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Key Points of the Protocol Amending the Tax Convention with the United States

[Provisional translation]

  1. Enlargement of the Subject of Exemption of Taxes Withheld at Source
    The subject of exemption of taxes withheld at source on investment income (dividends and interest) will be enlarged as follows:
  2. Current ConventionAmended Convention
    Dividends Exemption (Shareholding: more than 50%, Holding period: 12 months or longer) Exemption(Shareholding: at least 50%, Holding period: 6 months or longer)
    Interest 10% in principle
    Exemption (Interest received by financial institutions, etc.)
    Exemption in principle
  3. Introduction of Arbitration System to Mutual Agreement Procedure
    With respect to the mutual agreement procedure concerning the taxation which is not in accordance with the provisions of the Convention, the Protocol introduces the arbitration system to resolve the dispute by the decision of an arbitration panel composed of third parties at the request of a tax payer in the case where a dispute has not been resolved by the consultation between the tax authorities of the two countries within two years.
  4. Reinforcement of Assistance in the Collection of Taxes
    While the scope of application of the system to lend assistance to each other in the collection of revenue claims of the other country (assistance in the collection of taxes) is limited to cases of abuse of the Convention in the current Convention, the scope will be expanded after its amendment so that the system will apply to delinquent general revenue claims. With regard to the taxes of Japan, the income tax, the corporation tax, the special income tax for reconstruction, the special corporation tax for reconstruction, the consumption tax, the inheritance tax and the gift tax are covered under the assistance in the collection of taxes.