US And Japan Initial New Income Tax Treaty

by Mike Godfrey, for LawAndTax-News.com, Washington

12 June 2003

The US Treasury Department announced on Wednesday that progress has been made in the formal negotiations between Japan and the United States over the creation of a new income tax treaty to replace the old bilateral agreement, which has been in place for more than 30 years.

According to the Treasury, the proposed treaty provides for substantial reductions in the withholding taxes imposed on cross-border dividends, interest, royalties and other income, including the complete elimination of source-country withholding taxes on royalties, certain interest, and certain intercompany dividends.

Speaking at the Japan Society's annual dinner this week, Treasury Secretary, John Snow welcomed the new agreement, announcing that:

'I am very pleased to announce tonight that the United States and Japan have reached an agreement in principle on the text of a new income tax treaty. The proposed treaty reflects both the deepening economic ties between the United States and Japan, and the globalization of our two economies.'

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