Transfer pricing audit defense and negotiation


CRA’s Rebel Curd and Haruka Abe assisted multiple SaaS taxpayers in relation to the transfer pricing audits by the Japanese tax authority (NTA). In a case where the NTA challenged the taxpayer’s change in the cost-plus markup target, CRA successfully defended the taxpayer’s position and resulted in closing the case without any adjustments.

Prior to the audit, CRA was engaged to prepare a global transfer pricing documentation for a SaaS taxpayer, including a Japanese transfer pricing Local File for the Japanese subsidiary. CRA’s transfer pricing Local File for the Japanese subsidiary contained a detailed functional analysis as well as an economic analysis that are in line with the Japanese transfer pricing regulations. This complete and reliable documentation served as a great starting point for the audit.

In addition, a Japanese bilingual CRA Transfer Pricing consultant represented the taxpayer and its position in Japanese during the direct communication with the NTA auditors while serving as a trusted advisor to the US parent company and a liaison between the NTA and the US parent company. The successful management of the exchange of information in Japanese was another crucial key to a swift resolution of the case.

CRA’s Transfer Pricing Practice includes various bilingual team members who assist in foreign jurisdiction audits to harmonize and accelerate the communication with the local auditors.

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