Japan, Uruguay sign tax treaty

The governments of Japan and Uruguay on September 13 signed their first-ever tax treaty, Japan’s Ministry of Finance has announced.

The new Japan-Uruguay tax treaty would reduce withholding taxes on dividends to 5 percent for some payments to related companies and to 10 percent for others.

Withholding taxes on interest would be exempt if received by governments and would be ten percent in other cases.

Withholding tax on royalties would be reduced to 10 percent.

The treaty includes a modern “principle purposes” test to prevent abuse of the treaty. It also includes a mutual agreement procedure and an arbitration clause to aid in the resolution of cross-border tax disputes.

The two governments must take further steps to bring the treaty into force.

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