National Tax Agency, Japan
MAP Report 2016
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. Also, the NTA enters intoa Bilateral Advance Pricing Arrangement (“BAPA”) in order to ensure the predictability of taxpayers andpromote the proper and smooth administration of the transfer pricing taxation.
1. MAP requests received○ During the 2015 business year (from July 2015 to June 2016), the NTA received 195 MAPrequests (BAPA 77%, Transfer pricing adjustment etc. 23%).
○ The number of MAP requests received increased slightly compared to the 2014 business year
(187 requests).
(Note) Attachment 1 shows more details.

Chart 1: MAP requests received
Number of requests

197

200

Total
150

183

174
154

143

129

152

149
113

100

167

157

153

195
187

130

BAPA

135

149

151

38

44

2014

2015

131
112

105
92

Transfer Pricing Adjustment etc.

50
3749

40

44

34

2202005

2006

2007

2008

2009

2010

31362011

2012

452013Business Year(Notes)

123

The 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 through foreign tax
authorities.
Transfer pricing adjustment etc. includes cases related to permanent establishments (PEs) andwithholding taxes.

1National Tax Agency, Japan
2. MAP cases closed
2.1 The number of MAP cases closed○ The number of MAP cases closed in the 2015 business year amounted to 155 (BAPA 81%,Transfer pricing adjustment etc.19%), which was increased by 10% from the 2014 business year.
(Note) Attachment 1 shows more details.

Chart 2: MAP cases closed
Number of cases closed

164

150

154

Total
125
115

100

174

157
135155
141

141

129

121

BAPA

126

105
93
84

50

128

127

170

91
82

65
49

43

28413636
31
Transfer Pricing Adjustment etc.

222006

2011

33

29
200
2005

2007

2008

2009

2010

2012

2013

2014

2015

Business Year

2.2 Average processing time on a MAP case
○ The average processing time on a MAP case closed in the 2015 business year increased to26.0 months (22.4 months in the 2014 business year).
○ The average processing time on a BAPA case also increased to 25.7 months (22.2 months inthe 2014 business year).
○ The average processing time on a transfer pricing adjustment etc. reached 27.2 months (23.8months in the 2014 business year).

2

National Tax Agency, Japan
3. Year-End Inventories
3.1 The number of Year-End Inventories○ In the 2015 business year, the number of MAP requests received was over the number of MAP
cases closed, which brought to the increase in year-end inventories.
(Note) Attachment 1 shows more details.
Chart 3: Year- End Inventories
Number of year end inventories
500450

BAPA425380

400351

350

304

250

237

200

67373

359

356

70

65

110

379
95

75

61305

312

289

291

302

2009

2010

2011

2012

2013

90276

300

77

8285

150
100465

Transfer Pricing Adjustment etc.

261

222

170191

2005

2006

330

355

5002007

2008

2014

2015

Business Year
3.2 Region-by-region inventories○ In the 2015 business year, the number of cases with Asia/Oceania accounted for the largest
part of the total inventory.
○ The treaty partner with which the NTA has year-end inventories most is the United States (31%),
followed by China (18%), Korea (10%), India (9%) and the United Kingdom (6%).
(Note) Attachment 2 shows a list of treaty partners with which the NTA has MAP inventories as ofJune 30, 2016.

Chart 4: Year-End Inventories by region

Number of inventories

250

219

200
150

154
177510050137

144

Transfer Pricing Adjustment etc.
BAPA

92
1874

0The Americas

Asia/Oceania
3EuropeNational Tax Agency, Japan
4. MAP cases with non-OECD economies
4.1 The number of MAP cases○ In the 2015 business year, non-OECD economies accounted for 29% of the total MAP requests
received, 15% of the total MAP cases closed and 35% of the total year-end inventories.

Chart 5:
MAP requests received with non-OECD economies

MAP cases closed with non-OECD economies

NumberNumber60

60565045

Total

40
30

292426100BAPA23

11 Transfer Pricing Adjustment etc.

20112012

2013

2014

28

1002015

1912101114

3 Transfer Pricing Adjustment etc.7

2011

2012

Business Year

23

16

11830
BAPA

1820

176Total

30

26
1918

40
30

18205040

2013

2014

122015Business Year

Year-end inventories with non-OECD economies
Number

180
160
140
120
100
80
60
40
200

Transfer Pricing Adjustment etc.
BAPA95165

132
96

70

111
524229306666

6980

2011

2012

2013

2014

95

2015

Business
Year事務年度

4.2 Average processing time on a MAP case with non-OECD economies○ The average processing time on a MAP case with non-OECD economies in the 2015 businessyear increased to 33.3 months (30.6 months in the 2014 business year).
○ The average processing time on a BAPA case with non-OECD economies also increased to 41.4
months (38.9 months in the 2014 business year).
○ The average processing time on transfer pricing adjustment etc. amounted to 26.0 months(16.3months in the 2014 business year).

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National Tax Agency, Japan(Attachment 1)
The number of MAP cases in the last three years
TransferBusiness Year

BAPAPricingOthers

Total

Adjustment

20132014

2015（Notes） 1

Requests Received

152378197

Cases Closed

141

2112174

Year-End Inventories

302

62

15379

Requests Received

149

35

3187

Cases Closed

121

137141Year-End Inventories

330

84

11425

Requests Received

151

368195

Cases Closed

126

236155Year-End Inventories

355

97

13465

The business 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.

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, 2016)
EuropeAsia/Oceania

The Americas

Belgium

Australia

CanadaFranceKorea

MexicoTotal(OECD countries)

Germany

United States

Ireland

14 partners

Italy
Netherlands
SwedenSwitzerland
United Kingdom(Non-OECD economies)
China
Hong Kong
8 partners

India
Indonesia
Singapore
Thailand
Malaysia
Vietnam
9 partners(Notes)12(Notes)

3

10 partners

3 partners

As of June 30, 2016, the number of treaty partners with which theNTA had MAP inventories was 22.
The NTA had BAPA inventories with all treaty partners listed inthe chart above.
The number of treaty partners with which the NTA has MAP
inventories generally continued to be the same for the last five years(from 23 in 2012 to 22 in 2016).

622 partners

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 those
represented 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. 60 tax treaties that Japan has
concluded (which covers 71 countries/regions as of the end of June 2016) contain 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 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. 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 the taxpayer if the taxpayer files its
tax returns in accordance with the confirmed APA conditions for the years covered by the APA.

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National Tax Agency, Japan(Reference 2)
Types of MAP cases in the 2015 business year
Industry
A, 4Others, 16

B, 33
G, 21C, 6F, 19

D, 15

E, 41

Manufacturing
Wholesale/RetailOthers
Total

99
40
16
155

(63.9%)(25.8%)( 10.3%)(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/retailType of transaction

Intangibles
61

Inventories
116

Services84(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
Transfer pricing method
Comparable uncontrolled
price (CUP) method, 5
Cost plus (CP)method, 6
Profit split (PS)method, 17Others, 37

Transactional
net margin
method(TNMM), 87(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.

9