A protocol and exchange of notes between the UK and Japan, signed December 17, 2013, will enter into force on December 12, the UK government announced November 12.
The protocol and exchange of notes will take effect in the United Kingdom in respect of withholding taxes, on income derived on or after January 1, 2015; in respect of income tax and capital gains tax, for any year of assessment beginning on or after April 6, 2015; and in respect of corporation tax, for any financial year beginning on or after April 1, 2015.
In Japan, the protocol and exchange of notes will take effect in respect of withholding taxes, on amounts taxable on or after January 1, 2015; and in respect of other income taxes, for any tax year beginning on or after January 1, 2015.
The protocol amends a 2006 treaty between the countries, adopting the Authorized OECD Approach for business profits attributable to a permanent establishment. The treaty reduces the threshold shareholding requirement for dividends exempt from tax in the source country from 50 percent to 10 percent, and exempts interest from taxation by the source country in principle. Arbitration is introduced, and provisions are added regarding mutual assistance for tax collection.
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