The Japanese Ministry of Finance on 30 August 2017 issued a press release announcing that the Government of Japan and the Government of Estonia have signed a Double Taxation Agreement (DTA) in Tallinn. The agreement provides for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income. This DTA is the first tax convention to be concluded between Japan and the Republic of Estonia in the light of an increasingly close economic relationship between the two countries.
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 dividends to zero when paid to the owner of at least 10% of the company’s voting power;
- The treaty would exempt interest paid to governments from withholding tax and sets the maximum withholding tax rate in other cases at 10%; and
- Withholding tax on royalties is set at a maximum of 5%.
The treaty would be the first tax treaty between the two countries. It must be ratified by both governments before it enters into force.
