In June 2025, Japan's National Tax Agency released guidance in the form of a frequently asked questions (FAQ) document regarding the Organisation for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting project Pillar One Amount B (Amount B). The purpose of Amount B is to simplify and streamline the approach to determining the arm's-length pricing for in-country baseline marketing and distribution activities.

In short, Japan will not be implementing Amount B. This means that taxpayers need to rely on existing transfer pricing methods to determine the arm's-length price for Japan. This is true even if a country with a transaction counterparty has implemented Amount B, and even if the OECD recognizes that country as a "covered jurisdiction" (previously known as "low capacity jurisdiction"). The FAQ document notes that, because Japan is not introducing Amount B, documentation requirements and Advance Pricing Agreements will not be modified.

Implications

Multinationals will not be able to employ the simplified approach under Amount B and will need to continue to rely on existing transfer pricing methods and either prepare transfer pricing documentation or apply for an Advance Pricing Agreement.