06 Aug 077 In principle agreement on new DTA with JapanIn a press release issued on 3 August 2007, the Treasurer, Peter Costello, announced that Australia and Japan had reached an agreement in principle on a new income tax treaty to replace the existing Agreement between Australia and Japan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, signed on 20 March, 1969. Both countries have had series of negotiations since January 2007, having recognized that the existing treaty might no longer adequately reflect the current economic relationship between the two countries.
The proposed new treaty, based on the OECD Model Tax Convention, will comprehensively revise the existing Agreement and substantially reduce the withholding taxes imposed on dividends, interest and royalties paid between the two countries. In particular, it will eliminate withholding taxes on certain inter-company dividends, and certain interest.
After the governments of the 2 countries have completed the necessary procedures, the proposed new treaty will be signed and become ready for submission to the respective parliaments. The new treaty will enter into force after it has been approved by the respective parliaments and an official exchange of notes has taken place.
For a copy of the Treasurer's press release, No 2007/070, 3 August 2007, go here
For a copy of the transcript of the Treasurer's joint press conference with Finance Minister of Japan Mr Koji Omi, 3 August 2007, go here