Skip to Content

Application of the MLI to the Tax Treaty between Japan and Korea

The MLI enters into force for Japan on January 1, 2019, and for Korea on September 1, 2020.
 Based on the reservations and notifications submitted by Japan on September 26, 2018 and by Korea on May 13, 2020, the MLI applies to the tax treaty between Japan and Korea as described below. 

1. Tax treaty covered by the MLI
  -“Convention between Japan and the Republic of Korea for the Avoidance of Double Taxation and the Prevention of
    Fiscal Evasion with respect to Taxes on Income”
    Date of signature: October 8, 1998
    Date of entry into force: November 22, 1999

2. Provisions of the MLI applicable to the tax treaty
  - Article 6(1) (Preamble language describing the intent of the Contracting Jurisdictions that the tax treaty will not
    create opportunities for non-taxation or reduced taxation)
  - Article 7(1) (Provisions that deny the benefits under the tax treaty where the principal purpose or one of the principal
    purposes of any arrangement or transaction was to obtain those benefits)
  - Article 16(1), 1st sentence (Provisions for presentation of a case of taxation not in accordance with the provisions of
    the tax treaty for a mutual agreement procedure)
  - Article 17(1) (Provisions regarding corresponding adjustments to taxation in accordance with arm’s length principle)

3. Entry into effect
 (a) The provisions of the MLI shall have effect in each Contracting Jurisdiction with respect to the tax treaty between
      Japan and Korea:
   (i) with respect to taxes withheld at source on amounts paid or credited to non-residents, where the event giving rise
      to such taxes occurs on or after January 1, 2021; and
   (ii) with respect to all other taxes levied by that Contracting Jurisdiction, for taxes levied with respect to taxable
      periods beginning on or after March 1, 2021.
(b) Notwithstanding (a), Article 16 (Mutual Agreement Procedure) shall have effect with respect to the tax treaty
     between Japan and Korea for a case presented to the competent authority of a Contracting Jurisdiction on or after
     September 1, 2020, except for cases that were not eligible to be presented as of that date under the tax treaty
     between Japan and Korea prior to its modification by the MLI, without regard to the taxable period to which the
     case relates.