On September 11, 2018 the Japanese Ministry of Finance issued a press release announcing that on September 10, 2018 the exchange of diplomatic notes between the Government of Japan and the Government of the Russian Federation for entry into force of the Convention between the Government of Japan and the Government of the Russian Federation for the Elimination of Double Taxation with respect to Taxes on Income and the Prevention of Tax Evasion and Avoidance, which was signed on September 7, 2017 (hereafter: the DTA) took place in Vladivostok.

Based on Article 29, Paragraph 1 of the DTA (“ENTRY INTO FORCE”) the fact that the exchange of diplomatic notes took place on September 10, 2018 means that the DTA will enter into force on October 10, 2018.

Based on Article 29, Paragraph 2 of the DTA the fact that the DTA entered into force on October 10, 2017 means that the provisions of the DTA shall have effect:

(a)  with respect to taxes levied on the basis of a taxable year, for taxes for any taxable years beginning on or after January 1, 2019; and

(b)  with respect to taxes levied not on the basis of a taxable year, for taxes levied on or after January 1, 2019.

With respect to the exchange of information (Article 25 of the DTA) and the Assistance in the collection of taxes (Article 26 of the DTA) Article 29, Paragrap 3 of the DTA arranges that the provisions of Articles 25 and 26 of the DTA shall have effect from October 10, 2018 without regard to the date on which the taxes are levied or the taxable year to which the taxes relate.

Article 29, Paragrap 4 subsequently arranges that The Convention between the Government of Japan and the Government of the Union of Soviet Socialist Republics for the Avoidance of Double Taxation with respect to Taxes on Income, with Protocol, signed at Tokyo on January 18, 1986 (hereinafter referred to as “the prior Convention”) shall between Japan and Russia cease to be applicable from the date upon which this Convention applies in respect of the taxes to which this Convention applies in accordance with the provisions of paragraph 2 of this Article.

Article 29, Paragraph 4 of the DTA arranges that the Convention between the Government of Japan and the Government of the Union of Soviet Socialist Republics for the Avoidance of Double Taxation with respect to Taxes on Income, with Protocol, signed at Tokyo on January 18, 1986 (hereafter: the prior Convention) shall between Japan and Russia cease to be applicable from the date upon which the DTA applies in respect of the taxes to which this Convention applies in accordance with the provisions of paragraph 2 of this Article.

Article 29, Pargaraph 5 arranges that notwithstanding the entry into force of the DTA, an individual who is a resident of either Contracting State and entitled to the benefits of Article 17 of the prior Convention at the time of the entry into force of the DTA shall continue to be entitled to such benefits until such time as the individual would have ceased to be entitled to such benefits if the prior Convention had remained in force.

An analysis of a further selection of provisions included in the DTA can be found in our article from September 9, 2017. In this article you can also find links to the text of the DTA as available on the website of the Japanese Ministry of Finance.

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