Japan has implemented Country-by-Country (CbC) Reporting requirements as part of its commitment to the Base Erosion and Profit Shifting (BEPS) Action Plan developed by the Organisation for Economic Co-operation and Development (OECD).

Under the CbC Reporting requirements in Japan, multinational enterprises (MNEs) with a consolidated group revenue of at least JPY 100 billion in the previous fiscal year are required to file a CbC report. The report should contain information on the global allocation of income, taxes paid, and other indicators of economic activity among tax jurisdictions in which the MNE group operates.

The ultimate parent entity of the MNE group is responsible for filing the CbC report if it is resident in Japan. If the ultimate parent entity is not resident in Japan, the obligation to file the CbC report falls on the designated entity in Japan.

The deadline for filing the CbC report in Japan is within 12 months from the end of the fiscal year of the MNE group. Failure to file the CbC report or providing false or misleading information can result in penalties.

Japan has implemented a penalty regime for non-compliance with CbC Reporting requirements. MNEs that fail to file the CbC report or provide incomplete or inaccurate information can be fined up to JPY 10 million (approximately $90,000).

MNEs must file the CbC report in Japan electronically through the National Tax Agency’s (NTA) online portal. The NTA provides a CbC Reporting module that allows MNEs to upload their CbC report in XML format. The NTA will send a confirmation of receipt once the report has been successfully submitted.

In addition to the CbC report, MNEs operating in Japan may be required to prepare and file Transfer Pricing Documentation (TPD) if they have cross-border related party transactions. The TPD report should provide detailed information on the pricing of related party transactions within the MNE group.

In conclusion, Japan has implemented CbC Reporting requirements as part of its compliance with the OECD’s BEPS Action Plan. MNEs with a consolidated group revenue of at least JPY 100 billion in the previous fiscal year must file a CbC report in Japan. The deadline for filing the CbC report is within 12 months from the end of the fiscal year of the MNE group. Failure to comply with CbC Reporting requirements can result in penalties, and MNEs must also prepare and file a Transfer Pricing Documentation report if required.