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Japan Corporate - Withholding taxes

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Tax treaty network

As of 1 June 2018, Japan has entered into 70 tax treaties with 123 countries and/or regions. Companies making certain payments are required to withhold income taxes using the following rates.

Recipient WHT (%)
Dividends Interest Royalties (2)
Portfolio (3) Substantial holdings (1)
Japanese corporations 20 20 0/20 (4) 0
Resident individuals 20 20 0/20 (4) 0
         
Foreign corporations, non-resident individuals:        
Non-treaty (5) 15/20 (3) 20 (3) 0/15/20 (4) 20
Treaty (6):        
Australia 10 0/5 10 5
Austria 20 10 10 10
Bahamas (7) - - - -
Bangladesh 15 10 10 10
Belgium (25) 15 10 10 10
10 0 0/10 (27) 0
Bermuda (7) - - - -
Brazil 12.5 12.5 12.5 12.5/15/25 (8)
British Virgin Islands (7) - - - -
Brunei 10 5 10 10
Bulgaria 15 10 10 10
Canada 15 5 10 10
Cayman Islands (7) - - - -
China, People’s Republic of 10 10 10 10
Czechoslovakia (former) (9) 15 10 10 0/10 (9)
Denmark (25) 15 10 10 10
5/15 (28) 0 0 0
Egypt 15 15 15/20 (10) 15/20 (10)
Estonia (25) 10 0 0/10 (29) 0
Finland 15 10 10 10
France 10 0/5 (30) 10 0
Germany 5/15 (31) 0 (31) 0 0
Guernsey (7) - - - -
Hong Kong 10 5 10 5
Hungary 10 10 10 0/10 (11)
Iceland (25) 5/15 (32) 0 (32) 0 0
India 10 10 10 10 (12)
Indonesia 15 10 10 10
Ireland, Republic of 15 10 10 10
Israel 15 5 10 10
Italy 15 10 10 10
Jersey (7) - - - -
Kazakhstan 15 5 10 5 (13)
Korea, Republic of 15 5 10 10
Kuwait 10 5 10 10
Latvia (26) 0 0 0 0
Liechtenstein (7) - - - -
Lithuania (25) 0 0 0 0
Luxembourg 15 5 10 10
Macao (7) - - - -
Malaysia 15 5 10 10
Man, Isle of (7) - - - -
Mexico 15 0/5 (14) 10/15 (14) 10
Netherlands 10 0/5 (15) 0/10 (15) 0
New Zealand 15 0 10 5
Norway 15 5 10 10
Oman 10 5 0/10 (33) 10
Pakistan 10 5/7.5 (16) 10 10
Panama (7) - - - -
Philippines 15 10 10 10/15 (17)
Poland 10 10 10 0/10 (11)
Portuguese Republic 10 5 0/5/10 (34) 5
Qatar 10 5 0/10 (35) 5
Romania 10 10 10 10/15 (18)
Samoa (7) - - - -
Saudi Arabia 10 5 0/10 (36) 5/10 (19)
Singapore 15 5 0/10 (36) 10
Slovenia (26) 5 5 0/5 (37) 5
South Africa 15 5 10 10
Spain 15 10 10 10
Sri Lanka 20 20 0/15/20 (20) 0/10 (20)
Sweden 10 0 (21) 0 0
Switzerland 10 0/5 0/10 (35) 0
Taiwan 10 10 0/10 (38) 10
Thailand 15 (3) 15/20 (22) 10/25 (22) 15
Turkey 15 10 10/15 (23) 10
USSR (former) (24, 25) 15 15 10 0/10 (24)
10/15 (39) 5 (39) 0 0
United Arab Emirates 10 5 10 10
United Kingdom 10 0 0 0
United States 10 (40) 0/5 (40) 0/10 (41) 0
Vietnam 10 10 10 10
Zambia 0 0 10 10

Notes

  1. The tax treaty rates apply only to corporate shareholders. The applicable treaty should be checked for conditions required to claim the reduced rate. Note that WHT may be subject to the income surtax of 2.1%, which is levied for the income earned for the period from 1 January 2013 through 31 December 2037.
  2. The applicable treaty should be reviewed because certain tax treaties exclude film royalties and/or gain from copyright transfer from taxable income. Note that WHT may be subject to the income surtax of 2.1%, which is levied for the income earned for the period from 1 January 2013 through 31 December 2037.
  3. 15% for publicly traded shares (for non-resident individual, only applicable to minority interest [less than 3% ownership]) and investment trusts. Note that WHT may be subject to the income surtax of 2.1%, which is levied for the income earned for the period from 1 January 2013 through 31 December 2037.
  4. Interest on bank deposits and/or certain designated financial instruments is subject to a 15% national WHT and 5% local inhabitants WHT (20% combined). Taxation of such interest is fully realised by tax withholding, so resident individuals are not required to aggregate such interest income with other income. Interest on loans made by resident individuals is not subject to WHT; instead, it is taxed in the aggregate with other income. Such WHT is subject to the income surtax of 2.1%, which is levied for the income earned for the period from 1 January 2013 through 31 December 2037.
  5. Dividends, interest, and royalties earned by non-resident individuals and/or foreign corporations are subject to a 20% national WHT under Japanese domestic tax laws in principle. An exceptional rate of 15% is applied to interest on bank deposits and certain designated financial instruments. Interest on loans, however, is taxed at a 20% rate. A special exemption from WHT applies to certain long-term corporate bonds issued to non-residents in foreign countries. Note that WHT may be subject to the income surtax of 2.1%, which is levied for the income earned for the period from 1 January 2013 through 31 December 2037.
  6. Tax treaties with many countries provide reduced tax rates, as indicated. Some treaties, however, provide higher tax rates (e.g. Brazil, Thailand) or do not provide rates (e.g. Egypt, New Zealand). In these instances, rates specified under Japanese domestic tax laws apply. Each treaty should be consulted to see if a reduced rate for dividends (in the case of substantial holdings) is applicable.
  7. The tax treaty was concluded mainly for the purpose of information exchange.
  8. The tax treaty with Brazil provides a 25% tax rate for certain royalties (trademark). However, the WHT rate cannot exceed 20.42% (including the income surtax of 2.1%) on any royalties to be received by a non-resident taxpayer of Japan under Japanese income tax law. Film royalties are taxed at 15%. Any other royalties are taxed at 12.5%.
  9. The treaty with the former Czechoslovakia is applied to the Czech Republic and the Slovak Republic. It stipulates that cultural royalties are tax exempt.
  10. In the tax treaty, no rate on interest is specified, therefore Japanese domestic rate is applied. Film royalties are taxed at 20%, and other royalties are taxed at 15%.
  11. Cultural royalties are tax exempt.
  12. The rate of 10% for royalties includes consideration for technical services.
  13. The rate for royalties is reduced from 10% to 5% by Protocol.
  14. Dividends received from subsidiaries, by parent companies that have met certain conditions, are exempt from WHT. Interest received by government and other specific entities is exempt. Interest received by banks, financial institutions, or paid as a consequence of sale on credit of any equipment is subject to 10% WHT. Any other interest is taxed at 15%.
  15. Dividends received from subsidiaries for which the parent company has 50% or more shareholding are tax exempt. Interest received by government and other specific entities, or paid as a consequence of sale on credit of any equipment, merchandise, or service, is tax exempt.
  16. A 5% rate is applied to a company that has 50% or more shares with direct voting rights, and a rate of 7.5% is applied to a company that has 25% or more shares with direct voting rights.
  17. Film royalties are taxed at 15%. Any other royalties are taxed at 10%.
  18. Cultural royalties are taxed at 10%.
  19. Royalties paid for the use of certain equipment are taxed at 5%.
  20. Interest paid to financial institutions is tax exempt, as well as film and copyright royalties. Patent royalties are subject to a 10% rate.
  21. If certain conditions for beneficial owners are met, dividends are taxable only in the contracting state of which the beneficial owner is a resident.
  22. Dividends paid by a corporation that is engaged in industrial undertakings are taxed at 15%. Interest paid to financial institutions is taxed at 10%.
  23. Interest paid to financial institutions is taxed at 10%.
  24. The treaty with the former USSR is applied to Armenia, Azerbaijan, Belarus, Georgia, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan. It stipulates that cultural royalties are tax exempt.
  25. The new treaty was signed but has not yet become effective.
  26. The treaty will apply with respect to taxes levied on the basis of a taxable year for taxes for any taxable years beginning on or after 1 January 2018 and with respect to taxes not levied on the basis of a taxable year for taxes levied on or after 1 January 2018.
  27. Exempted when paid and beneficially owned by enterprises, etc; 10% for others.
  28. Exempted when paid by a company of Japan, holding at least 10% of voting power for six months, or beneficially owned by pension funds; 15% for others.
  29. Exempted when received by governments, etc.; 10% for others.
  30. Exempted when paid by a company of Japan, holding at least 15% (direct or indirect) or 25% (direct) shares for six months; 5% for holding at least 10% (direct or indirect) shares for six months.
  31. Exempted when holding at least 25% for 18 months; 5% when holding at least 10% for six months; 15% for others.
  32. Exempted when holding at least 25% of voting shares for six months or beneficially owned by pension funds; 5% when holding at least 10% of voting shares for six months; 15% for others.
  33. Exempted when received by governments, etc.; 10% for others.
  34. Exempted when received by governments, etc.; 5% when received by banks; 10% for others.
  35. Exempted when received by governments, financial institutions, etc.; 10% for others.
  36. Exempted when received by governments or central bank, 10% for others.
  37. Exempted when received by governments, etc.; 5% for others.
  38. Exempted when received by governments, etc., 10% for others.
  39. Exempted when received by beneficially owned by pension funds; 5% when holding at least 15% of voting power for 365 days; 15% when shares deriving at least 50% of their value from immovable property; 10% for others.
  40. Exempted when holding more than 50% of voting shares for 12 months or beneficially owned by pension funds; 5% when holding at least 10% of voting shares; 10% for others.
  41. Exempted when received by governments or financial institutions; 10% for others.

Last Reviewed - 30 November 2017

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