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Japan, Russia Agree New Double Tax Pact

Wednesday, September 13, 2017

The governments of Japan and Russia signed a new convention on the elimination of double taxation on September 7.

The convention replaces the 1986 agreement between Japan and the former Soviet Union. It lowers withholding tax rates on cross-border income from trade and investment – in most cases to zero percent – and enhances provisions on cooperation in tax matters.

The deal waives withholding tax on interest income and income from royalties.

Dividends will be subject to withholding tax at different rates. A zero rate will apply if the recipient is a pension fund and the beneficial owner of the company distributing the dividend; a five percent rate will apply if the recipient owns at least 15 percent voting power in the company distributing the dividend for at least a calendar year; a 15 percent rate will apply for shares deriving at least 50 percent of their value from immovable property; and a 10 percent rate will apply in all other cases.

The convention will enter into force 30 days after it is ratified by both countries.