Japan and Switzerland on July 16 signed an amending protocol to the tax treaty between the countries that would revise the treatment of taxes on investment income, among other revisions.
Under the amended treaty, dividends would be subject to a maximum rate of 10%, as under the existing treaty. However, dividend taxation would be exempted in the case of certain companies that are at least 10% owned for 365 days. Currently, a 5% rate applies for such 10%-owned companies. The full dividend exemption in the current treaty only applies with respect to 50%-owned companies.
The amended treaty would also fully exempt interest. Under the current treaty, a 10% interest tax rate maximum applies, except where beneficially owned by certain government or financial institutions.
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