Taxation (Source: “Zeimutsushin”)
1. New Japan-Netherlands Tax Treaty—Basic Agreement in place
A basic agreement was reached on the new Japan-Netherlands Tax Treaty in December 2009.Key points of the new treaty are as follows.
1) Tokumei Kumiai distributions will become taxable at the source country
Under the current treaty, income derived from a Tokumei Kumiai (Japanese silent partnership) was taxed neither in Japan nor the Netherlands since it was categorized as “Other Income”.
However, the new treaty will adopt provisions that will allow the source country to tax such income.
2) Withholding tax on Passive Income to be reduced/exempted
Under the new treaty, withholding tax on dividends, interests and royalties will either be reduced or exempted. Specifically, full exemption of withholding tax will be applied to royalties.
３．This Week’s Words of Wisdom (Source: “English words of wisdom to enrich life”)
“A man who wishes to accomplish a lot must immediately carry out a single task.”
The essence of this quote I believe is that one must prioritize his/her work. Sorting out one’s priorities is a very important and timeless habit.
２．The tax regime in the British Island of Guernsey allows eligible corporations to negotiate a corporate tax rate between nil and 30%. Such tax rate will be applied upon approval by the tax authorities
In a court case involving a Japanese company applying a 26% tax rate under this system, the taxpayer lost the case in its first and second trials since the courts asserted that taxes determinable at the taxpayer’s discretion do not qualify as foreign corporation tax. However, the Supreme Court recently reversed these rulings saying that Guernsey taxes qualify as foreign corporation tax under Article 141 of the Corporate Tax Law Enforcement Ordinance and hence not subject to the anti-tax haven rules which currently specifies 25% as the threshold in determining tax-haven status.