The Japanese Ministry of Finance on 7 September 2017 issued a press release announcing that the Government of Japan and the Government of the Russian Federation have signed a Double Taxation Agreement (DTA). The agreement provides for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income.

This Convention wholly amends the existing Convention, which entered into force in 1986, by expanding the extent of reduction of taxation on investment income, introducing measures for prevention of abuse of this Convention and assistance in the collection of tax claims, and reinforcing the exchange of information concerning tax matters.

On investment income (dividends, interest and royalties), taxation in the source country is limited or exempted as follows:

  • The new treaty would reduce the withholding tax on interest and royalties to zero;
  • Whereas the countries’ existing tax treaty sets the maximum withholding tax rate on dividends at 15%, the new DTA keeps that rate only for dividends on shares that derive at least 50% of their value from immovable property; and
  • Withholding tax on royalties is set at a maximum of 10% (exempted for use of copyright, etc.).