OECD’s hard-to-value intangibles approach to be introduced
Japan Inbound Tax & Legal Newsletter March 2019, No. 37
Japan’s 2019 tax reform package contains new rules that represent the domestic implementation of the OECD’s guidance on hard-to-value intangibles (HTVI).
At the date of writing this article, the tax reform bill has passed the lower house and is expected to pass the upper house with limited changes. Additional detail is expected to be included in the cabinet orders (expected shortly after the law passes) and commissioners directives (expected later in 2019).
Similar to other BEPS-related changes, Japan is among the first movers to introduce domestic law based on the OECD guidance.
This newsletter explains the following topics;
1. OECD Guidance
2. Proposed Japanese Law
(1) HTVI adjustment mechanism
(2) Clarification of definition of intangible assets
(3) Inclusion of discounted cash flow as allowable pricing method
(4) Extension of statute of limitations
(5) Formalization of interquartile range
* This Article is based on the relevant Japanese or specific country’s tax law and other authorities in effect on the date of this Article. This Article would not be guaranteed updating if there are any changes in Japanese tax law, any other law, or interpretations by the courts or tax authorities thereof after the date of this Article.