2012 Volume 20 Issue 2 Pages 63-77
The objective of this study is to clarify the international transfer pricing practices in Japanese multinational enterprises based on data collected by questionnaire survey. Smooth control of transfer prices requires four preliminary decision making as follows; 1)The selection of transfer pricing methods on actual transactions, 2)The selection of cost collection route with regard to intra group service, 3)The selection of transfer pricing methods as arm’s length principles, 4)The selection of adjustment methods of income difference in case transfer prices on actual transactions are not compliant with arm’s length principles. The trait of this study is to focus on the above 2),3),4) which have not been focused. The fact found through of this survey is that the transfer pricing methods as arm’s length prices most frequently used is Transactional net margin methods (TNMM), and that the income adjustment methods most frequently used is to adjust transfer prices on actual transactions. Additionally, the foreign subsidiaries of respondent firms have some intangible assets. Residual profit split method is more applicable than TNMM in that case. So the future challenge for Japanese MNEs is to develop measuring method of contribution degree of building intangible assets.
