(December 10, 2014)

On December 10, 2014 both the Ministry of Finance of Japan and the Inland Revenue Department of the Hong Kong Special Administrative Region issued a press release announcing that on December 10, 2014 the Governments of both jurisdictions exchanged notes regarding the Exchange of Information Article in the Agreement between the Government of the Hong Kong Special Administrative Region of the People's Republic of China and the Government of Japan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income. The purpose of the exchange of notes is to expand the coverage of tax types under the Exchange of Information arrangement of the Agreement.

By the exchange of the notes, the both Governments confirm the understanding that information concerning the following taxes shall be exchanged in accordance with the provisions of Article 25 of the Agreement:

a)      the taxes covered by Article 2 of the Agreement; and 

b)      the following taxes of Japan:

(i)           the inheritance tax;

(ii)          the gift tax;

(iii)        the consumption tax; and

(iv)        any identical or substantially similar taxes that are imposed after the date of signature of the notes (December 10, 2014) in addition to, or in place of, the existing taxes referred to in (i), (ii) and (iii).

According to the press release as issued by the Japanese Ministry of Finance, up until now, the two Governments have not been obliged to exchange information concerning the taxes other than those referred to in (a) under the provisions of paragraph 7 of the Protocol which forms an integral part of the Agreement. After the entry into force of the agreement between the two Governments which is constituted by the exchange of the notes, they will be obliged to exchange information concerning the taxes referred to in (b) as well as (a).

The exchange of notes will come into force after the completion of ratification procedures and notification by both sides.

Each of the two Governments will notify the other about the completion of its internal procedures necessary for the entry into force of the agreement. This agreement will enter into force on the date of receipt of the later notification and have effect:

a)     in the case of the Hong Kong Special Administrative Region:
with respect to Hong Kong Special Administrative Region tax, for any year of assessment beginning on or after the date on which this agreement enters into force; and

b)     in the case of Japan:

(i)          with respect to taxes withheld at source, for amounts taxable on or after the date on which this agreement enters into force;

(ii)        with respect to taxes on income which are not withheld at source, as regards income for any taxable year beginning on or after the date on which this agreement enters into force; and

(iii)       with respect to other taxes, as regards taxes for any taxable year beginning on or after the date on which this agreement enters into force.

The Exchanged Notes are published on the website of the Japanese Ministry of Finance in both the English and the Japanese language.

For further information click here to be forwarded to the press release as issued by the Inland Revenue Department of the Hong Kong Special Administrative Region in this repect.

For further information click here to be forwarded to the press release as issued by the Japanes Ministry of Finance in this respect.

Follow International Tax Plaza on Twitter (@IntTaxPlaza) 

Copyright – internationaltaxlaza.info