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Advance Pricing Agreements–Japan

Unilateral and Bilateral APAs are available and frequently used in Japan. The NTA prefers Bilateral APAs and a rollback of up to six years is possible in the case of a Bilateral APA. Rollback is not permitted in unilateral cases.

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Advance Pricing Agreements

Japan has a formal APA program which can be used for all corporate taxpayers. In practice, as in most countries, the tax authorities reserve the right to reject APA applications in certain cases, e.g., if the application is deemed to be part of a tax avoidance scheme or if a local entity is still in a start-up phase. The average time for concluding an APA is approximately one year for unilateral APAs and two years for bilateral APAs. The current guidance sets the APA filing deadline as the day preceding the first day of the fiscal year to be covered by the proposed APA. Profit-based methods, such as the Transactional Net Margin Method, are now widely accepted. Please contact Deloitte Japan for more details.