Protocol Amending the Japan - UK Tax Treaty - KPMG Japan
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Protocol Amending the Japan - UK Tax Treaty

Protocol Amending the Japan - UK Tax Treaty

On 17 December 2013, the governments of Japan and the UK signed the Protocol amending the current tax treaty between the two countries.


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The main amendments are as follows:

  • The threshold of the shareholding requirement for dividends which are exempt from tax in a residence country of the dividend paying company will be reduced from 50 percent to 10 percent.
  • In principle, interest payments will be exempt from tax in a country where the interest arises.
  • Under the current tax treaty, where a parent company holding 25 percent or more of shares in a company in the other country sells 5 percent or more of the shares in a taxable year, the capital gains from the sale which are not subject to tax in the residence country of the parent company may be taxed in the residence country of the subsidiary. This clause will be eliminated. Note that the right to tax capital gains from sales of shares in a real estate holding company by the country of the real estate will remain.
  • Article 7 (Business Profits provision) will be amended to the same as Article 7 of the OECD Model Tax Convention amended in 2010, which is in line with the Authorised OECD Approach as an approach to calculate income attributable to a permanent establishment.


KPMG Tax e-Tax News No.65

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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