F: Trading (import/export)
G: Other wholesale/retail
H: Others

Type of transaction

Intangibles
76
Inventories
156
Services
90(Notes)
1. Total number of MAP requests resolved does not correspond to the sum of the numbers in the chart
above, as some cases are counted for each type of transaction when multiple types were covered.
2. In the case of MAP requests related to compensation adjustments and amendments to previously
agreed APAs, it is counted as the same transaction in the original APA agreement.
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National Tax Agency, Japan

Transfer pricing method
Comparable
uncontrolled
price（CUP）
method, 4

Resale price（RP）method, 1

Cost plus（CP）
method, 1

Profit split（PS）method,
10Others, 53

Transactional
net margin
method（TNMM）, 101(Notes)
1. Total number of MAP requests resolved does not correspond to the sum of the numbers in the chart
above, as some cases are counted for each transfer pricing method when multiple methods wereapplied.
2. In the case of MAP related to compensating adjustments and amendments to previously agreed
APAs, it is counted as the same transfer pricing method applied in the original APA agreement.

8National Tax Agency, Japan(Reference)
Terminologies

Mutual Agreement Procedures (MAP) are a formalized set of procedures between tax authorities oftreaty partners which are provided in tax treaties. The NTA enters into MAP when taxpayers consider
that international double taxation arise or will arise from transfer pricing adjustments or others, or whentaxpayers request bilateral APA.
(Note 1)67 tax treaties that Japan has concluded (which covers 77 countries/regions as of the end of June2019) contain the provisions on the Mutual Agreement Procedures.
(Note 2)An Advance Pricing Arrangement (APA) is an arrangement whereby, based on an application from ataxpayer, the tax administration confirms in advance a set of criteria such as methods, comparables
and adjustments thereto, and critical assumptions as to future events for the determination of thetransfer pricing for transactions between the taxpayer and its foreign-related entity/entities over a fixed
period of time. The tax administration will refrain from adjusting the transfer pricing set by the taxpayer
if taxpayers files its tax returns in accordance with the confirmed APA conditions for the years coveredby the APA.

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