Foreign tax relief
Resident taxpayers can credit foreign income taxes against their Japanese national tax and local inhabitant’s tax liabilities (with certain limitations), where foreign-source income is taxed in Japan. Non-resident taxpayers are not entitled to take foreign tax credits on their Japan income tax returns unless one has a PE in Japan.
As of 1 June, 2020, Japan has tax treaties with the following countries:
|Belgium||Ireland, Republic of||Russia|
|Bermuda||Isle of Man||Romania|
|British Virgin Islands||Italy||Saudi Arabia|
|Cayman Islands||Korea, Republic of||Spain|
|Estonia||Mexico||United Arab Emirates|
|Finland||New Zealand||United States|
- The treaty with the former Czechoslovakia is applied to the Czech Republic and the Slovak Republic.
- The treaty with the former USSR is applied to Armenia, Azerbaijan, Belarus, Georgia, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan.
Mutual Administrative Assistance
Japan has signed a Convention on Mutual Administrative Assistance in Tax Matters and it is effective.
Base Erosion and Profit Shifting (BEPS) Agreement
On 7 June 2017, Japan signed a Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS, which will not be effective until the instrument of ratification is submitted. As of 30 September 2020, it is effective with Australia, Austria, Belgium, Canada, Cyprus, Czech Republic, Denmark, Finland, France, Georgia, Guernsey, Iceland, India, Indonesia, Ireland, Isle of Man, Israel, Jersey, Republic of Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mauritius, Monaco, Netherlands, New Zealand, Norway, Poland, Portugal, Qatar, Russia, San Marino, Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, Sweden, Switzerland, Ukraine, United Arab Emirates, United Kingdom, and Uruguay.
Designed to avoid overlaps in social security enrolment, Japan has entered into social security agreements with several countries. As of 30 June 2020, the agreements currently in effect are with Australia, Belgium, Brazil, Canada, China, the Czech Republic, France, Germany, Hungary, India, Ireland, Korea, Luxembourg, the Netherlands, Philippines, Slovak Republic, Spain, Switzerland, the United Kingdom, and the United States. Agreements with Finland, Italy, and Sweden have been signed and are in the process of implementation.