The Japanese government today announced that all steps required for the entry into force of the Japan-Iceland tax treaty, signed January 15, have been completed.
As such, the tax treaty will enter into force on October 31, the government said. This is the first tax treaty between the two nations.
The treaty reduces withholding taxes on interest and royalties to zero and reduces withholding taxes on dividends to zero if held by a pension fund or if the beneficial owner is a company which owned at least 25 of the shares for six months. In other cases, withholding on dividends is reduced to 15 percent.
The treaty also includes a modern principal purposes clause to prevent tax treaty shopping and a mutual agreement procedure to resolve tax treaty disputes. It also provides for exchange of information between tax authorities.