Following result of discussion on BEPS (Base Erosion and Profit Shifting) project at OECD following new reports are required to be prepared for Japanese income tax purposes:
A) Country by Country Report (CbC Report)
B) Master file and
C) Local file
Company subject to the requirements follow:
A) and B) Ultimate parent company of Multi National Entity (MNE) whose consolidated revenue is equal to or more than JPY100 billion in previous fiscal year
Those reports are to be distributed to tax authorities where constituent entities of the MNE group are resident based on tax treaty.
However in case of not received the data by Japanese tax authority those constituent entities or branches in Japan needs to file those reports with Japanese tax authority.
Constituent entity in Japan or Japanese branch of the MNE group needs to file notice of the ultimate parent company of the MNE group with the tax office.
In case there are several number of constituent entities or branches in Japan one entity may represents those companies in the filing.
C) Company whose transaction amount with a related party is equal to or more than JPY5 billion in total in previous fiscal year or Company whose transaction amount of intangible assets such as royalty payment is equal to or more than JPY300 million in total in previous fiscal year.
A) and B) Within one year after fiscal year end by electronic filing (e-Tax)
Notice of ultimate parent company needs to be filed by the end of the year
C) Filing is not required but the documents need to be prepared by due date of filing income tax return
Documents needs to be given to tax auditor on their request in case of tax audit
A) and B) Fiscal year starting from April 1, 2016
For the company whose fiscal year ends December 31 first report will be for the year ended December 31, 2017 and the reports need to be filed by December 31, 2018.
With regard to the notice of ultimate parent company first notice needs to be filed by December 31, 2017.
C) Fiscal year starting from April 1,2017
For the company whose fiscal year ends December 31 first report will be for the fiscal year ended December 31, 2018 and the report needs to be prepared by the end of February 2019 or end of March in case filing due date is extended by one month.