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 United States, Japan Sign Protocol to Income Tax Treaty



WASHINGTON — In a ceremony held at the U.S. Department of the Treasury today, Treasury Deputy Secretary Neal S. Wolin and Japan’s Ambassador to the United States Kenichiro Sasae signed a new Protocol to the income tax treaty between the United States and Japan. The new Protocol amends the existing tax treaty, concluded in 2003, to bring that agreement into closer conformity with the current tax treaty policies of both the United States and Japan.


“This new protocol reinforces the strong economic relationship between the United States and Japan,” said Deputy Secretary Wolin. “These amendments provide important clarity for investors and businesses and will help foster cross-border investment between our two nations.”


Key aspects of the protocol include:


  • New rules for the taxation of interest and certain dividends;
  • Provisions to help resolve certain cases through mandatory binding arbitration; and
  • Provisions to help the revenue authorities of both nations carry out their duties as tax administrators.


“These amendments will further promote investment between Japan and the United States,” said Ambassador Sasae. “And that investment will add new vitality to both economies and deepen our economic relationship.”


The new Protocol provides for exclusive residence-country taxation of interest and of an expanded category of direct dividends. The new Protocol also amends the provisions of the existing tax treaty governing the taxation of capital gains in a manner that permits the United States to fully apply the Foreign Investment in Real Property Tax Act.


Consistent with a number of recent U.S. tax treaties, the new Protocol provides for resolution through mandatory binding arbitration of certain cases that the revenue authorities of the United States and Japan have been unable to resolve after a reasonable period of time.


In addition, the new Protocol adopts provisions that enable the competent authorities to assist each other in the collection of taxes. The new Protocol also provides for the full exchange of information between the competent authorities to facilitate the administration of each country’s tax laws.


The existing tax treaty, originally signed on *November 6, 2003, is intended to avoid double taxation and prevent income tax evasion.


The text of the treaty document can be found at:


The text of the exchange of notes can be found at:




*The date noted in regards to the original signing of the existing tax treaty has been corrected since this press release was first published.  
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