On 30 August 2019, the U.S. treasury department announced that protocol amending the convention between the government of the United States of America and the government of Japan for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and a related agreement entered into by an exchange of notes.
The Protocol amends the existing income tax treaty (2003) which was signed on 25 January 2013 and approved by the Japanese Diet on 17 June 2013, it took 6 years and 7 months from the signature to the enactment due to additional time necessary for US ratification procedures.
The Protocol will significantly reduce taxes on interest and certain dividends. It will also provide for mandatory binding arbitration to facilitate more effective and expedient resolutions of certain tax disputes between U.S. and Japanese tax administrations, resulting in certainty for taxpayers.
