Japan's National Tax Agency releases guidance on requesting Mutual Agreement Procedure assistance

Global Tax Alert


The Japanese National Tax Agency (NTA) has released guidance for taxpayers on the mutual agreement procedure (MAP), in line with the recommendations of the OECD's Base erosion and profit shifting (BEPS) Action 14 Final Report. The guidance is intended to supplement the Commissioner's Directive on the Mutual Agreement Procedures, which contains the official administrative guidelines for requesting MAP assistance.

The new guidance contains information in relation to how the MAP mechanism functions in Japan, including:

  • Who may request MAP
  • Issues requiring consideration when filing a MAP request
  • Documentation requirements and deadlines
  • Examples of specific scenarios in which MAP requests can be filed

Who may request a MAP

MAP assistance can be requested from the NTA if there has been, or there will be taxation not in accordance with the provisions of a tax treaty of which Japan is signatory by the following:

  1. Japanese residents
  2. Domestic corporations
  3. Non-residents and foreign corporations, if such requests are provided for under the relevant tax treaty

In addition to the more common scenarios in which taxpayers seek MAP assistance, such as those that involve transfer pricing adjustments, or in relation to the attribution of profit to permanent establishments, the new guidance also includes, inter alia, discrimination, and the application of treaty or domestic anti-abuse provisions. According to the latest guidance, MAP requests can be made in the following cases:

"Cases where a non-resident who has Japanese nationality requests MAP assistance on the grounds that the person has been, or will be subject to more burdensome taxation or requirements in a treaty partner than the taxation or requirements applied to the nationals of the treaty partner;

cases in which there is a disagreement between the taxpayer and the tax authorities making the adjustment as to whether the conditions for the application of a treaty anti-abuse provision have been met or as to whether the application of a domestic law anti-abuse provision is in conflict with the provision of a treaty."


For taxpayers in Japan considering filing a MAP request, the NTA strongly recommends that an appointment is made with the MAP Office for a pre-filing consultation prior to formal submission. Early pre-filing consultations are recommended where either the actions of one or both jurisdictions has already resulted in taxation not in accordance with the relevant tax treaty, or where such taxation is imminent, in order to address the issue in a timely manner.

The new guidance provides that pre-filing documentation should include a summary of the taxation subject to the MAP request, the facts that led to the taxation, and the reason for the request. These need to be submitted in Japanese, or be accompanied by Japanese translations.


Requests for MAP assistance must be made by submitting, Application for the Mutual Agreement Procedure (Form 1), together with the following documentation:

  • A copy of a letter of assessment of the relevant taxation
  • Written description of the facts related to the taxation and outline of position of the applicant or foreign related entity to such taxation
  • Written description of how the taxation will result in taxation not in accordance with the relevant tax treaty
  • Details of any relevant legal proceedings in relation to the taxation from foreign jurisdiction
  • If the taxation is in relation to transfer pricing, documentation describing the relationship of the related entities involved in the transaction(s)
  • Copies of any MAP requests made to foreign competent authorities
  • Any other documents that are relevant to the MAP request

If the MAP request relates to a transaction or transactions involving a consolidated subsidiary, its consolidated parent company must submit the application.


MAP requests must generally be made within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the relevant tax treaty, however this may vary. Taxpayers must consult the relevant tax treaty for confirmation of this deadline.

Key takeaways

Japan's NTA is a strong advocate of the utilisation of the MAP and APA mechanisms, in order to both resolve existing tax disputes, and minimise the risk of potential future disputes. The publishing of this supplementary guidance shows a clear intention to comply with the obligations arising from BEPS, as well as a readiness to engage with taxpayers and tax treaty partners in MAP discussions.

Taxpayers should, if they have not already done so, reconsider their use of this reinvented tool in a proactive strategy to prevent international tax disputes as well as in resolving them in the post BEPS environment. This reinvented tool is likely to become more relevant for taxpayers as countries are also under pressures from the OECD to resolve their MAP cases within 24 months. Japan's commitment to mandatory arbitration under bilateral tax treaties (and the OECD Multilateral Instrument) should also help make the MAP more effective.

As of October 1, 2017, Japan is signatory to 57 tax treaties that are principally for the elimination of double taxation and the prevention of tax evasion and avoidance; and 11 tax information exchange agreements. The NTA is currently engaged in MAP discussions with 22 of these jurisdictions, as a result of both audit assessments and APA applications. The tax treaty partners with the largest share of Japanese MAPs are the United States and China, constituting 31 percent and 18 percent of MAP cases respectively.

The number of MAP requests made to the NTA has increased in recent years. According to the NTA's latest MAP Report, whereas in 2005 the NTA received 129 MAP requests, this number increased to 195 in 2015. Applications for bilateral advance pricing agreements (BAPAs) have also increased, from 92 to 151 over the same ten-year period, an indication that multinationals are increasingly utilizing Japan's MAP and APA programs in order to proactively mitigate taxation risks. In our view, this trend is likely to continue under the supplementary guidelines, as the scope of MAP application has been widened substantially in accordance with the minimum standards in BEPS Action 14.

See our APA and MAP Country Guide for more information about MAP assistance.

Find out more about using MAP by contacting any of the authors.