Japan

Tax treaty network

As of 1 April 202 4, Japan has entered into 86 tax conventions applicable to 155 jurisdictions, and has also ratified the multilateral instrument (‘MLI’).

Companies making certain payments are required to withhold income taxes using the following rates, based on those treaties.

Notes

1. These 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% (see Income Determination: Dividend income, Interest income, Royalty income).
2. The applicable treaty should be reviewed because certain tax treaties exclude film royalties and/or gains from copyright transfers from taxable income. Note that WHT may be subject to the income surtax of 2.1% (see Income Determination: Dividend income, Interest income, Royalty income)
3. 15% for publicly traded shares (for non-resident individuals, only applicable to minority interests [less than 3% ownership]) and investment trusts. Note that WHT may be subject to the income surtax of 2.1% (see Income Determination: Dividend income, Interest income, Royalty income).
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% (see Income Determination: Dividend income, Interest income, Royalty income).
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% (see Income Determination: Dividend income, Interest income, Royalty income).
6. Tax treaties with many countries provide reduced tax rates, as indicated. Some treaties, however, provide higher tax rates (e.g. Brazil, Thailand), although the rate under domestic law will be the maximum rate. Still other treaties do not provide rates at all (e.g. Egypt). In these instances, rates specified under Japanese domestic tax laws apply.
7. The tax treaty was concluded mainly for the purpose of information exchange.
8. The tax treaties with Brazil and Thailand provide 25% tax rates for certain income. However, the WHT rate cannot exceed 20.42% (including the income surtax of 2.1%) on any income to be received by a non-resident taxpayer of Japan under Japanese income tax law.
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. The treaty with the former USSR is applied to Armenia, Belarus, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan .
11. Tax treaties with many countries provide reduced rates where the recipients of interest are government organisations and financial institutions.