Recent Trends in Tax Management in Japan

Planning and Compliance – From a Governance Perspective

Abstract

In recent years, the BEPS (Base Erosion and Profit Shifting) discussions to address controversially aggressive tax planning and saving schemes by certain multinational corporate groups have been heating up globally, particularly among G20 countries. During this period, the need to introduce a robust tax management or governance framework has become more and more critical for Japanese-based companies (which, unlike certain US or European multinationals, have traditionally been relatively humble or inattentive in their tax planning) in order to avoid unnecessary disputes with or challenges from tax authorities in various countries. We have started to observe the trend that Japanese taxpayer companies often end up with unrelieved double taxation as a result of scrutiny from tax authorities, and their traditional conservative approaches no longer seem to help as much as they did in the pre-BEPS era. In this article, I provide a general overview of the types of challenges most Japanese multinationals are facing in the post-BEPS regulatory environment, together with possible measures. Specifically, I offer “10 Things to Do”, which are measures that Japanese multinationals could adopt to increase their competitive advantages in terms of optimizing their overall tax positions.