National Tax Agency, JapanMAP (Mutual Agreement Procedures) Report 2013
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 2012 business year (from July 2012 to June 2013), the NTA received 167 MAPrequests, of which 131 were for BAPA.
○ The number of MAP requests increased again after 2 years of decline.
○ BAPA accounts for approximately 80% of total MAP requests.
Chart 1: Trends in the number of MAP and BAPA requests received
Number200

183
MAP

174
167

157

150

130

143

149
135

131
112

100

50

94

BAPA

47

0
2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Business Year(Notes)

1
2The 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. While the number of BAPA cases closed
decreased slightly, the overall number of MAP cases closed in the 2012 business year was 170(+8% Y/Y), hitting a record high.
As a result, the overall number of year-end inventories decreased for the third consecutive year.

(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

157

170

150

127

MAP

135

120

90

128

129

105

80
91

60

30

BAPA
470
2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Business Year

2.2 The number of MAP cases closed by region○ The treaty partner with which the NTA settled the largest number of MAP cases in the 2012business year was the United States, followed by Australia, the United Kingdom, Korea, andSingapore.
(Note) Please see Attachment 2 for the treaty partners with which the NTA has MAP inventories asof June 30, 2013. The number of cases for each country is not disclosed in consideration ofthe relationships with the treaty partners.

2National Tax Agency, Japan
Chart 3: The number of MAP cases closed by region
Number100

87

80

67

60

51
MAP

3940

32

BAPA

23200North America

Asia, Oceania

Europe and Others

2.3 The number of MAP cases with non-OECD economies○ The share of MAP cases with non-OECD economies is on the increase. In the 2012 business
year, non-OECD economies accounted for 17% of the overall MAP requests received and cases
closed.

Chart 4:
Trends in the number of MAP requests received
concerning non-OECD economies

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

NumberNumber40

40
MAP

30

20

32

29
24

26

1830

26
18

18

10

00
2009

1112182010

2011

2012

28

19

15

BAPA

112008

24

20

15

10

MAP

62008

82009

82010

2011

BAPA

2012
Business
Year

BusinessYear

3

National Tax Agency, Japan
Trends in the number of year-end inventories ofcases with non-OECD economies
Number120MAP

100
80

67

95

96

6666201120128274605640

2038

45
BAPA0200820092010

BusinessYear

2.4 Average processing time on a MAP case
○ The average processing time on a MAP case in the 2012 business year increased to 29.3 months(25.1 months in the 2011 business year) as the number of difficult cases requiring longer discussion
time increased.
Of which, the average processing time on a BAPA case also increased to 29.6 months (23.6months in the 2011 business year).

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National Tax Agency, Japan(Attachment 1)

The number of MAP cases in recent years
Transfer
Business YearBAPA

Pricing

OthersTotalAdjustment

20102011

2012（Notes） 1

Requests Received

135148157

Cases Closed

128

27

9164

Year-End Inventories

312

45

16373

Requests Received

112

2110143

Cases Closed

135

157157Year-End Inventories

289

51

19359

Requests Received

131

28

8167

Cases Closed

129

33

8170

Year-End Inventories

291

4619356

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, 2013)
EuropeAsia/PacificNorth America(OECD countries)
BelgiumCzech※

Denmark※

France※Germany※

Ireland※

Italy※

Luxembourg※

Netherlands※

Sweden※Switzerland※

United Kingdom※

Australia※

Canada※Korea※

United States※

China※

Hong Kong※

India

※

Indonesia※(Non-OECD countries)

Malaysia

12 countries

Singapore※

Thailand※

9 countries

2 countries(Notes)1

As of June 30 2013, the number of treaty partners with which the NTA had MAP
inventories was 23.

(Notes)2

The symbol " ※ " indicates a treaty partner with which the NTA had BAPA
inventories (21 countries/ economies).

(Notes)3The number of treaty partners with which the NTA has MAP inventories generallycontinued to be the same for the last five years (from 22 in 2008 to 23 in 2012).

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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. All 55 tax treaties that Japan has
concluded with treaty partners (66 countries/regions are covered as of the end of June 2013) 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)
The breakdown of MAP cases in the 2012 business year
A, 7

By industry

B, 15Others, 23C, 11G, 19D, 22F, 13E, 60

Manufacturing
Wholesale/RetailOthers
Total

115
32
23
170

(67.7%)(18.8%)(13.5%)(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,
66 (27.5%)

Inventories,
108 (45.0%)

Services,66 (27.5%)(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 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

Comparable
uncontrolled price(CUP) method, 8
Resale price (RP)method, 0

By transfer pricing method

Cost plus (CP)method, 3Others, 19
Profit split (PS)method, 16

Transactional net
margin method(TNMM), 97(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 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 chart above.

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