Japan: FAQs for nonresidents invoking withholding tax rates under income tax treaty

The FAQs address how treaty-related requests can be made by an electronic means.

The FAQs address how treaty-related requests can be made by an electronic means.

Japan’s tax agency on 19 May 2021 released a set of “frequently asked questions” (FAQs) with information about nonresidents and other eligible persons that submit requests to seek a reduction or exemption from withholding tax pursuant to a provision of an income tax treaty. The FAQs address how such treaty-related requests can be made by an electronic means.

Nonresidents of Japan that receive payments of Japanese-sourced income that is subject to withholding tax in Japan may claim a reduction or exemption of the withholding tax based on a provision of an income tax treaty. To claim the treaty benefits, it is necessary for these nonresidents to submit to the withholding agent a form applying to invoke the tax treaty’s withholding rates. Under the 2021 tax reform measures, nonresidents are permitted (under certain conditions) to provide the information regarding the tax treaty by electromagnetic method (instead of in writing) to the withholding agent and then the withholding agent is permitted to supply the information to the tax office by electronic means (for example, by image data such as a PDF file) instead of in writing. The withholding agents are to provide this information via the e-Tax system (after 1 April 2021).

The FAQs on electronic submissions of the application form for invoking tax treaty benefits are described under four sections:

  • Outline of the rules
  • When nonresidents provide electromagnetic records to the withholding agents
  • When withholding agents provide the image data to the tax office through e-Tax system
  • Preservation of the application form for tax treaty by withholding agents

Read a May 2021 report [PDF 113 KB] prepared by the KPMG member firm in Japan



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