Transfer Pricing Support
As business becomes more global, transfer pricing is a management issue not only for large multinationals but also for mid-sized and smaller companies with overseas subsidiaries. In recent tax audits, international transaction issues, with transfer pricing at their core, have become a central focus. Inadequate compliance can lead to substantial additional assessments and double taxation, raising tax risk significantly.
Companies that should pay particular attention
- Sales and purchases of goods between group companies
- Management, sales or technical support services between group companies
- Licence agreements for trademarks or technology between group companies
- Financial transactions between group companies (intercompany loans, guarantees and similar)
- Growing transaction volumes between group companies
What proper compliance achieves
Service menu
A full inventory of transactions with foreign related parties to identify where risk sits and how large it is, including a simplified review of pricing using existing data. Prioritising transfer pricing work on the highest-risk countries and transactions lets you focus limited internal resources and budget where they matter most, reducing transfer pricing risk both effectively and efficiently.
Support for preparing the Local File (LF) and Master File (MF), including functional and risk analysis, industry analysis and selection of comparable transactions. Engagements limited to specific analyses are also welcome. Preparing documentation ahead of any tax audit, with your company's position and the basis for its pricing clearly set out and kept on file, supports your position when an audit comes and acts as a shield that reduces transfer pricing risk. Even where the Local File thresholds are not met (the previous year's related-party transactions totalling JPY 5 billion or more, or intangible transactions totalling JPY 300 million or more), companies may be asked during an audit to submit documents equivalent to a Local File by a date set by the examiner within 60 days. Preparing such documents within 60 days of a request is very tight in practice, so we recommend keeping a Local File on hand in advance.
Support in determining pricing methods and policy, and in building, reviewing and operating group-wide transfer pricing policy. With your transfer pricing policy documented, whichever department or staff member answers the tax authority's questions during an audit can explain it using the written policy as a common language, so the company's explanation stays consistent across the organisation.
Support with preparing and filing applications, and with the authorities through pre-filing consultation, review and mutual agreement procedures, including liaison with overseas advisers. For transactions covered by an APA, transfer pricing risk (the risk of double taxation) can be eliminated for the agreed period (for a bilateral APA agreed through mutual agreement procedures, provided transactions follow the agreed terms), making an APA the strongest form of transfer pricing protection. Because the cost and effort involved are substantial, however, groups tend to pursue APAs for their largest and most significant intra-group transactions.
Advance preparation, organising the required documentation, planning the response, and attending meetings with the authorities alongside you. How you respond before the audit begins, when the questionnaire arrives and the schedule is being arranged, can shape the whole course of the audit. Missteps at this early stage can let the audit be driven by the examiners in a direction the company did not intend, so careful preparation is essential.
Decarbonisation & Sustainability Management Advisory
Responding to ESG (environmental, social and governance) issues has moved beyond corporate social responsibility to become a management priority that directly affects corporate value and competitiveness.
Why ESG matters to corporate value and competitiveness
- Customer requirementsLarge companies increasingly ask their suppliers, including small and medium-sized businesses, to reduce CO₂ emissions across the supply chain and to respect human rights and fair working conditions. For SMEs that trade directly or indirectly with listed or large companies, your response is becoming a condition for keeping existing business and winning new business, whatever your size.
- Access to financeBanks and investors are building ESG performance into lending and investment decisions, which can affect both the availability and the terms of funding.
- Attracting and retaining peopleA good working environment and a business with a clear social purpose help with recruitment and retention, a key source of competitiveness amid ongoing labour shortages.
- Preparing for future risks and costsClimate-related disasters, carbon pricing and tighter regulation can raise costs or disrupt operations. Preparing early limits the impact.
- Transparency and trustSound governance helps prevent misconduct and improves decision-making, strengthening the trust of customers, lenders and the community. Listed companies in Japan are already required to disclose sustainability information.
Decarbonised management
An approach that reduces CO₂ emissions from business activities while sustaining growth: lower energy costs, greater trust from business partners, new commercial opportunities, and higher corporate value.
Sustainability management
Management aimed at long-term corporate value while balancing environmental, social and economic considerations, with emphasis on the three ESG perspectives: Environment, Social and Governance.
E
ENVIRONMENT
Environment
CO₂ emissions, resources and energy
S
SOCIAL
Social
Employees, business partners and local community
G
GOVERNANCE
Governance
Transparency and sound decision-making
Benefits for smaller companies
- Lower utility and fuel costs
- Stronger recruitment
- Better standing with banks and business partners
- Access to subsidies and support schemes
- Preparedness for future business risk
Common concerns we hear
Examples of support
* We do not handle work reserved for certified administrative procedures specialists (gyoseishoshi), such as preparing licence and permit applications. Where such work is required, we will introduce a partner firm.
Accounting & Tax Advisory Services
As an ongoing adviser to businesses of all sizes, including small and medium-sized businesses (companies and sole proprietors), we support you through day-to-day accounting and tax consultations and monthly review of your accounts, with advice grounded in how your business actually works. Every consultation is handled personally by Naoki Hama, CPA and certified tax accountant, who explains matters as clearly as possible, avoiding jargon, and gives each client attentive, personal support.
Advisory fees (example)
MonthlyFrom JPY 22,000(incl. tax)
Based on around two hours of consultation per month
This is an example only. Fees vary with the size of your business (revenue, transaction volume, etc.) and the frequency and length of consultations. A specific quotation is provided after a free initial consultation.
Not included in the advisory fee (quoted separately)
- Annual year-end closing and tax filing: handled as a review of the financial statements and returns you prepare
- Attendance at tax audits (time-based charges; an approximate upper limit can be discussed in advance)
These services fall outside the advisory retainer and are quoted separately according to your needs. Please ask us for details.
* We do not provide bookkeeping, year-end payroll adjustment or statutory report preparation.
* Inheritance and business succession are highly specialised areas; we will introduce a specialist tax accountant.
For matters not listed above, please feel free to contact us; the initial consultation is free of charge. We will propose the support that best fits your situation.
Start with an informal conversation
We welcome enquiries on transfer pricing, decarbonisation and sustainability management, and accounting and tax advisory services. The initial consultation is free of charge, and consultations can be held online.