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The FY2026 Tax Reform Outline (published Dec 12, 2025) introduces tighter documentation rules for intra-group transactions, affecting companies of all sizes. This measure specifically targets arbitrary pricing or lack of documentation for intra-group services (including IP transfers and loans), such as shared cost facilities.

If you are planning on doing business in Japan, knowledge of the investment environment and information on legal, accounting, taxation and human resource frameworks are essential to keeping you on the right track. This guide has been prepared for the assistance of those interested in doing business in Japan. It does not cover the subject exhaustively but is intended to answer some of the important, broad questions that may arise. When specific problems occur in practice, it will often be necessary to refer to the laws and regulations of Japan and to obtain appropriate accounting and legal advice. This guide contains only brief notes and includes legislation in force as of November 27, 2024.

The quality of AI outputs is improving with a pace too significant for it to be discounted. The oft repeated phrase is that AI and automation is ideal for tasks that are repetitive, follow a specific set of rules, and take a long period of time with manual input. For example, current AI can assimilate information from a Local File and use this to evaluate the comparability of comparable companies based on their business description and other information, providing acceptance and rejection reasons accordingly.

On June 10, 2022, the National Tax Agency revised the Administrative Guidelines on Operation of Transfer Pricing. The revision is intended to clarify Japan's transfer pricing tax treatment of related party transactions in light of the revision of Chapter Ⅷ (Cost contribution arrangement) and Chapter X (Transfer pricing aspects of financial transactions) of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations.