Japanese Guidelines Address Diverse Transfer Pricing Issues
The Japanese transfer pricing regulations address a number of diverse issues as part of the case examples. These examples address:
- Case 23: Determining whether Services Provide Commercial Value
- Case 24: Multiple Year Considerations
- Case 25: Establishing the Target Profit Margin
- Case 26: Critical Assumptions
CASE 23: DETERMINING WHETHER SERVICES PROVIDE COMMERCIAL VALUE
The schematic of the business relations specifies:
- Japanese Corporation P manufactures and sells Product A.
- Ten years ago, Japanese Corporation P established three companies as subsidiaries to produce and to distribute Product A in their respective countries:
- Foreign-related person SX in Country X
- Foreign-related person SY in Country Y
- Foreign-related person SZ in Country Z
- Japanese Corporation P provides services to foreign-related person SX, to foreign-related person SY, and to foreign-related person SZ
- The S companies procure all of their parts and raw materials locally to produce and sell Product A in their respective countries.
- Japanese Corporation P has a unit that has responsibility for various operations concerning the S group.
Japanese Corporation P
Japanese Corporation P provides these services to the S group:
a. Japanese Corporation P determines the human resource policy at the S group and interviews candidate directors at the S group.
b. Japanese Corporation P manages business operations at the S group through weekly teleconferencing. ...