The Tax Group of Baker & McKenzie GJBJ Tokyo Aoyama Aoki Koma Law Office (Gaikokuho Joint Enterprise) is one of the leading comprehensive tax and transfer pricing/economics practices in Tokyo. We provide a full range of domestic and international tax planning, structuring, controversy and economics services to US, European and other multinational clients with respect to Japan, and to Japanese businesses seeking tax advice on foreign jurisdictions. Specifically, we provide services in the following areas: Transfer pricing planning, documentation and defense Economic analysis of transfer pricing and valuation of intangibles and other assets Representation in audits, administrative appeals, domestic litigation and competent authority proceedings Tax planning and structuring for mergers and acquisitions Tax minimization planning and implementation Tax-efficient financing structures and project finance Structuring and establishment of new business operations and joint ventures Real estate transactions Financial products and transactions Executive compensation including incentives such as stock options Consumption tax (VAT) and other indirect taxes Cross-border estate tax planning Customs The key strengths of the Tax Group are: Our Experience The extensive government experience that many of our Tax Group members bring to the firm is unrivalled. This is of particular importance because tax advisory work requires an understanding of the actual practice of the tax authorities due to the limited publicly disclosed law and authority in many areas. Several of our of counsel held key positions with Japan’s tax authority prior to joining Baker & McKenzie. In addition, the experience of our foreign lawyers in both their home jurisdictions and Japan, and their close working relationship with Japanese colleagues, permit them to coordinate Japanese tax advice with the client’s broader tax posture and ensure that advice is provided in the form needed. The career experience of our Tax Group members provides us with unique insight into the complex tax administration process in Japan. In some circumstances, this can be a valuable source of information, providing access to personnel both prior to and during administrative proceedings. When litigation is the best option, our Tax Group works closely with our renowned Dispute Resolution Group to achieve optimal results. This approach to the successful resolution of our clients’ tax controversies and the advantages provided by our highly regarded team sets us even further apart from our counterparts in Japan, and is the reason many of our clients request our services. Our Stand-Alone Practice and Team Our primary competitors providing stand-alone tax and economics advice in the Tokyo market are major accounting and economics consulting firms. Most law firms in Japan have limited traditional law firm tax practices which focus on supporting M&A and transactional work, in contrast to our comprehensive offering of tax services. Baker & McKenzie Tokyo’s tax support network is comprised of full time Japan-qualified lawyers (bengoshi), tax attorneys (zeirishi), US-qualified tax lawyers, economists, financial analysts and certified public accountants. Clients benefit from the unique structure of our team, where they can call upon the perspectives of lawyers, transfer pricing experts, accountants and economic analysts in one location rather than having to themselves coordinate tax advice from an accounting firm with other professional advice from law firms. Additionally, the experience of our foreign attorneys in both their home jurisdictions and Japan permits us to seamlessly advise and coordinate tax structures locally and overseas. Our Network The Tax Group is strongly supported by being part of Baker & McKenzie’s Global Tax Group of over 650 tax attorneys in 42 countries. Our Tokyo tax team works closely with colleagues in the Asia Pacific, the United States, Europe and elsewhere to provide comprehensive advisory, tax planning and structuring services. In addition to offering tailored advice with respect to local tax planning in Japan, we conduct sophisticated international tax planning, including tax optimization, for major corporations. Our Tax Planning and Structuring advisory practice is led by Japanese partners Shinichi Kobayashi, Ryutaro Oka and Hideyuki Yamamoto together with Ed Whatley, the head of our tax practice, who is a US tax lawyer, admitted as a foreign attorney in Japan and has extensive experience in advising on Japanese tax matters in conjunction with Japanese colleagues. Our partners are supported by a team of Japanese and foreign tax associates, and of counsel affiliates who are former senior tax officials able to consult and assist with contacting the Japanese tax authorities. One subdivision of our Tax Planning and Structuring practice is our M&A tax practice, led by Shinichi Kobayashi. The team conducts tax due diligence for mergers and acquisitions and provides solutions to tax issues arising in connection with other corporate transactions in Japan. Another subdivision of the Tax Planning and Structuring practice is the inbound tax practice, led by Ed Whatley. This team advises multinational clients regarding a broad range of international tax issues in connection with activities in Japan, providing practical solutions to complex issues that may arise in the world’s number three economy. Ryutaro Oka leads the outbound tax practice. This subdivision of the Tax Planning and Structuring practice focuses on advising Japanese multinationals with regard to international tax issues in connection with outbound activities, making use of Baker & McKenzie’s global network of tax professionals to provide practical advice from an international perspective. Representative matters in regard to tax planning and structuring projects include: US semiconductor manufacturer - Assisted the client with a major restructuring project which included the transfer of intangibles from Japan to a tax efficient jurisdiction and the subsequent conversion of Japan operations to a contract manufacturer. US pharmaceutical company - Assisted the client with the transfer of intangibles from Japan to a tax efficient jurisdiction. Also advised on the creation of a Japanese NK for US tax planning purposes. Numerous companies - Regularly provide a comprehensive analysis of Japanese operations to determine the most efficient corporate structure from both a tax and legal perspective. Our team has assisted where necessary with the restructuring of domestic and global operations as appropriate (commissionaire, etc.) Baker & McKenzie is renowned globally for its established Transfer Pricing and Economics Group. We are recognized leaders in transfer pricing and are uniquely placed to design, implement, document, and defend cross-border transfer pricing solutions that optimize international tax structures. Our professionals make use of their expertise regarding complex transfer pricing matters in virtually every industry, with vast experience in transfer price planning, documentation and advance pricing agreements, including economic analysis and financial modeling. The Tokyo Tax Group works seamlessly with the firm’s team of tax lawyers and economists located around the world to offer clients effective and commercially viable tax solutions that adopt global best practices while complying with Japan’s local tax rules. Dr. Ken Okawara is the head of Tokyo’s Transfer Pricing and Economic Analysis team and is widely recognized as one of Japan’s pre-eminent experts in transfer pricing and economics, with significant experience in bilateral and multilateral competent authority proceedings covering various jurisdictions. The Transfer Pricing and Economic Analysis team consists of Japanese and US-qualified CPAs, economists and financial analysts that provide comprehensive economic and valuation services in connection with transfer pricing and tax planning, controversy resolution, and other international tax and business planning matters. Recent representative transfer pricing and economic analysis matters include: US financial management company - Advised the client in relation to US-Japan competent authority issues and transfer pricing adjustments. Japanese pharmaceutical firm - Represented the client in relation to a transfer pricing challenge of a royalty paid by the client’s Irish manufacturing subsidiary. The initial adjustment against the taxpayer was the largest NTA adjustment against a Japanese taxpayer to date ending in competent authority action. Swiss pharmaceutical company - Advised the client regarding pricing issues relating to sales by client of active ingredients to its Japanese subsidiary. The client was subject to two audit cycles each ending in competent authority proceedings in addition to a current APA negotiation. US software company - Represented the client in its domestic appeal and litigation of a transfer pricing adjustment. Motor vehicle manufacturers - Advised clients, including four Japanese motor vehicle manufacturers, such as Yamaha, in relation to numerous US-Japan transfer pricing matters Provided legal advice regarding audits, competent authority proceedings and US Tax Court litigation. The Tax Group’s litigation practice successfully resolves tax disputes with revenue authorities by employing a wide variety of administrative dispute resolution techniques and, when necessary, aggressively advocating our client’s position in litigation. The practice is led by Hideyuki Yamamoto, a Japanese bengoshi who, together with other Tax Group members and members of the Tokyo Dispute Resolution Group, has led several of our clients to success in Japan’s most notable taxpayer victories. We regularly handle a wide range of major tax dispute cases, including trials and APA competent authority negotiations. Representative matters regarding controversies and tax litigation include: Multinational electronics corporation - Represented TDK Corporation in a transfer pricing matter which resulted in the National Tax Tribunal’s (“NTT”) JPY14.1 billion reversal of a JPY21.3 billion deemed revenue assessment. The NTT’s decision to reverse the assessment, released on February 1, 2010, resulted in the highest tax refund made in a transfer pricing matter in Japan to date. Multinational software corporation - Represented Adobe Systems Co., Ltd. in the first ever successful transfer pricing litigation brought by a taxpayer in Japan. The Tokyo High Court’s landmark ruling in favor of Adobe in October 2008 involved close scrutiny of the tax authority’s use of comparables and represented a significant departure from the Japanese courts’ previous reluctance to overturn transfer pricing assessments. Japanese banking corporation - Represented Sumitomo Trust & Banking Co., Ltd. (“STB”) in relation to their dispute with the NTA’s characterization of repurchase margins as loan interest under Japan’s Income Tax Law. On behalf of STB, we successfully argued at both the district and appellate levels that the client had no obligation to withhold from repurchase margins paid to its foreign counterparties. As a result, STB was entitled to a refund of over USD60 million for withholding taxes that the tax authorities had incorrectly assessed. This case set a precedent for the largest amount of taxes ever cancelled by the Japanese Supreme Court to date. US computer software supplier - Assisted the client with competent authority issues regarding withholding tax treatment of payments from a Japanese subsidiary to its US parent. Japanese government organization - Represented the client in tax appeals and litigation relating to withholding tax in multiple jurisdictions. US cosmetics company - Represented the client in its administrative appeal to the Ministry of Finance in relation to customs/consumption tax (VAT) adjustments. Our Customs Practice is a subdivision of our Trade and Commerce Group. Our customs experts can seamlessly integrate all aspects of strategic customs planning and compliance with broader transfer pricing and corporate tax planning to optimize the operations of foreign multinational corporations that export goods and services to Japan. We know the rules and regulations and practical applications of Japanese customs laws, and integrate expertise in related areas, including competition law; trade regulations, such as export controls; trade remedies, such as antidumping actions; and indirect and excise taxes on goods imported to Japan. We handle regulatory work related to consumer protection, environmental and product safety regulations and local labeling certification, and we liaise closely with our tax, IP, commercial, regulatory and litigation practices to provide solutions to customs and trade challenges and issues. We have strong capabilities with regard to cross-border dispute cases that require special skills and expertise in dealing with complex customs and trade issues. Specifically, our services include: Domestic customs law and practice Structuring sales to optimize customs treatment Importation arrangements into Japan to take into account customs and consumption tax for foreign multinationals Advising on and representation in customs appeals and disputes including litigating customs matters in Japanese courts Advising on regulations affecting cross-border trade Customs classification, rules of origin, valuation Export controls and trade sanctions Trade remedies, antidumping and countervailing duty actions WTO and FTAs/EPAs Antitrust and competition law Our Customs Practice is headed by Ed Whatley, a US lawyer and registered foreign lawyer in Japan who has extensive experience in assisting foreign MNCs with Japanese customs, trade and tax matters. Our practice includes renowned customs experts Yoshihisa Fujimaki and Hiroshi Terashima, who had distinguished careers at the highest levels of Japan Customs and Japan’s Finance Ministry prior to joining Baker & McKenzie. Counsel Junko Suetomi previously worked in the WTO Dispute Settlement Division of Japan’s Foreign Ministry. Where necessary, we can call on the expertise of more than 450 Trade and Commerce lawyers in more than three dozen nations that together comprise more than 80 percent of the world’s economic activity. ■List of Professionals Kobayashi, Shinichi Oka, Ryutaro Okawara, Ken Whatley, Edwin T. Yamamoto, Hideyuki