1．Further Reduction of Taxation on Investment Income
Taxation on investment income (dividends, interest and royalties) in the source country is subjected to the reduced maximum rates or exempted as follows:
| Existing Convention | New Convention | |
|---|---|---|
| Dividends | 10% (holding more than 50% of share capital for 12 months) 20% (others) |
Exempted (holding at least 10% of voting power for 6 months) Exempted (beneficially owned by pension funds) by pension funds) 10% (others) |
| Interest | 10% | Exempted |
| Royalties | 10% | Exempted |
2. 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 the exemption from tax on investment income. In addition, any benefit under this Convention shall not be granted if it is reasonable to conclude that obtaining such a benefit was one of the principal purposes of any transaction.
3. Arbitration Proceedings 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.
4. Exchange of Information and Assistance in the Collection of Tax Claims
In order to prevent international tax evasion and tax avoidance effectively, the scope of cases and taxes subject to the exchange of information concerning tax matters is expanded and the mutual assistance in the collection of tax claims between the two countries is introduced.