Every civilized country has its own taxation system in one form or another whether by legislation or by autocratic Rules and orders. The birth place of taxation system cannot be ascertained as it is in existence since, say, not less than five thousand years in ancient Europe. An increasing number of multinationals are participating in the booming Japan economy. Accordingly, the cash and complexity of associated enterprises transactions with the Japan affiliates and, consequently, the international tax and transfer pricing issues have increased manifold. Most of multinationals don’t mind paying their fair share of taxes. However, they seek a level of certainty for the costs/implications from these covered transactions. Japan to achieve certainty of tax treatment and to resolve real or potential transfer pricing disputes before they arise, companies may seek an Advance Pricing Agreement,

KEYWORDS: taxation, pricing, Japan economy, Advance pricing agreement