National Tax Agency, JapanMAP (Mutual Agreement Procedures) Report 2015
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 2014 business year (from July 2014 to June 2015), the NTA received 187 MAP
requests, of which 149 were for BAPA.
○ The number of MAP requests received decreased slightly compared to the 2013 businessyear.
○ BAPA accounts for approximately 80% of total MAP requests.
(Note) Please see Attachment 1 for the trend in the number of year-end inventories.
Chart 1: Trends in the number of MAP and BAPA requests received
Number200

197

MAP
150

187

174 183
153

154

167
157

129

130

135

113

100

90

143

149

152

149

131
112

105

BAPA

9263500
2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

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.

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 2014 business year was 141 (-19% Y/Y).
○ Out of the overall number of MAP cases closed, the number of BAPA cases closed was 121.
(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

150

154

MAP
120

125

127

128

170

174

157
135

141
129

141
121

115
105

93

90

91

92
84
60

82

65

BAPA

49
30

0
2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Business Year
2.2 Average processing time on a MAP case
○ The average processing time on a MAP case closed in the 2014 business year was 22.4
months (22.6 months in the 2013 business year).
○ Of which, the average processing time on a BAPA case was 22.2 months (20.9 months in the2013 business year).

2National Tax Agency, Japan
3. Year-End Inventories
3.1 The number of Year-End Inventories○ In the 2014 business year, the number of MAP requests received decreased slightly while
greatly exceeding the number of MAP cases closed which together bringed the increase inyear-end inventories as of the end of the year.
(Note) Please see Attachment 1 for the trend in the number of year-end inventories.
Chart 3: Trends in the number of Year- End Inventories of MAP and BAPA cases
Number425
400

380
MAP350

BAPA330
302

291

261

237

222

201

191

200
150

379

356

289

276

250

359

312

305

304
300

373

351

170
143

100
500
2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Business Year

3.2 Breakdown by region○ In respect of the regional breakdown of year-end inventories in the 2014 business year, thenumber of cases from Asia-Oceania is the largest, followed by the Americas and Europe.
○ The treaty partner with which the NTA has year-end inventories most is the United States,
followed by China, South Korea, India and United Kingdom.
(Note) Please see Attachment 2 for the treaty partners with which the NTA has MAP inventories asof June 30, 2015. The number of inventories by each treaty partner is not disclosed inconsideration of the relationships with the treaty partners.

Chart 4: The number of Year-End Inventories by region
Number200
190

MAPBAPA

159
150

138

130

100
76
62
50

0
The Americas

Asia,Oceania

3EuropeNational Tax Agency, Japan
4. The number of MAP cases with non-OECD economies
4.1 The number of MAP cases○ In the 2014 business year, non-OECD economies accounted for 21% of the overall MAP requests
received and 31% of the number of 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 with
non-OECD economies
NumberNumber50

50
40

45
32

30
2040

MAP

40
MAP

2930

24

10

1820

23

19

10

BAPA

1115

2011

2012

2013

2010

2014

18

2011

16
BAPA

800
2010

30
1926
18

2428

2012

2013

122014

Business YearBusiness Year

Trends in the number of year-end inventories
concerning non-OECD economies
Number140
120
100

MAP

95

82

80
60

132

BAPA

111
96

80

66

66

69

2011

2012

2013

56

40
20020102014

BusinessYear
事務年度

4.2 Average processing time on a MAP case with non-OECD economies○ As far as non-OECD economies are concerned, the average processing time on a MAP case inthe 2014 business year was 30.6 months (40.0 months in the 2013 business year).
○ Of which, the average processing time on a BAPA case was 38.9 months (33.2 months in the2013 business year).

4

National Tax Agency, Japan(Attachment 1)
The number of MAP cases in recent years
Transfer
Business YearBAPA

Pricing

Others

Total

Adjustment

2012

2013

2014（Notes） 1

Requests Received

131

288167

Cases Closed

129

338170Year-End Inventories

291

4619356

Requests Received

152378197

Cases Closed

141

2112174

Year-End Inventories

302

6215379

Requests Received

149

353187

Cases Closed

121

137141Year-End Inventories

330

8411425

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 from foreign tax authorities.

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

4The 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, 2015)
EuropeAsia/Oceania

The Americas(OECD countries)
Belgium

Australia

CanadaFranceNew ZealandUnited States

Germany

Korea

Ireland
Italy
Luxembourg
Netherlands
SwedenSwitzerlandUnited Kingdom(Non-OECD economies)
China
Hong Kong
India
Indonesia
Singapore
Thailand
Malaysia
Vietnam10 countries(Notes)12(Notes)3

11 countries

2 countries

As of June 30, 2015, the number of treaty partners with which the NTA had MAP
inventories was 23.
Excluding Vietnam, 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 2010 to 23 in 2014).

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 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. 58 tax treaties that Japan hasconcluded (which covers 69 countries/regions as of the end of June 2015) 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 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.

7

National Tax Agency, Japan(Reference 2)
Breakdown of MAP cases in the 2014 business year
By industry
Others,13A, 11G, 13B, 18C, 18F, 27D, 10E, 31

ManufacturingWholesale/RetailOthers
Total

884013141(62.4%)(28.4%)( 9.2%)(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,
37 (17.5%)
Inventories,
100 (47.4%)
Services,74 (35.1%)(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, 5

Resale price (RP)method, 1
Cost plus (CP)method, 16

Others, 37

Profit split (PS)method, 9Transactional net
margin method(TNMM), 68(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