US & Japan Sign New Bilateral Tax Agreement

by Mary Swire, for LawAndTax-News.com, Hong Kong

07 November 2003

US Treasury Secretary, John Snow, and the Japanese Ambassador to the United States, Ryozo Kato on Thursday signed the new US-Japan Income Tax Treaty, the Treasury Department has announced.

Speaking on Monday at the US-Japan Business Council Annual Meeting in Washington, Mr Snow made reference to the treaty, drawing attention to its potential for enhancing business and investment opportunities between the two countries.

Whilst stressing the important role played by the Japanese business community (both in Japan and the United States) in the good relationship between the two nations, the Treasury Secretary nevertheless observed that:

"Of course there will continue to be a role for government-to-government discussions to facilitate a more hospitable environment for trade and investment between the United States and Japan. A recent and important result of these discussions is our agreement in principle with Japan on the text of a new US-Japan Bilateral Income Tax Treaty."

He continued:

"The proposed treaty reflects the deepening economic ties between the United States and Japan, and the globalization of the two economies. The proposed treaty reduces existing economic barriers to trade and investment between the United States and Japan, most significantly by substantially reducing withholding taxes imposed on cross border dividends, interest, royalties and other income. This includes the complete elimination of source country withholding taxes on royalties, certain interest, and certain inter-company dividends."

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