Key Tax Points

  • Domestic corporations, whose head or main office is located in Japan are subject to tax on their worldwide income.
  • Foreign corporations are subject to either corporation tax or final withholding tax on Japanese source income depending on the type of income and the extent of the foreign corporation’s activities in Japan.
  • Vendors are liable for a consumption tax (value added tax) of 10% sales (8% if the sales of certain foods or newspaper), including imports of goods and services
  • Relief of double taxation is available for foreign taxes on certain foreign-sourced income.
  • Under the consolidated tax regime, an affiliated group of companies (a ‘Consolidated Group’) can report and pay national corporate income tax as one unit. However, consolidated tax regime will be significantly changed.
  • All transactions between related companies are required to be conducted on an arm’s length basis.
  • Domestic corporations are subject to withholding tax on dividends, interest and certain other income. Foreign corporations are subject to withholding tax on dividends, interest, royalties, income from immovable property, rentals from industrial or commercial equipment, and certain other income.
  • Non-resident individual taxpayers are taxed only on their Japanese source income. Non-permanent resident individual taxpayers are taxed on income other than foreign-sourced income defined under Japanese income tax law plus the part of foreign-sourced income that is paid in and/or remitted to Japan. A permanent resident taxpayer is taxed on his worldwide income.

A. Taxes Payable

Company Tax

company-taxDomestic corporations are those whose head or main office is located in Japan. Companies incorporated in Japan under the Corporate Law or under other special laws are required to locate their head office in Japan. Such domestic corporations are subject to tax on their worldwide income. Foreign corporations are all corporations which are not domestic corporations. A corporation having its head or main office outside Japan is a foreign corporation even if its business operations are in Japan. Foreign corporations are subject to corporation tax on Japanese source income. Foreign corporations are subject to either corporation tax or final withholding tax on Japanese source income, depending on the type of income and the extent of the foreign corporation’s activities in Japan.

The rate of national tax for Japanese corporations is 23.2%. If the paid-in capital of the corporation is JPY 100 million or less, the first JPY 8 million of income is only taxed at 15%. From 1 October 2019, a part of inhabitant tax (local tax) will be further moved to the national tax regime as ‘local corporate tax’ at a rate of 10.3%. Tax is imposed on a current year basis. The tax year adopted is generally the one specified in a company’s constituent documents with a standard year being a calendar year. However, it should be noted that other periods are also allowed, including periods of 12 months or less. Japanese branches of foreign corporations are required to adopt the accounting period used by their foreign head office. Final tax is payable when lodging the final corporation tax return, usually required within two months of the end of the accounting period. Extensions of time to lodge can be sought although interest tax is payable on the tax liability which is not settled by the original filing due date.

Interim tax returns and payments are required if a corporation has a fiscal period longer than six months. Ordinarily, provisional taxes are computed as one half of the tax liability of the previous year but a reduction is available where the interim tax returns are filed to reflect bi-annual results of operations for the current year.

Blue Return Filers

Preferential tax treatment is given to companies who file ‘Blue Returns’. A company which undertakes to maintain specified bookkeeping records and documentation and gains approval from the Director of the District Tax Office can file a Blue Return, the associated benefits of which are as follows.

  • Tax losses may be carried forward for ten years (however, for large scale companies the use of the losses is restricted to 50% of taxable income for fiscal years) or carried back to the previous year. However, carry back of tax loss is temporarily suspended except for companies with paid-in capital of JPY 100 million or less (except for a subsidiary of a large scale company) etc.,
  • The national tax authorities cannot seek to adjust taxable income without a physical review of the books and records of the company and must state the reason for such an adjustment.
  • Allowance of reserves, special depreciation and tax credits as stipulated in the Special Taxation Measures Law.

Importantly, a new company must seek registration for Blue Form returns within the earlier of three months from incorporation or the end of the initial accounting period.

Consumption Tax (JCT)

Vendors are liable for a consumption tax (JCT) of 10% of sales (8% if the sales of certain foods or newspaper), including imports of goods and services. Exemptions apply to leases of land, education and medical treatment. Exports and certain specific services invoiced to non-residents are zero rated.

Local Taxes

Inhabitant Tax

Inhabitants Taxes are local prefectural and municipal taxes. These taxes are computed as a percentage of the corporation tax before tax credits. From 1 October 2014, a part of inhabitant tax has been moved to national tax regime as ‘local corporate tax’. Each prefecture and municipality may elect an Inhabitants Tax rate within the range shown below:

Rates
(for fiscal years beginning as from October 2019)
Prefecture 1% to 2%
Municipality 6% to 8.4%
Tokyo Metropolitan (combined) 7% to 10.4%

In addition to the above, local governments charge a per capita levy on inhabitant tax with standard rates that vary from JPY 70,000 to JPY 3,800,000 depending upon the amount of the paid-in capital and the number of employees.

Enterprise Tax

Prefectures also levy an Enterprise Tax. The tax base is generally based on the taxable income as computed for national corporation tax purposes, with certain adjustments such as the exclusion of income from a business carried on in a foreign country. Enterprise Tax paid over the year is deductible in computing taxable income for national corporation and Enterprise Tax purposes.

Size-based taxation is applied to large corporations with paid-in capital of more than JPY 100 million. For such large corporations, Enterprise Tax consists of the traditional Enterprise Tax levied based on the taxable income as well as Enterprise Tax levied based on the capital etc. (i.e. paid-in capital and capital surplus), and Enterprise Tax levied based on value added (i.e. wages, interest and rental expenses etc.). Tax rates vary depending on whether the corporation is a large corporation with paid-in capital of more than JPY 100 million (i.e. whether it is subject to size-based taxation) and depending on the prefecture.

Special Enterprise Tax which is moved to national tax regime from Enterprise Tax is also levied.

Below is the summary of Enterprise Tax rate in case of standard rate and Tokyo applied to taxable periods beginning on or after 1 October 2019.

Standard (%) Tokyo (%) Special Enterprise Tax
(1) Company whose paid-in capital is JPY100 million or less
Taxable Income:
First JPY 4,000,000 per annum 3.5 3.75 (Taxable Income x Standard Tax Rate) x 37%
Next JPY 4,000,000 to JPY 8,000,000 per annum 5.3 5.665
Above JPY 8,000,000 per annum 7.0 7.48
(2) Company whose paid-in capital is more than JPY 100 million
(a) Income base (taxable income):
First JPY 4,000,000 per annum 0.4 0.495 (Taxable Income x Standard Tax Rate) x 260%
Next JPY 4,000,000 to JPY 8,000,000 per annum 0.7 0.835
Above JPY 8,000,000 per annum 1.0 1.18
(b) Added value base:
The sum of wages, net interest expense and net rental expense 1.2 1.26
(c) Capital base:
The sum of paid-in capital and capital surplus 0.5 0.525

Other Taxes

Family Holdings Company Surtax

Family holding companies are liable for surtax on earnings not distributed in excess of specified limits at the following rates:

Excess Income Rates
First JPY 30,000,000 per annum 10%
Next JPY 70,000,000 per annum 15%
Over JPY 100,000,000 per annum 20%

A Japanese company in which more than 50% of the shares are held by the first shareholder’s group is a family holding company and is subject to the surtax, subject to certain other conditions. A family holding company with paid-in capital of JPY 100 million or less (when its 100% parent company’s stated capital is JPY 500 million or more, ‘Intra-group transaction taxation’ takes away this benefit) whose net equity for tax purposes is less than certain threshold is not subject to this special corporate surtax.

Business Office Tax

Companies whose business premises exceed 1,000 square meters and/or employ in excess of 100 employees in designated cities are subject to a tax on business activity based on space or gross payroll respectively. It is within the discretion of the city authorities whether or not to charge the tax. Additions can be made to the list of designated cities for the purpose of this tax but the city must have a population of at least 300,000. The tax is imposed on ongoing businesses etc.

The rate of tax is JPY 600 per square meter of floor space in business use plus 0.25% of the total remuneration paid to employees.

Fixed Assets Tax

Real property and tangible depreciable fixed assets are subject to a fixed assets tax at the standard rate of 1.4% (1.7% for real property in specified large cities).

Total Effective Tax Rate

By way of example of how the major taxes interrelate and accumulate, set out below is a sample effective tax rate for Japanese or foreign corporation in Tokyo.

Where paid-in capital is JPY 100 million or less: 34.59%

Where paid-in capital is more than JPY 100 million: 30.62%

Note: Enterprise Tax is deductible for corporation tax purposes for the period in which it is paid. Also, Enterprise tax capital basis and value added basis will be separately imposed where paid-in capital is more than JPY 100 million.

B. Determination of Taxable Income

taxable-incomeIncome is ordinarily determined in accordance with generally accepted accounting principles, with certain adjustments made to comply with tax law. Income and expenses are recorded on an accrual basis, with deductions from gross income for all reasonable expenses, costs and losses. Several restrictions under tax law may apply to the deduction of losses or expenses (e.g. entertainment expenses).

Depreciation

Depreciation is allowed in respect of all tangible assets, other than land and specified intangible assets. Depreciation on tangible assets is calculated using the straight-line or declining-balance method at the option of the taxpayer. However, for buildings, equipment attached to buildings, and structures, only the straight-line method should be used. Intangible assets are generally amortised on a straight-line basis.

Legislation specifies the period over which assets are to be depreciated and the rates for both the straight-line and declining-balance methods. Minor assets that cost less than JPY 100,000 are deductible as an expense during the year. In addition to ordinary depreciation, special depreciation in the form of increased initial depreciation and accelerated depreciation is available in certain cases.

Stock/Inventory

Inventory valuation methods acceptable for tax include an item’s individual cost, FIFO, moving or straight average, most recent purchase, retail and lower of cost or market. Importantly, the tax treatment must replicate that adopted for the statutory accounts.

Losses

Corporations filing a ‘Blue Return’ are eligible for loss carry-over treatment. In general, losses may be carried forward ten years (however, for large scale companies, use of the losses is restricted to 50%) of taxable income for each year or carried back to the previous year. However, carry back of tax loss is temporarily suspended except for companies with paid-in capital of JPY 100 million or less (except for a subsidiary of a large scale company) etc.,

Foreign Source Income

Japanese corporations are taxable on their worldwide income as and when earned. However, corporations are generally entitled to claim tax credits against corporation and Inhabitants Tax for foreign income taxes paid (direct credit). For subsidiaries in low or zero tax countries or jurisdictions etc., such profits of subsidiaries might be taxed at the level of the Japanese parent on an accruals basis by application of Japanese Controlled Foreign Company (CFC) rules, with any associated foreign tax credits being available.

Tax Credit Incentives-Capital Investment

Corporate tax credits of 7% of the acquisition cost are available on certain designated fixed assets acquired by small to medium sized corporations which can file Blue Return. However, the total credit available is limited to 20% of the corporate tax.

Several tax credits to encourage investment, R&D or salary increases etc. are available under tax law.

To claim these tax credits, taxpayers need to meet certain conditions which are set for the respective credits.

C. Foreign Tax Relief

Relief for double taxation could be available for foreign taxes imposed on certain foreign-sourced income. Where a tax treaty exists, the foreign tax might be reduced or exempted depending on the nature of the foreign-sourced income. Also, domestic tax legislation allows for a foreign tax credit or its deduction from taxable income.

Notwithstanding the above, 95% of dividend income from certain subsidiaries outside of Japan are excluded from the recipient’s taxable income instead of a tax credit being applied.

A foreign tax credit or exclusion of a dividend distributed by a foreign subsidiary at the level of the Japanese recipient’s income can be applied irrespective of whether there is a double tax treaty between Japan and the jurisdiction where the foreign-sourced income arose, subject to certain conditions under domestic tax law.

D. Corporate Groups

corporate-groupsThe Japanese consolidated tax regime (a part of the corporate tax reform act for the year 2002) was enacted on 1 August 2002.

Under the consolidated tax regime, an affiliated group of companies (a ‘Consolidated Group’) can report and pay national corporate income tax as one unit. For these purposes, a Consolidated Group means a Japanese parent company and its 100% directly or indirectly owned Japanese subsidiaries. An application for consolidated filing is at the taxpayers’ choice but, if made, must include all of the parent’s eligible subsidiaries. Once started, consolidated filing should in principle continue indefinitely, unless a specific event (such as change of ownership) causes the qualifying conditions for consolidated filing to be failed, or an application to discontinue is approved by the Commissioner of National Tax Agency.

The group’s national corporate income tax liability will be computed on a consolidated basis by aggregating the separate taxable income or loss of the member companies, and then making various consolidation adjustments for tax purposes. The consolidated national corporate income tax liability will then be determined by applying the normal corporate income tax rate to the consolidated taxable income, adjusted for consolidated tax credits. The total liabilities will then be allocated among the members. The parent company will file the consolidated return and pay the national corporate income tax on behalf of the group, although the member companies remain jointly and severally liable for the Consolidated Group’s national corporate income tax liability. Local corporate income taxes such as inhabitant tax or enterprise tax levied on member companies will continue to be paid on an individual basis although the amount payable will be affected by the existence of the consolidation.

The consolidation tax regime provides for certain benefits such as the deduction of losses of individual member companies from the total income of the Consolidated Group (for national corporate income tax purposes only). On the other hand, some features of the consolidated tax regime may result in an unpredictable tax burden on the introduction of tax consolidation or when a company joins the Consolidated Group in the future, thus putting some restrictions on future M&A (mergers and acquisitions) activity by the group. Therefore, understanding these issues will become very important for tax professionals and taxpayers when considering an application for consolidation.

According to the 2020 tax reform, consolidated tax regime as explained above will be significantly changed so that it makes easier for corporate taxpayers to apply the consolidated tax regime. The new tax regime is expected to be applicable to fiscal years of corporations starting on or after April 1, 2022.

E. Related Party Transactions

All transactions between related companies are required to be conducted on an arm’s length basis with the meaning of ‘arm’s length price’ depending upon the transaction. Difference arising between the price of the actual transaction and that regarded as the arm’s length price should generally be taxable or not deductible as applicable. The transactions covered by the provisions include the purchase and sale of inventory, the provision of services and financial facilities such as the making of loans and guarantee facilities.

F. Withholding Tax

withholding-taxDomestic corporations are generally subject to withholding tax on dividends and interest and certain other income. This tax may generally be taken as a credit against the ultimate tax liability of the recipient.

Foreign corporations are subject to withholding tax (generally at the rate of 20.42%) on dividends, interest, royalties, income from immovable property, rentals from industrial or commercial equipment and certain other income. This tax may generally be taken as a credit against the ultimate tax liability of the recipient if the foreign corporation is also required to file corporate tax returns. It should be noted that where the foreign corporation has a permanent establishment in Japan, certain types of income (for example, rent and royalties) are exempt from withholding tax if taxed together with income from Japanese business activities.

G. Personal Tax

While similarities between the taxation of companies and individuals do exist in Japan to some extent, the above refers to companies. Accordingly, outlined below are the basic rules and rates applicable to individuals. Given the complexity of this area, it is necessary to stress the need to seek professional advice. Non-resident taxpayers are taxed only on their Japanese source income. Non-permanent resident taxpayers are taxed on income other than foreign-sourced income plus the part of foreign-sourced income that is paid in and/or remitted to Japan. A permanent resident taxpayer is taxed on his worldwide income.

Individuals who do not have Japanese nationality are generally classified on the following basis:

Status / Period of Residence Classification
Does not have domicile in Japan Non-resident
Has domicile in Japan and lived there up to 60 months Non-permanent resident
Has domicile in Japan and lived there more than 60 months Permanent resident

National individual tax:

Taxable income (JPY ) Rate Deduction (JPY)
0 – 1,950,000 5%
1,950,000 – 3,300,000 10% 97,500
3,300,000 – 6,950,000 20% 427,500
6,950,000 – 9,000,000 23% 636,000
9,000,000 – 18,000,000 33% 1,536,000
18,000,000 – 40,000,000 40% 2,796,000
Above 40,000,000 45% 4,796,000

Calculation: Taxable income × tax rate – tax credit = national tax.

A surcharge of 2.1% of the national personal tax liability has been added to the national personal tax rate for 25 years from January 2013. Retirement income, interest, certain dividend, capital gain arising from disposal of certain assets etc., are each taxed separately from other income.

In addition to the national tax, inhabitant local tax at 10% should be also imposed on the income if the individual resides in Japan.

H. Treaty and Non-Treaty Withholding Tax Rates

Dividends
(%)
Interest
(%)
Royalties
(%)
Individuals, companies
(%)
Qualifying companies
(%)
Non-treaty countries:
Companies 15/2032 15/2032 0/15/20 20
Individuals 15/20 0/15/20 20
Treaty countries:
Australia 10 0/51 0/10 5
Austria 10 02 0 0
Bangladesh 15 103 10 10
Belgium 10 04 0/10 0
Brazil 12.5 12.5 12.5 12.5/15/25
Brunei Darussalam 10 55 10 10
Bulgaria 15 103 10 10
Canada 15 58 10 10
Chile 15 0/57 4/10 2/10
China 10 10 10 10
Croatia 5 08 0/5 5
Czech Republic 15 109 10 0/10
Denmark 15 010 0 0
Ecuador 5 5 0/10 10
Egypt 15 15 _30 15
Estonia 10 02 0/10 5
Fiji _30 _30 _30 10
Finland 15 103 10 10
France 10 0/512 0/10 0
Germany 15 0/513 0 0
Hong Kong 10 55 10 5
Hungary 10 10 10 0/10
Iceland 15 0/514 0 0
India 10 10 10 10
Indonesia 15 1011 10 10
Ireland 15 109 10 10
Israel 15 56 10 10
Italy 15 103 10 10
Kazakhstan 15 55 10 5
Korea 15 56 10 10
Kuwait 15 55 10 10
Latvia 0/1015 0 0/10 0
Lithuania 0/1015 0 0/10 0
Luxembourg 15 56 10 10
Malaysia 15 56 10 10
Mexico 15 0/516 10/15 10
Netherlands 10 0/517 0/10 0
New Zealand 15 018 0/10 5
Norway 15 56 10 10
Oman 10 55 0/10 10
Pakistan 10 5/7.519 10 10
Philippines 15 1020 10 10/15
Poland 10 10 10 0/10
Portugal 10 521 5/10 5
Qatar 10 522 0/10 5
Romania 10 10 10 10/15
Russia 10 0/5/1523 0 0
Saudi Arabia 10 524 0/10 5/10
Singapore 15 56 0/10 10
Slovak Republic 15 104 10 0/10
Slovenia 5 5 0/5 5
South Africa 15 56 10 10
Spain 5 025 0 0
Sri Lanka 20 20 _30 0/10
Sweden 10 026 0/10 0
Switzerland 10 0/517 0/10 0
Taiwan 10 10 10 10
Thailand _30 15/2027 10/25 15
Turkey 15 103 10/15 10
United Arab Emirates 10 55 10 10
United Kingdom 10 028 0/10 0
United States 10 0/529 0/10 0
USSR31 15 15 10 0/10
Vietnam 10 10 10 10
Zambia 0 0 10 10

Notes

  1. The 5% rate applies if the beneficial owner is a company which owns directly shares representing at least 10% of the voting power of the paying company. The 0% rate applies to dividends paid to a company that has owned directly shares representing at least 80% of the voting power of the company paying the dividends for the 12 month period ending on the date on which entitlement to the dividends is determined and the company that is the beneficial owner of the dividends (i) is a qualified publicly traded company or (ii) at least 50% of the aggregate vote and value of its shares is owned directly or indirectly by five or fewer such qualified publicly traded companies or (iii) has received a determination of entitlement to the treaty benefits.
  2. The 0% rate applies if the beneficial owner is a company which has owned directly or indirectly, for the of 6 months ending on the date on which entitlement to the dividends is determined, at least 10% of the voting power of the paying company or if the beneficial owner is a pension fund.
  3. The 10% rate applies if the beneficial owner is a company which owns at least 25% of the voting shares of the paying company during the period of 6 months immediately before the end of the accounting period for which the distribution of profits takes place.
  4. The 0% rate applies if the beneficial owner is a company which has owned, directly or indirectly, at least 10% of the voting power of the paying company for period of 6 months ending on the date on which entitlement to the dividends is determined or if the beneficial owner is a pension fund.
  5. The 5% rate applies if the beneficial owner is a company that has owned directly or indirectly, for the period of 6 months ending on the date on which entitlement to the dividends is determined, at least 10% of the voting shares of the paying company.
  6. The 5% rate applies if the beneficial owner is a company which owns at least 25% of the voting shares of the paying company throughout the period of 6 months immediately before the end of the accounting period for which the distribution of profits takes place.
  7. The 5% rate applies if the beneficial owner is a company that has owned directly, for the period of 6 months ending on the date on which entitlement to the dividends is determined, at least 25% of the voting power in the paying company. The 0% rate applies if the beneficial owner is a pension fund provided that the dividends are not derived from the carrying on of a business by such pension fund or through an associated enterprise.
  8. The 0% rate applies if the beneficial owner is a company which has owned directly at least 25% of the voting power of the paying company throughout a 365 day period that including the date on which entitlement to the dividends is determined.
  9. The 10% rate applies if the recipient is a company which owns at least 25% of the voting shares of the paying company during the period of 6 months immediately preceding the date of payment of the dividends.
  10. The 0% rate applies if any of the following circumstances exist: The beneficial owner is a company which has owned directly, for the period of 6 months ending on the date on which entitlement to the dividends is determined, at least 10% of: (i) in the case where the paying company is a resident of Japan, the voting power of that company; or (ii) in the case where the paying company is a resident of Denmark, the capital of that company; or the beneficial owner is a pension fund.
  11. The 10% rate applies if the beneficial owner is a company which owns at least 25% of the voting shares of the paying company during the period of 12 months immediately before the end of the accounting period for which the distribution of profits takes place.
  12. The 5% rate applies if the beneficial owner is a company which holds during the period of 6 months immediately before the end of the accounting period for which the distribution takes place directly at least 15% of the voting rights in the paying company. The 0% rate applies if the beneficial owner is a company which is a French qualified resident and which has held during the period of 6 months immediately before the end of the accounting period with respect to which the profits distribution takes place directly at least 15% of the voting rights in the paying company. The term qualified resident refers to (i) a company quoted on the French Stock Exchange or (ii) more than 50% of the capital of the company is held directly or indirectly by, among others, the French State, its local authorities or public legal persons.
  13. The 5% rate applies if the beneficial owner is a company (other than a partnership) that has owned directly, for the period of 6 months ending on the date on which entitlement to the dividends is determined, at least 10% of the voting shares of the paying company. The 0% rate applies if the beneficial owner is a company (other than a partnership) that has owned directly, for the period of 18 months ending on the date on which entitlement to the dividends is determined, at least 25% of the voting shares of the paying company.
  14. The 0% rate applies if any of the following circumstances exist: The beneficial owner is a company which has owned directly or indirectly, for the period of 6 months ending on the date on which entitlement to the dividends is determined, at least 25% of: (i) in the case where the paying company is a resident of Iceland, the capital of that company; or (ii) in the case where the paying company is a resident of Japan, the voting power of that company; or the beneficial owner is a pension fund. The 5% rate applies if any of the following circumstances exit: The beneficial owner is a company which has owned directly or indirectly, for the period of 6 months ending on the date which entitlement to the dividends is determined, at least 10 % of: (i) in the case where the paying company is a resident of Iceland, the capital of that company; or (ii) in the case where the paying company is a resident of Japan, the voting power of that company.
  15. The 0% rate applies if the beneficial owner is a person other than an individual.
  16. The 5% rate applies if the beneficial owner is a company which owns at least 25% of the voting shares issued by the paying company during the period of 6 months immediately before the end of the accounting period for which the profits distribution takes place. The 0% rate applies if the recipient is a company which holds at least 25% of the voting shares issued by the paying company during the period of 6 months immediately before the end of the accounting period for which the profits distribution takes place and satisfies on the date of payment the following conditions: (i) the recipient’s shares are traded on the Mexican Stock Exchange and (ii) more than 50% of the total shares is owned by, among others, the Mexican Government, its political subdivisions or local authorities.
  17. The 5% rate applies if the beneficial owner is a company that has owned, directly or indirectly, shares representing at least 10% of the voting power of the paying company for the period of 6 months ending on the date on which entitlement to the dividends is determined. The 0% rate applies if the beneficial owner is (i) a company that has owned, directly or indirectly, shares representing at least 50% of the voting power of the paying company for the period of 6 months ending on the date on which entitlement to the dividends is determined or (ii) a pension fund, provided that the dividends are not derived from the carrying on of a business, directly or indirectly, by such pension fund.
  18. The 0% rate applies if the beneficial owner is a company that has owned directly or indirectly, for the period of 6 months ending on the date on which entitlement to the dividends is determined, at least 10% of the voting power of the paying company and the beneficial owner of the dividends (i) is a qualified publicly traded company or (ii) at least 50% of the aggregate voting power is owned directly or indirectly by five or fewer such qualified publicly traded companies or (iii) is granted benefits to the dividends.
  19. The 5% rate applies if the beneficial owner is a company that has owned directly, for the period of 6 months ending on the date on which entitlement to the dividends is determined, at least 50% of the voting shares of the paying company. The 7.5% rate applies if the beneficial owner is a company that has owned directly, for the period of 6 months ending on the date on which entitlement to the dividends is determined, at least 25% of the voting shares of the paying company.
  20. The 10% rate applies if the beneficial owner is a company which holds directly at least 10% either of the voting shares of the paying company or of the total shares issued by that company during the period of 6 months immediately preceding the date of payment of the dividends.
  21. The 5% rate applies if the beneficial owner is a company (other than a partnership) that has owned directly for the period of 12 months ending on the date on which entitlement to the dividends is determined, at least 10% of the voting shares of the paying company.
  22. The 5% rate applies if the beneficial owner is a company that has owned directly or indirectly, for the period of 6 months ending on the date on which entitlement to the dividends is determined, at least 10% of the voting power or of the total issued shares of the paying company.
  23. The 0% rate applies if the beneficial owner is a pension fund. The 5% rate applies if the beneficial owner is a company which has owned directly at least 15% of the voting power of the paying company for the period of 365 days ending on the date on which entitlement to the dividends is determined. The 15% rate applies on the shares of companies that derive at least 50% of their value directly or indirectly from immovable property.
  24. The 5% rate applies if the beneficial owner is a company which holds directly or indirectly, during the period of 183 days ending on the date on which entitlement to the dividends is determined, at least 10% of the voting shares or of the total issued shares of the paying company.
  25. The 0% rate applies if the beneficial owner is a company which has owned directly or indirectly at least 10% of the voting powers of the paying company throughout a 12 month period that includes the date on which entitlement to the dividends is determined or if the beneficial owner is a recognised pension fund.
  26. The 0% rate applies if the beneficial owner is a company (other than a partnership) that has held, directly or indirectly, at least 10% of the voting power of the paying company for the period of 6 months ending on the date on which entitlement to the dividends is determined.
  27. No reduction under the tax treaty, the domestic rate applies.
  28. The 15% rate applies in case the dividends are paid by a company engaged in an industrial undertaking and if the beneficial owner is a company which owns at least 25% of the voting shares of the paying company during the period of 6 months immediately before the end of the accounting period for which the profits distribution takes place. The 20% rate applies in all other cases.
  29. The 0% rate applies if the beneficial owner is a company that has owned, directly or indirectly, shares representing at least 10% of the voting power of the paying company for the period of 6 months ending on the date on which entitlement to the dividends is determined or is a pension fund or pension scheme, provided that such dividends are not derived from the carrying on of a business, directly or indirectly, by such pension fund or pension scheme.
  30. The 5% rate applies if the beneficial owner is a company that owns directly or indirectly, on the date on which entitlement to the dividends is determined, at least 10% of the voting stock of the paying company. The 0% rate applies if the beneficial owner of the dividends is either (i) a company that has owned, directly or indirectly through one or more residents of either state, more than 50% of the voting stock of the paying company for the period of 12 months ending on the date on which entitlement to the dividends is determined, and that satisfies various requirements on the ownership of its shares, or has received a determination of entitlement to the treaty benefits or (ii) a pension fund, provided that such dividends are not derived from the carrying on of a business, directly or indirectly, by such pension fund.
  31. Japan continues to apply the treaty with the former USSR in its relations with Armenia, Azerbaijan, Belarus, Georgia, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Ukraine and Uzbekistan.
  32. Dividends paid by resident companies to non-resident companies are subject to a 20% withholding tax. A reduced 15% rate applies to dividends from certain listed shares.