[Provisional translation]
1．Amendment of Taxation on Business Profits
The business profits attributable to a permanent establishment (such as a branch) of an enterprise of one of the two countries situated in the other country which may be taxed in that other country shall be calculated by comprehensively recognizing internal dealings between its head office and branches and by strictly applying the arm’s length principle.
2．Further Reduction of Taxation on Investment Income
Taxation on investment income (dividends, interest and royalties) in the source country is further limited to the maximum rates or exempted as follows:
| Existing Convention | New Convention | |
|---|---|---|
| Dividends | 5% (paid by a company of Belgium, holding at least 25% of voting shares for 6 months) 10% (paid by a company of Japan, holding at least 25% of voting shares for 6 months) 15% (others) |
Exempted (holding at least 10% of voting power for 6 months) Exempted (beneficially owned by pension funds) 10% (others) |
| Interest | 10% | Exempted (paid and beneficially owned by enterprises, etc) 10% (others) |
| Royalties | 10% | Exempted |
3. Prevention of Abuse of the Convention
In order to prevent abuse of benefits under this Convention, it is provided that only residents who satisfy specified conditions, such as qualified persons, may be entitled to such benefits. In addition, benefits under this Convention shall not be granted if it is reasonable to conclude that obtaining such benefits was one of the principal purposes of any transaction.
4. Arbitration Proceeding in Mutual Agreement Procedure
Where taxation not in accordance with the provisions of this Convention has not been resolved through the consultation between the tax authorities of the two countries within two years, the unresolved issue shall be submitted to arbitration and resolved pursuant to a decision of an arbitration panel composed of third parties.
5. Assistance in the Collection of Tax Claims
In order to prevent international tax evasion and tax avoidance effectively, the mutual assistance in the collection of tax claims between the two countries are introduced.