Japan’s Ministry of Finance today announced that two tax agreements will enter into force: a tax treaty with Germany and a protocol to a tax treaty with India. Notifications for entry into force of both documents have been completed this week, the Ministry said.
The Japan/Germany tax treaty, signed December 17, 2015, will enter into force on October 28.
The treaty reduces withholding tax on interest and royalties to zero and withholding tax on dividends to zero for holdings of least 25 percent for 18 months. For dividends, withholding is 5 percent for holdings of at least 10 percent for 6 months, and 15 percent in other cases.
The tax treaty also provides for arbitration of tax disputes and for assistance in the collection of taxes. It also includes a principal purpose test to prevent tax treaty abuse.
The protocol to India and Japan’s 1989 tax treaty, signed December 11, 2015, will enter into force on October 29.
The protocol adds provisions on exchange of information for tax purposes and on assistance in the collection of tax.
It also allows information about a country’s residents received from the other country to be shared with law enforcement agents in some cases.
It further adds more financial institutions to the list of of those exempted from withholding tax on interest.
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