A tax treaty between the United Arab Emirates and Japan signed on May 2, 2013, will enter into force on December 24, Japan’s Ministry of Finance announced on November 25.
The treaty will apply to taxes withheld at source, income taxes, and other taxes beginning January 1, 2014, the Ministry of Finance said.
Under the agreement, the withholding tax rate for dividends is set at 5 percent for corporate shareholders that hold at least 10 percent voting power, and is 10 percent in other cases. The withholding tax rate on interest received by the government is zero and is 20 percent in other cases. Withholding tax on royalties is set at a 10 percent rate.
Taxes on income from the international transportation business will be exempted in the source country under the new tax convention on or after November 24.
The treaty also includes a provision to prevent abuse of the treaty and provisions on exchange of information and mutual agreement procedures.
Japan and the UAE also exchanged notes regarding the termination of a June 27, 2004, agreement on the taxation of international transportation business.
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