On December 17, 2013, the Protocol Amending the Convention
between Japan and the United Kingdom of Great Britain and Northern
Ireland for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with respect to Taxes on Income and on Capital Gains
(the "Protocol") was executed in London.
The Japan–UK income tax treaty amended by the Protocol (the
"Revised Treaty") will be the first income tax treaty for
Japan that adopts the Authorized OECD Approach (the
"AOA"). Under the Revised Treaty, (i) shareholding
requirement with regard to dividends exempted from taxation by the
source country will be reduced from "50 percent or more"
to "10 percent or more"; (ii) interest income will, in
principle, be exempted from taxation by the source country; (iii)
capital gains arising from the transfer of shares similar to
business transfers by the source country will, in principle, be
exempted; (iv) arbitration proceedings under the mutual agreement
procedure will be introduced; and (v) the tax authorities of Japan
and the UK may assist each other in the collection of revenue
claims (specifically for consumption tax, value added tax,
inheritance tax, and gift tax, to which the Revised Treaty is not
applicable).
The Protocol will take effect 30 days after the date of the
exchange of diplomatic notes indicating the approvals required
under the legal procedures of both Japan and the UK.
For additional reference, as of March 1, Japan has concluded 51
income tax treaties applicable to 62 jurisdictions and eight tax
information exchange agreements applicable to eight jurisdictions.
Japan is also a member country of the "Convention on Mutual
Administrative Assistance in Tax Matters." The income tax
treaty between Japan and Germany is currently undergoing official
negotiations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
