Global

Details

  • Service: Tax, International Corporate Tax, Global Transfer Pricing Services, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 1/30/2013

Japan - Proposal to allow application of Berry ratio 

January 30: The ruling coalition (the Liberal Democratic Party and New Komeito) on 24 January 2013 agreed on an outline of the 2013 tax reform proposals, and measures that would allow for application of the “Berry ratio” for transfer pricing purposes are included.

The tax reform announcement was one month later than as was usual for prior years due to the change in government.


Among the international tax provisions in the tax reform proposals—e.g., anti-tax haven rules (CFC rules), earnings stripping rules, and overseas assets reporting requirements— there are measures that would allow application of the “Berry ratio” (i.e., ratio of gross profit to operating expenses) as a profit level indicator, as per the OECD Transfer Pricing Guidelines (amended July 2010).


According, if the proposals are enacted, the Berry ratio would be a profit level indicator in calculating arm’s length prices for Japanese tax purposes.


Read a January 2013 report [PDF 386 KB] prepared by the KPMG member firm in Japan: Outline of the 2013 Tax Reform Proposals




Contact a tax professional with KPMG's Global Transfer Pricing Services.




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