UK-Japan Tax Treaty Exempts Some Entities From Dividend Withholding Taxes

The UK and Japan signed a tax treat that will substantially exempt the withholding tax imposed on dividends derived from pension fund interest, which state governments, central banks, pension funds and certain financial institutions might receive, provided these entities meet

By None

The UK and Japan signed a tax treat that will substantially exempt the withholding tax imposed on dividends derived from pension fund interest, which state governments, central banks, pension funds and certain financial institutions might receive, provided these entities meet certain benefit provisions.

The treaty set some of the perimeters for dividend income including a reduction in the ceiling tax rate for inter-company dividends from 10 to 5%, and for general dividends from 15 to 10%. It also set a holding tax exemption on certain inter company dividends and pension funds.

For interest income, the treaty calls for exemption from withholding tax, which the government, central bank, pension fund and certain financial institutions might receive.

The agreement also addresses provisions meant to prevent fiscal evasion by limiting the application to qualified persons who fulfil certain requirements.

It also makes mandatory that the taxation on income and profits derived by a sleeping partnership (Tokumei Kumiai partnership ) comply with Japanese law, meaning a contract may be taxed in the contracting states in which the income and profits arise.

The treaty, which mirrors the one signed between Japan and the US, will take effect on January 1, 2007.

«