Transaction in foreign currency during the business year should be converted by the spot rate, generally the average rate (TTM) of telegraphic transfer selling rate (TTS) and telegraphic transfer buying rate (TTB) in Japan. However, monthly average rate of the month, monthly average rate of prior month and weekly average rate, etc. can also be applicable on the continuous basis in practice.
Inter-company exchange rate set on a monthly basis taking the actual exchange rate into account can also be applicable for the Japanese tax purposes. However, inter-company exchange rate set for more than one month, e.g., on a quarterly or yearly basis cannot be admitted by the Japanese tax authorities and should be adjusted for the Japanese tax purposes.