Where a foreign company earns income with the economic nature of interest (referred to below as ‘Funding Income’) from lending to a business carried out in Japan, investing in a bond with a Japanese issuer or from a similar transaction (referred to below as a ‘Funding Transaction’), Japanese withholding tax (‘WHT’) will apply if the income is treated as falling within defined categories of Japan source income. Read More
Under the Japanese withholding tax system the Payor of Japanese source income on which withholding tax applies has an obligation to withhold the tax concerned and pay it over to the tax authorities. A Payor who withholds insufficient tax may be liable to penalties and interest in respect of the underpayment. Procedures also exist to repay the Payor for certain taxes incorrectly over-withheld. Read More
The table linked to this article summarizes the withholding tax rates on dividends under Japan’s different tax treaties.
The withholding tax rate on dividends under Japan’s model tax treaty is 15 per cent for portfolio investments and 5 per cent for dividends from parent-subsidiary shareholdings. Read More
The table linked to this article summarizes the withholding tax rates on royalties under Japan’s different tax treaties.
The withholding tax rate under Japan’s model tax treaty is 10 per cent. More recent tax treaties Read More
The issue of determining whether or not an item of income has been “paid” for withholding tax purposes, thus triggering the obligation to remit the taxes withheld to the authorities within an allowed time limit, is an issue common to all withholding tax systems.
This article is the first in a series that outlines the structure, target income and administration of the Japanese withholding tax system. These articles will form a foundation for understanding more complex Japanese withholding tax issues arising in an international context.
Japan has an extensive system of withholding taxes (‘WHT’) imposed on different types of income. Read More
Rates of withholding tax on interest under Japan's tax treaties.Read More
Table listing how TK distributions are taxed under Japan's tax treaties.Read More