The range is usually 5% to 8% generally. It means that EBIT range is almost similar 5% to 8%. To make it sure and correct, we have to make benchmarking by using suitable way referring OECD Transfer Princing Guideline in Japan. If it is not easy find comparable transactions, partly due to the unique activities and partly due to the lack of database information available, The above rate is first recommended before getting correct benchmarking on the basis of Transfer Pricing in Japan.
Generally, if there is any direct revenue just for few times in small amount on the basis of cost plus revenue, we suggest that the total revenue (direct revenue + cost plus revenue) should be matched to decided percentage against the amount (total cost + expense) for transfer pricing. Otherwise, from first direct revenue is recommended to charge to Japanese client by local subsidiary instead of cost plus revenue.
