OUR THOUGHTS ON:

US and Japan Protocol Finalized

International

By Ken Kobayashi

Representatives of the governments of the United States and Japan signed a new Protocol to the United States-Japan income tax treaty on January 24, 2013. The new Protocol amends the existing tax treaty to bring that agreement into closer conformity with the current tax treaty policies of both the United States and Japan.

The new Protocol includes the following provisions:
• Residence-country-only taxation on interest;
• An expanded category of direct dividends paid by subsidiaries that are 50% or more owned for six months (from 12 months).
• Provisions of the existing treaty rules governing the taxation of capital gains in a manner that would permit the United States to fully apply the Foreign Investment in Real Property Tax Act;
• Mandatory binding arbitration of certain cases that the tax authorities of the United States and Japan have been unable to resolve after a reasonable period of time;
• Provisions to enable the competent authorities to assist each other in the collection of taxes; and
• An exchange-of-information provision to allow the competent authorities to facilitate the administration of each country’s tax laws.

These amendments to 2003 Protocol signed by both the United States and Japan would help promote investment and increase vitality in both economies and deepen both economic relationships.
The Protocol will enter into force when instruments of ratification are exchanged.

© 2013 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at contactSD@schneiderdowns.com.

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2018 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

comments