The Japanese Ministry of Finance on 14 July 2017 issued a press release announcing that the Government of Japan and the Government of the Republic of Lithuania 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 is the first tax convention to be concluded between Japan and the Republic of Lithuania in the light of an increasingly close economic relationship between the two countries.
The Treaty contains a number of treaty-based recommendations from the BEPS project and contained in Actions 2 (neutralizing the effects of hybrid mismatch arrangements), 6 (preventing the granting of treaty benefits inappropriate circumstances), 7 (preventing the artificial avoidance of permanent establishment status) and 14 (making dispute resolution mechanisms more effective).
Both Japan and Lithuania have signed the OECD MLI. Given that the Treaty already incorporated the treaty-related BEPS minimum standards, it can be expected that this treaty will not be listed as a CTA and thus will not likely be further modified by the MLI.
Although the DTA has been signed, it has not entered into force yet. For the DTA to enter into force, the respective ratification procedures have to have been finalised in both countries.
