DTC agreement between United Kingdom and Japan

8/3/2019 DTC agreement between United Kingdom and Japan

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2. This Convention shall also apply to any identical orsubstantially similar taxes which are imposed after thedate of signature of the Convention in addition to, or inplace of, those referred to in paragraph 1 of this Article.

The competent authorities of the Contracting States shallnotify each other of any substantial changes which havebeen made in their respective tax laws, or changes in otherlaws that significantly affect their obligations under theConvention, within a reasonable period of time after suchchanges.

Article 3

1. For the purposes of this Convention, unless thecontext otherwise requires:

(a) the term United Kingdom means Great Britain andNorthern Ireland, including any area outside theterritorial sea of the United Kingdom designatedunder its laws concerning the Continental shelfand in accordance with international law as anarea within which the rights of the UnitedKingdom with respect to the seabed and subsoiland their natural resources may be exercised;

(b) the term Japan, when used in a geographicalsense, means all the territory of Japan,including its territorial sea, in which the lawsrelating to Japanese tax are in force, and allthe area beyond its territorial sea, includingthe seabed and subsoil thereof, over which Japanmay exercise sovereign rights in accordance withinternational law and in which the laws relatingto Japanese tax are in force;

(c) the terms a Contracting State and the otherContracting State mean Japan or the UnitedKingdom, as the context requires;

(d) the term tax means Japanese tax or UnitedKingdom tax, as the context requires;

(e) the term person includes an individual, acompany and any other body of persons;

(f) the term company means any body corporate orany entity that is treated as a body corporatefor tax purposes;

(g) the term enterprise applies to the carrying onof any business;


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(h) the terms enterprise of a Contracting State andenterprise of the other Contracting State meanrespectively an enterprise carried on by aresident of a Contracting State and an enterprise

carried on by a resident of the other ContractingState;

(i) the term international traffic means anytransport by a ship or aircraft operated by anenterprise of a Contracting State, except whenthe ship or aircraft is operated solely betweenplaces in the other Contracting State;

(j) the term national of a Contracting State means:

(i) in the case of the United Kingdom, anyBritish citizen, or any British subject notpossessing the citizenship of any otherCommonwealth country or territory, providedhe has the right of abode in the UnitedKingdom and any legal person, partnership,association or other entity deriving itsstatus as such from the laws in force in theUnited Kingdom; and

(ii) in the case of Japan, any individualpossessing the nationality of Japan and anyjuridical person created or organised underthe laws of Japan and any organisationwithout juridical personality treated forthe purposes of Japanese tax as a juridicalperson created or organised under the lawsof Japan;

(k) the term competent authority means:

(i) in the case of the United Kingdom, theCommissioners for Her Majestys Revenue andCustoms or their authorised representative;

and

(ii) in the case of Japan, the Minister ofFinance or his authorised representative;

(l) the term business includes the performance ofprofessional services and of other activities ofan independent character; and

(m) the term pension fund or pension scheme meansany plan, scheme, fund, trust or otherarrangement that is:


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(i) established under the laws of a ContractingState;

(ii) operated principally to administer or

provide pensions, retirement benefits orother similar remuneration or to earn incomeor gains for the benefit of one or more sucharrangements; and

(iii) exempt from tax in that Contracting Statewith respect to income or gains derived fromactivities described in clause (ii) of thissubparagraph.

2. As regards the application of this Convention at anytime by a Contracting State, any term not defined thereinshall, unless the context otherwise requires, have themeaning which it has at that time under the laws of thatContracting State for the purposes of the taxes to whichthe Convention applies, any meaning under the applicabletax laws of that Contracting State prevailing over ameaning given to the term under other laws of thatContracting State.

Article 4

1. For the purposes of this Convention, the termresident of a Contracting State means any person who,under the laws of that Contracting State, is liable to taxtherein by reason of his domicile, residence, place of heador main office, place of management, place of incorporationor any other criterion of a similar nature, and alsoincludes:

(a) the Government of that Contracting State and anypolitical subdivision or local authority thereof;

(b) a pension fund or pension scheme establishedunder the laws of that Contracting State; and

(c) an organisation established under the laws ofthat Contracting State and operated exclusivelyfor a religious, charitable, educational,scientific, artistic, cultural or public purpose(or for more than one of those purposes), only ifall or part of its income or gains may be exemptfrom tax under the domestic laws of thatContracting State.


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This term, however, does not include any person who isliable to tax in that Contracting State in respect only ofincome, profits or gains from sources in that ContractingState.

2. Where by reason of the provisions of paragraph 1 ofthis Article an individual is a resident of bothContracting States, then his status shall be determined asfollows:

(a) he shall be deemed to be a resident only of theContracting State in which he has a permanenthome available to him; if he has a permanent homeavailable to him in both Contracting States, heshall be deemed to be a resident only of theContracting State with which his personal andeconomic relations are closer (centre of vitalinterests);

(b) if the Contracting State in which he has hiscentre of vital interests cannot be determined,or if he does not have a permanent home availableto him in either Contracting State, he shall bedeemed to be a resident only of the ContractingState in which he has an habitual abode;

(c) if he has an habitual abode in both ContractingStates or in neither of them, he shall be deemedto be a resident only of the Contracting State ofwhich he is a national;

(d) if he is a national of both Contracting States orof neither of them, the competent authorities ofthe Contracting States shall settle the questionby mutual agreement.

3. Where by reason of the provisions of paragraph 1 ofthis Article a person other than an individual is aresident of both Contracting States, then the competent

authorities of the Contracting States shall determine bymutual agreement the Contracting State of which that personshall be deemed to be a resident for the purposes of thisConvention. In the absence of a mutual agreement by thecompetent authorities of the Contracting States, the personshall not be considered a resident of either ContractingState for the purposes of claiming any benefits provided bythe Convention, except those provided by paragraph 1 ofArticle 23, Article 24 and Article 25 of the Convention.


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4. Where, pursuant to any provision of this Convention, aContracting State reduces the rate of tax on, or exemptsfrom tax, income, profits or gains of a resident of theother Contracting State and under the laws in force in that

other Contracting State the resident is subject to tax bythat other Contracting State only on that part of suchincome, profits or gains which is remitted to or receivedin that other Contracting State, then the reduction orexemption shall apply only to so much of such income,profits or gains as is remitted to or received in thatother Contracting State.

5. For the purposes of applying this Convention:

(a) an item of income, profit or gain:

(i) derived from a Contracting State through anentity that is organised in the otherContracting State; and

(ii) treated as an item of income, profit or gainof the beneficiaries, members orparticipants of that entity under the taxlaws of that other Contracting State;

shall be eligible for the benefits of theConvention that would be granted if it weredirectly derived by a beneficiary, member orparticipant of that entity who is a resident ofthat other Contracting State, to the extent thatsuch beneficiaries, members or participants areresidents of that other Contracting State andsatisfy any other conditions specified in theConvention, without regard to whether an item ofincome, profit or gain is treated as an item ofincome, profit or gain of such beneficiaries,members or participants under the tax laws of thefirst-mentioned Contracting State.

(b) an item of income, profit or gain:

(i) derived from a Contracting State through anentity that is organised in the otherContracting State; and

(ii) treated as an item of income, profit or gainof that entity under the tax laws of thatother Contracting State;


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shall be eligible for the benefits of theConvention that would be granted to a resident ofthat other Contracting State, without regard towhether an item of income, profit or gain is

treated as an item of income, profit or gain ofthe entity under the tax laws of the first-mentioned Contracting State, if such entity is aresident of that other Contracting State andsatisfies any other conditions specified in theConvention.

(c) an item of income, profit or gain:

(i) derived from a Contracting State through anentity that is organised in that ContractingState; and

(ii) treated as an item of income, profit or gainof that entity under the tax laws of theother Contracting State;

shall not be eligible for the benefits of theConvention.

Article 5

1. For the purposes of this Convention, the termpermanent establishment means a fixed place of businessthrough which the business of an enterprise is wholly orpartly carried on.

2. The term permanent establishment includesespecially:

(a) a place of management;

(b) a branch;

(c) an office;

(d) a factory;

(e) a workshop; and

(f) a mine, an oil or gas well, a quarry or any otherplace of extraction of natural resources.

3. A building site or a construction or installationproject constitutes a permanent establishment only if itlasts more than twelve months.


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4. Notwithstanding the preceding provisions of thisArticle, the term permanent establishment shall be deemednot to include:

(a) the use of facilities solely for the purpose ofstorage, display or delivery of goods ormerchandise belonging to the enterprise;

(b) the maintenance of a stock of goods ormerchandise belonging to the enterprise solelyfor the purpose of storage, display or delivery;

(c) the maintenance of a stock of goods ormerchandise belonging to the enterprise solelyfor the purpose of processing by anotherenterprise;

(d) the maintenance of a fixed place of businesssolely for the purpose of purchasing goods ormerchandise or of collecting information, for theenterprise;

(e) the maintenance of a fixed place of businesssolely for the purpose of carrying on, for theenterprise, any other activity of a preparatoryor auxiliary character;

(f) the maintenance of a fixed place of businesssolely for any combination of activitiesmentioned in subparagraphs (a) to (e) of thisparagraph, provided that the overall activity ofthe fixed place of business resulting from thiscombination is of a preparatory or auxiliarycharacter.

5. Notwithstanding the provisions of paragraphs 1 and 2of this Article, where a person other than an agent of anindependent status to whom the provisions of paragraph 6 ofthis Article apply is acting on behalf of an enterprise

and has, and habitually exercises, in a Contracting Statean authority to conclude contracts on behalf of theenterprise, that enterprise shall be deemed to have apermanent establishment in that Contracting State inrespect of any activities which that person undertakes forthe enterprise, unless the activities of such person arelimited to those mentioned in paragraph 4 of this Articlewhich, if exercised through a fixed place of business,would not make this fixed place of business a permanentestablishment under the provisions of that paragraph.


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6. An enterprise shall not be deemed to have a permanentestablishment in a Contracting State merely because itcarries on business in that Contracting State through abroker, general commission agent or any other agent of an

independent status, provided that such persons are actingin the ordinary course of their business.

7. The fact that a company which is a resident of aContracting State controls or is controlled by a companywhich is a resident of the other Contracting State, orwhich carries on business in that other Contracting State(whether through a permanent establishment or otherwise),shall not of itself constitute either company a permanentestablishment of the other.

Article 6

1. Income derived by a resident of a Contracting Statefrom immovable property (including income from agricultureor forestry) situated in the other Contracting State may betaxed in that other Contracting State.

2. The term immovable property shall have the meaningwhich it has under the laws of the Contracting State inwhich the property in question is situated. The term shallin any case include property accessory to immovableproperty, livestock and equipment used in agriculture andforestry, rights to which the provisions of general lawrespecting landed property apply, usufruct of immovableproperty and rights to variable or fixed payments asconsideration for the working of, or the right to work,mineral deposits, sources and other natural resources;ships and aircraft shall not be regarded as immovableproperty.

3. The provisions of paragraph 1 of this Article shallapply to income derived from the direct use, letting, oruse in any other form of immovable property.

4. The provisions of paragraphs 1 and 3 of this Articleshall also apply to the income from immovable property ofan enterprise.

Article 7

1. The profits of an enterprise of a Contracting Stateshall be taxable only in that Contracting State unless theenterprise carries on business in the other ContractingState through a permanent establishment situated therein.If the enterprise carries on business as aforesaid, theprofits of the enterprise may be taxed in that otherContracting State but only so much of them as isattributable to that permanent establishment.


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2. Subject to the provisions of paragraph 3 of thisArticle, where an enterprise of a Contracting State carrieson business in the other Contracting State through apermanent establishment situated therein, there shall in

each Contracting State be attributed to that permanentestablishment the profits which it might be expected tomake if it were a distinct and separate enterprise engagedin the same or similar activities under the same or similarconditions and dealing wholly independently with theenterprise of which it is a permanent establishment.

3. In determining the profits of a permanentestablishment, there shall be allowed as deductionsexpenses which are incurred for the purposes of thepermanent establishment, including executive and generaladministrative expenses so incurred, whether in theContracting State in which the permanent establishment issituated or elsewhere.

4. Insofar as it has been customary in a ContractingState to determine the profits to be attributed to apermanent establishment on the basis of an apportionment ofthe total profits of the enterprise to its various parts,nothing in paragraph 2 of this Article shall preclude thatContracting State from determining the profits to be taxedby such an apportionment as may be customary; the method ofapportionment adopted shall, however, be such that theresult shall be in accordance with the principles containedin this Article.

5. No profits shall be attributed to a permanentestablishment by reason of the mere purchase by thatpermanent establishment of goods or merchandise for theenterprise.

6. For the purposes of the preceding paragraphs of thisArticle, the profits to be attributed to the permanentestablishment shall be determined by the same method yearby year unless there is good and sufficient reason to the

contrary.

7. Where profits include items of income, profits orgains which are dealt with separately in other Articles ofthis Convention, then the provisions of those Articlesshall not be affected by the provisions of this Article.

Article 8

1. Profits from the operation of ships or aircraft ininternational traffic carried on by an enterprise of aContracting State shall be taxable only in that ContractingState.


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and in either case conditions are made or imposed betweenthe two enterprises in their commercial or financialrelations which differ from those which would be madebetween independent enterprises, then any profits which

would, but for those conditions, have accrued to one of theenterprises, but, by reason of those conditions, have notso accrued, may be included in the profits of thatenterprise and taxed accordingly.

2. Where a Contracting State includes, in accordance withthe provisions of paragraph 1 of this Article, in theprofits of an enterprise of that Contracting State andtaxes accordingly profits on which an enterprise of theother Contracting State has been charged to tax in thatother Contracting State and the competent authority of thatother Contracting State agrees that the profits so includedare profits which would have accrued to the enterprise ofthe first-mentioned Contracting State if the conditionsmade between the two enterprises had been those which wouldhave been made between independent enterprises, then thatother Contracting State shall make an appropriateadjustment to the amount of the tax charged therein onthose profits. In determining such adjustment, due regardshall be had to the other provisions of this Convention.

3. Notwithstanding the provisions of paragraph 1 of thisArticle, a Contracting State shall not change the profitsof an enterprise of that Contracting State in thecircumstances referred to in that paragraph, if an enquiryinto the profits of that enterprise is not initiated withinseven years from the end of the taxable year or chargeableperiod in which the profits that would be subject to suchchange would, but for the conditions referred to in thatparagraph, have accrued to that enterprise. The provisionsof this paragraph shall not apply in the case of fraud orwilful default or if the inability to initiate an enquirywithin the prescribed period is attributable to the actionsor inaction of that enterprise.

Article 10

1. Dividends paid by a company which is a resident of aContracting State to a resident of the other ContractingState may be taxed in that other Contracting State.

2. However, such dividends may also be taxed in theContracting State of which the company paying the dividendsis a resident and according to the laws of that ContractingState, but if the dividends are beneficially owned by aresident of the other Contracting State, the tax so chargedshall not exceed, except as otherwise provided:


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6. The provisions of paragraphs 1, 2 and 3 of thisArticle shall not apply if the beneficial owner of thedividends, being a resident of a Contracting State, carrieson business in the other Contracting State of which the

company paying the dividends is a resident through apermanent establishment situated therein and the holding inrespect of which the dividends are paid is effectivelyconnected with such permanent establishment. In such casethe provisions of Article 7 of this Convention shall apply.

7. Where a company which is a resident of a ContractingState derives income, profits or gains from the otherContracting State, that other Contracting State may notimpose any tax on the dividends paid by the company, exceptinsofar as such dividends are paid to a resident of thatother Contracting State or insofar as the holding inrespect of which the dividends are paid is effectivelyconnected with a permanent establishment situated in thatother Contracting State, nor subject the companysundistributed profits to a tax on the companysundistributed profits, even if the dividends paid or theundistributed profits consist wholly or partly of income,profits or gains arising in such other Contracting State.

8. A resident of a Contracting State shall not beconsidered the beneficial owner of dividends paid by aresident of the other Contracting State in respect ofpreferred stock or other similar interest if such preferredstock or other similar interest would not have beenestablished or acquired unless a person:

(a) that is not entitled to benefits with respect todividends paid by a resident of the otherContracting State which are equivalent to, ormore favourable than, those available under thisConvention to a resident of the first-mentionedContracting State; and

(b) that is not a resident of either Contracting

State;

held equivalent preferred stock or other similar interestin the first-mentioned resident.

9. No relief shall be available under this Article if itwas the main purpose or one of the main purposes of anyperson concerned with the creation or assignment of theshares or other rights in respect of which the dividend ispaid to take advantage of this Article by means of thatcreation or assignment.


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Article 11

1. Interest arising in a Contracting State and paid to aresident of the other Contracting State may be taxed in

that other Contracting State.

2. However, such interest may also be taxed in theContracting State in which it arises and according to thelaws of that Contracting State, but if the beneficial ownerof the interest is a resident of the other ContractingState, the tax so charged shall not exceed 10 per cent ofthe gross amount of the interest.

3. Notwithstanding the provisions of paragraph 2 of thisArticle, interest arising in a Contracting State shall betaxable only in the other Contracting State if:

(a) the interest is beneficially owned by theGovernment of that other Contracting State, apolitical subdivision or local authority thereof,or the central bank of that other ContractingState or any institution wholly owned by thatGovernment;

(b) the interest is beneficially owned by a residentof that other Contracting State with respect todebt-claims guaranteed, insured or indirectlyfinanced by the Government of that otherContracting State, a political subdivision orlocal authority thereof, or the central bank ofthat other Contracting State or any institutionwholly owned by that Government;

(c) the interest is beneficially owned by a residentof that other Contracting State that is either:

(i) a bank;

(ii) an insurance company;

(iii) a securities dealer; or


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(iv) any other enterprise, provided that in thethree taxable years preceding the taxableyear in which the interest is paid, theenterprise derives more than 50 per cent of

its liabilities from the issuance of bondsin the financial markets or from takingdeposits at interest, and more than 50 percent of the assets of the enterprise consistof debt-claims against persons that do nothave with the resident a relationshipdescribed in subparagraphs (a) or (b) ofparagraph 1 of Article 9 of this Convention;

(d) the interest is beneficially owned by a pensionfund or pension scheme that is a resident of thatother Contracting State, provided that suchinterest is not derived from the carrying on of abusiness, directly or indirectly, by such pensionfund or pension scheme; or

(e) the interest is beneficially owned by a residentof that other Contracting State and paid withrespect to indebtedness arising as a part of thesale on credit by a resident of that otherContracting State of equipment or merchandise.

4. For the purposes of paragraph 3 of this Article, theterms the central bank and institution wholly owned bythat Government mean:

(a) in the case of Japan:

(i) the Bank of Japan;

(ii) the Japan Bank for InternationalCooperation;

(iii) the Nippon Export and Investment Insurance;and

(iv) such other similar institution the capitalof which is wholly owned by the Governmentof Japan as may be agreed upon from time totime between the Governments of theContracting States through an exchange ofdiplomatic notes.

(b) in the case of the United Kingdom:

(i) the Bank of England;

(ii) the Commonwealth Development Corporation;and


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(iii) such other similar institution the capitalof which is wholly owned by the Governmentof the United Kingdom as may be agreed uponfrom time to time between the Governments of

the Contracting States through an exchangeof diplomatic notes.

5. The term interest as used in this Article meansincome from debt-claims of every kind, whether or notsecured by mortgage and whether or not carrying a right toparticipate in the debtors profits, and in particular,income from government securities and income from bonds ordebentures, including premiums and prizes attaching to suchsecurities, bonds or debentures, and all other income thatis subjected to the same taxation treatment as income frommoney lent by the tax laws of the Contracting State inwhich the income arises. Income dealt with in Article 10of this Convention shall not be regarded as interest forthe purposes of this Convention.

6. The provisions of paragraphs 1, 2 and 3 of thisArticle shall not apply if the beneficial owner of theinterest, being a resident of a Contracting State, carrieson business in the other Contracting State in which theinterest arises, through a permanent establishment situatedtherein and the debt-claim in respect of which the interestis paid is effectively connected with such permanentestablishment. In such case the provisions of Article 7 ofthis Convention shall apply.

7. Interest shall be deemed to arise in a ContractingState when the payer is a resident of that ContractingState. Where, however, the person paying the interest,whether such person is a resident of a Contracting State ornot, has in a state other than that of which such person isa resident a permanent establishment in connection withwhich the indebtedness on which the interest is paid wasincurred, and such interest is borne by such permanentestablishment, then:

(a) if the permanent establishment is situated in aContracting State, such interest shall be deemedto arise in that Contracting State; and

(b) if the permanent establishment is situated in astate other than the Contracting States, suchinterest shall not be deemed to arise in eitherContracting State.


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8. Where, by reason of a special relationship between thepayer and the beneficial owner or between both of them andsome other person, the amount of the interest exceeds, forwhatever reason, the amount which would have been agreed

upon by the payer and the beneficial owner in the absenceof such relationship, the provisions of this Article shallapply only to the last-mentioned amount. In such case, theexcess part of the payments shall remain taxable accordingto the laws of each Contracting State, due regard being hadto the other provisions of this Convention.

9. A resident of a Contracting State shall not beconsidered the beneficial owner of interest in respect of adebt-claim if such debt-claim would not have beenestablished unless a person:

(a) that is not entitled to benefits with respect tothe interest arising in the other ContractingState which are equivalent to, or more favourablethan, those available under this Convention to aresident of the first-mentioned ContractingState; and

(b) that is not a resident of either ContractingState;

held an equivalent debt-claim against the first-mentionedresident.

10. No relief shall be available under this Article if itwas the main purpose or one of the main purposes of anyperson concerned with the creation or assignment of thedebt-claim in respect of which the interest is paid to takeadvantage of this Article by means of that creation orassignment.

Article 12

1. Royalties arising in a Contracting State and

beneficially owned by a resident of the other ContractingState shall be taxable only in that other ContractingState.

2. The term royalties as used in this Article meanspayments of any kind received as a consideration for theuse of, or the right to use, any copyright of literary,artistic or scientific work including cinematograph filmsand films or tapes for radio or television broadcasting,any patent, trade mark, design or model, plan, or secretformula or process, or for information concerningindustrial, commercial or scientific experience.


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3. The provisions of paragraph 1 of this Article shallnot apply if the beneficial owner of the royalties, being aresident of a Contracting State, carries on business in theother Contracting State in which the royalties arise

through a permanent establishment situated therein and theright or property in respect of which the royalties arepaid is effectively connected with such permanentestablishment. In such case the provisions of Article 7 ofthis Convention shall apply.

4. Where, by reason of a special relationship between thepayer and the beneficial owner or between both of them andsome other person, the amount of the royalties paidexceeds, for whatever reason, the amount which would havebeen agreed upon by the payer and the beneficial owner inthe absence of such relationship, the provisions of thisArticle shall apply only to the last-mentioned amount. Insuch case, the excess part of the payments shall remaintaxable according to the laws of each Contracting State,due regard being had to the other provisions of thisConvention.

5. A resident of a Contracting State shall not beconsidered the beneficial owner of royalties in respect ofthe use of intangible property if such royalties would nothave been paid to the resident unless the resident paysroyalties in respect of the same intangible property to aperson:

(a) that is not entitled to benefits with respect toroyalties arising in the other Contracting Statewhich are equivalent to, or more favourable than,those available under this Convention to aresident of the first-mentioned ContractingState; and

(b) that is not a resident of either ContractingState.

6. No relief shall be available under this Article if itwas the main purpose or one of the main purposes of anyperson concerned with the creation or assignment of theright or property in respect of which the royalties arepaid to take advantage of this Article by means of thatcreation or assignment.

Article 13

1. Gains derived by a resident of a Contracting Statefrom the alienation of immovable property referred to inArticle 6 of this Convention and situated in the otherContracting State may be taxed in that other ContractingState.


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2. Gains derived by a resident of a Contracting Statefrom the alienation of shares in a company or of aninterest in a partnership or trust may be taxed in theother Contracting State where the shares or the interest

derive at least 50 per cent of their value directly orindirectly from immovable property referred to in Article 6of this Convention and situated in that other ContractingState unless the relevant class of the shares or theinterest is traded on a recognised stock exchange specifiedin subparagraph (c) of paragraph 7 of Article 22 of thisConvention and the resident and persons related orconnected to that resident hold or own in the aggregate 5per cent or less of that class of the shares or theinterest.

3. Unless the provisions of paragraph 2 of this Articleare applicable, gains derived by a resident of aContracting State which are not subject to tax in thatContracting State from the alienation of shares issued by acompany being a resident of the other Contracting State maybe taxed in that other Contracting State, if:

(a) shares held or owned by the alienator (togetherwith such shares held or owned by any otherrelated or connected persons as may be aggregatedtherewith) amount to at least 25 per cent of thetotal issued shares of such company at any timeduring the taxable year or chargeable period inwhich the alienation takes place; and

(b) the total of the shares alienated by thealienator and such related or connected personsduring that taxable year or chargeable period inwhich the alienation takes place amounts to atleast 5 per cent of the total issued shares ofsuch company.

4. Notwithstanding the provisions of paragraphs 2 and 3of this Article, gains from the alienation of movable

property forming part of the business property of apermanent establishment which an enterprise of aContracting State has in the other Contracting State,including such gains from the alienation of such apermanent establishment (alone or with the wholeenterprise), may be taxed in that other Contracting State.

5. Gains derived by an enterprise of a Contracting Statefrom the alienation of ships or aircraft operated by thatenterprise in international traffic or movable propertypertaining to the operation of such ships or aircraft shallbe taxable only in that Contracting State.


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6. Gains from the alienation of any property other thanthat referred to in the preceding paragraphs of thisArticle shall be taxable only in the Contracting State ofwhich the alienator is a resident.

Article 14

1. Subject to the provisions of Articles 15, 17 and 18 ofthis Convention, salaries, wages and other similarremuneration derived by a resident of a Contracting Statein respect of an employment shall be taxable only in thatContracting State unless the employment is exercised in theother Contracting State. If the employment is soexercised, such remuneration as is derived therefrom may betaxed in that other Contracting State.

2. Notwithstanding the provisions of paragraph 1 of thisArticle, remuneration derived by a resident of aContracting State in respect of an employment exercised inthe other Contracting State shall be taxable only in thefirst-mentioned Contracting State if:

(a) the recipient is present in the other ContractingState for a period or periods not exceeding inthe aggregate 183 days in any twelve month periodcommencing or ending in the taxable year or yearof assessment concerned;

(b) the remuneration is paid by, or on behalf of, anemployer who is not a resident of the otherContracting State; and

(c) the remuneration is not borne by a permanentestablishment which the employer has in the otherContracting State.

3. Notwithstanding the provisions of the precedingparagraphs of this Article, remuneration derived in respectof an employment exercised aboard a ship or aircraft

operated in international traffic by an enterprise of aContracting State may be taxed in that Contracting State.

Article 15

Directors fees and other similar payments derived bya resident of a Contracting State in his capacity as amember of the board of directors of a company which is aresident of the other Contracting State may be taxed inthat other Contracting State.


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Article 16

1. Notwithstanding the provisions of Articles 7 and 14 ofthis Convention, income derived by a resident of a

Contracting State as an entertainer, such as a theatre,motion picture, radio or television artiste, or a musician,or as a sportsman, from his personal activities as suchexercised in the other Contracting State, may be taxed inthat other Contracting State.

2. Where income in respect of personal activitiesexercised in a Contracting State by an entertainer or asportsman in his capacity as such accrues not to theentertainer or sportsman himself but to another person,that income may, notwithstanding the provisions of Articles7 and 14 of this Convention, be taxed in the ContractingState in which the activities of the entertainer orsportsman are exercised.

Article 17

Subject to the provisions of paragraph 2 of Article 18of this Convention, pensions and other similar remunerationbeneficially owned by a resident of a Contracting Stateshall be taxable only in that Contracting State.

Article 18

1. (a) Salaries, wages and other similar remunerationpaid by a Contracting State or a politicalsubdivision or local authority thereof to anindividual in respect of services rendered tothat Contracting State or political subdivisionor local authority thereof, in the discharge offunctions of a governmental nature, shall betaxable only in that Contracting State.

(b) However, such salaries, wages and other similarremuneration shall be taxable only in the other

Contracting State if the services are rendered inthat other Contracting State and the individualis a resident of that other Contracting Statewho:

(i) is a national of that other ContractingState; or

(ii) did not become a resident of that otherContracting State solely for the purpose ofrendering the services.


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2. (a) Notwithstanding the provisions of paragraph 1 ofthis Article, pensions and other similarremuneration paid by, or out of funds to whichcontributions are made or created by, a

Contracting State or a political subdivision orlocal authority thereof to an individual inrespect of services rendered to that ContractingState or a political subdivision or localauthority thereof shall be taxable only in thatContracting State.

(b) However, such pensions and other similarremuneration shall be taxable only in the otherContracting State if the individual is a residentof, and a national of, that other ContractingState.

3. The provisions of Articles 14, 15, 16 and 17 of thisConvention shall apply to salaries, wages, pensions, andother similar remuneration in respect of services renderedin connection with a business carried on by a ContractingState or a political subdivision or local authoritythereof.

Article 19

Payments which a student or business apprentice who isor was immediately before visiting a Contracting State aresident of the other Contracting State and who is presentin the first-mentioned Contracting State solely for thepurpose of his education or training receives for thepurpose of his maintenance, education or training shall notbe taxed in the first-mentioned Contracting State, providedthat such payments arise from sources outside thatContracting State. The exemption provided by this Articleshall apply to a business apprentice only for a period notexceeding one year from the date he first begins histraining in the first-mentioned Contracting State.

Article 20

Notwithstanding any other provisions of thisConvention, any income, profits or gains derived by asleeping partner in respect of a sleeping partnership(Tokumei Kumiai) contract or other similar contract may betaxed in the Contracting State in which such income,profits or gains arise, and according to the laws of thatContracting State.


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Article 21

1. Items of income beneficially owned by a resident of aContracting State, wherever arising, which are not dealt

with in the foregoing Articles of this Convention(hereinafter referred to as other income), other thanincome paid out of trusts or the estates of deceasedpersons in the course of administration, shall be taxableonly in that Contracting State.

2. The provisions of paragraph 1 of this Article shallnot apply to income, other than income from immovableproperty as defined in paragraph 2 of Article 6 of thisConvention, if the beneficial owner of such income, being aresident of a Contracting State, carries on business in theother Contracting State through a permanent establishmentsituated therein and the right or property in respect ofwhich the income is paid is effectively connected with suchpermanent establishment. In such case the provisions ofArticle 7 of the Convention shall apply.

3. Where, by reason of a special relationship between theresident referred to in paragraph 1 of this Article and thepayer, or between both of them and some other person, theamount of other income exceeds the amount (if any) whichwould have been agreed upon between them in the absence ofsuch relationship, the provisions of this Article shallapply only to the last-mentioned amount. In such case, theexcess part of the other income shall remain taxableaccording to the laws of each Contracting State, due regardbeing had to the other applicable provisions of thisConvention.

4. A resident of a Contracting State shall not beconsidered the beneficial owner of other income in respectof the right or property if such other income would nothave been paid to the resident unless the resident paysother income in respect of the same right or property to aperson:

(a) that is not entitled to benefits with respect toother income arising in the other ContractingState which are equivalent to, or more favourablethan, those available under this Convention to aresident of the first-mentioned ContractingState; and

(b) that is not a resident of either ContractingState.


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5. No relief shall be available under this Article if itwas the main purpose or one of the main purposes of anyperson concerned with the creation or assignment of theright or property in respect of which the other income is

paid to take advantage of this Article by means of thatcreation or assignment.

Article 22

1. Except as otherwise provided in this Article, aresident of a Contracting State that derives income,profits or gains described in Article 7; in paragraph 3 ofArticle 10 or paragraph 3 of Article 11; or in Articles 12,13 or 21 of this Convention from the other ContractingState shall be entitled to the benefits granted for ataxable year or chargeable period by the provisions ofthose paragraphs or Articles only if such resident is aqualified person as defined in paragraph 2 of this Articleand satisfies any other specified conditions in thoseparagraphs or Articles for the obtaining of such benefits.

2. A resident of a Contracting State is a qualifiedperson for a taxable year or chargeable period only if suchresident is either:

(a) an individual;

(b) a qualified governmental entity;

(c) a company if the principal class of its shares islisted, registered or admitted to dealings on arecognised stock exchange specified in clause (i)or (ii) of subparagraph (c) of paragraph 7 ofthis Article and is regularly traded on one ormore recognised stock exchanges;

(d) a person other than an individual or a company ifthe principal class of units in that person islisted, registered or admitted to dealings on a

recognised stock exchange specified in clause (i)or (ii) of subparagraph (c) of paragraph 7 ofthis Article and is regularly traded on one ormore recognised stock exchanges;

(e) a person described in subparagraph (b) or (c) ofparagraph 1 of Article 4 of this Convention,provided that in the case of a person describedin subparagraph (b) of that paragraph as of theend of the prior taxable year or chargeableperiod more than 50 per cent of the personsbeneficiaries, members or participants areindividuals who are residents of eitherContracting State;


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(f) a person other than an individual if residents ofeither Contracting State that are qualifiedpersons by reason of subparagraphs (a), (b), (c),(d) or (e) of this paragraph own, directly or

indirectly, shares or other beneficial interestsrepresenting at least 50 per cent of the votingpower of the person; or

(g) a trust or trustee of a trust in their capacityas such if at least 50 per cent of the beneficialinterests in the trust is held, directly orindirectly, by persons who are either:

(i) qualified persons by reason of subparagraphs(a), (b), (c), (d) or (e) of this paragraph;or

(ii) equivalent beneficiaries as defined inclause (i) of subparagraph (e) of paragraph7 of this Article.

3. Notwithstanding that a company that is a resident of aContracting State may not be a qualified person, it shallbe entitled to the benefits otherwise accorded to residentsof a Contracting State by the provisions of Article 7; ofparagraph 3 of Article 10 or paragraph 3 of Article 11; orof Articles 12, 13 or 21 of the Convention with respect toan item of income, profit or gain described in thoseparagraphs or Articles derived from the other ContractingState if it satisfies any other specified conditions inthose paragraphs or Articles for the obtaining of suchbenefits and shares representing at least 75 per cent ofthe voting power of the company are owned, directly orindirectly, by seven or fewer persons who are equivalentbeneficiaries.

4. Where the provisions of subparagraphs (f) or (g) ofparagraph 2 or the provisions of paragraph 3 of thisArticle apply:

(a) in respect of taxation by withholding at source,a resident of a Contracting State shall beconsidered to satisfy the conditions described inthe relevant subparagraph or paragraph for thetaxable year or chargeable period in which thepayment is made if such resident satisfies thoseconditions during the twelve month periodpreceding the date of payment of an item ofincome, profit or gain (or, in the case ofdividends, the date on which entitlement to thedividends is determined);


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(b) for all other cases, a resident of a ContractingState shall be considered to satisfy theconditions described in subparagraphs (f) or (g)of paragraph 2 or in paragraph 3 of this Article

for the taxable year or chargeable period inwhich the payment is made if such residentsatisfies those conditions on at least half thedays of the taxable year or chargeable period.

5. (a) Notwithstanding that a resident of a ContractingState may not be a qualified person, thatresident shall be entitled to the benefitsgranted by the provisions of Article 7; ofparagraph 3 of Article 10 or paragraph 3 ofArticle 11; or of Articles 12, 13 or 21 of thisConvention with respect to an item of income,profit or gain described in those paragraphs orArticles derived from the other Contracting Stateif the resident is carrying on business in thefirst-mentioned Contracting State (other than thebusiness of making or managing investments forthe residents own account, unless the businessis banking, insurance or securities businesscarried on by a bank, insurance company orsecurities dealer), the income, profits or gainsderived from the other Contracting State isderived in connection with, or is incidental to,that business and that resident satisfies anyother specified conditions in those paragraphs orArticles for the obtaining of such benefits.

(b) If a resident of a Contracting State derives anitem of income, profit or gain from a businesscarried on by that resident in the otherContracting State or derives an item of income,profit or gain arising in the other ContractingState from a person that has with the resident arelationship described in subparagraph (a) or (b)of paragraph 1 of Article 9 of this Convention,

the conditions described in subparagraph (a) ofthis paragraph shall be considered to besatisfied with respect to such item of income,profit or gain only if the business carried on inthe first-mentioned Contracting State issubstantial in relation to the business carriedon in the other Contracting State. Whether suchbusiness is substantial for the purpose of thisparagraph will be determined on the basis of allthe facts and circumstances.


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(c) In determining whether a person is carrying onbusiness in a Contracting State undersubparagraph (a) of this paragraph, the businessconducted by a partnership in which that person

is a partner and the business conducted bypersons connected to such person shall be deemedto be conducted by such person. A person shallbe connected to another if one possesses at least50 per cent of the beneficial interest in theother (or, in the case of a company, sharesrepresenting at least 50 per cent of the votingpower of the company) or another personpossesses, directly or indirectly, at least 50per cent of the beneficial interest (or, in thecase of a company, shares representing at least50 per cent of the voting power of the company)in each person. In any case, a person shall beconsidered to be connected to another if, on thebasis of all the facts and circumstances, one hascontrol of the other or both are under thecontrol of the same person or persons.

6. A resident of a Contracting State that is neither aqualified person nor entitled under paragraph 3 or 5 ofthis Article to the benefits granted by the provisions ofArticle 7; of paragraph 3 of Article 10 or paragraph 3 ofArticle 11; or of Articles 12, 13 or 21 of this Conventionwith respect to an item of income, profit or gain describedin those paragraphs or Articles shall, nevertheless, begranted such benefits if the competent authority of theother Contracting State determines, in accordance with itsdomestic law or administrative practice, that theestablishment, acquisition or maintenance of such residentand the conduct of its operations did not have as one ofthe principal purposes the obtaining of such benefits.

7. For the purposes of this Article:

(a) the term qualified governmental entity means

the Government of a Contracting State, anypolitical subdivision or local authority thereof,the Bank of Japan, the Bank of England or aperson that is wholly owned, directly orindirectly, by the Government of a ContractingState or a political subdivision or localauthority thereof;


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(b) the term principal class of shares means theordinary or common shares of the company,provided that such class of shares represents themajority of the voting power of the company. If

no single class of ordinary or common sharesrepresents the majority of the voting power ofthe company, the principal class of shares isthat class or those classes that in the aggregaterepresent a majority of the voting power of thecompany;

(c) the term recognised stock exchange means:

(i) the London Stock Exchange and any otherrecognised investment exchange within themeaning of the Financial Services Act 1986or, as the case may be, the FinancialServices and Markets Act 2000;

(ii) any stock exchange established by a StockExchange or a securities dealers associationunder the terms of the Securities andExchange Law (Law No. 25 of 1948) of Japan;

(iii) the Swiss Stock Exchange, the Irish StockExchange and the stock exchanges ofAmsterdam, Brussels, Dsseldorf, Frankfurt,Hamburg, Johannesburg, Luxembourg, Madrid,Milan, New York, Paris, Singapore,Stockholm, Sydney, Toronto and Vienna andthe NASDAQ System; and

(iv) any other stock exchange which the competentauthorities agree to recognise for thepurposes of this Article;

(d) the term units includes shares and any otherinstrument, not being a debt-claim, granting anentitlement to share in the assets or income of,

or receive a distribution from, the person. Theterm principal class of units means the classof units which represents the majority of thevalue of the person. If no single class of unitsrepresents the majority of the value of theperson, the principal class of units is thatclass or those classes that in the aggregaterepresent the majority of the value of theperson; and

(e) an equivalent beneficiary is:


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(i) a resident of a state that has a conventionfor the avoidance of double taxation betweenthat state and the Contracting State fromwhich the benefits of this Convention are

claimed such that:

(aa) that convention contains provisions foreffective exchange of information;

(bb) that resident is a qualified personunder limitation on benefits provisions(Tokuten Joko) in that convention or,where there are no such provisions inthat convention, would be a qualifiedperson when that convention is read asincluding provisions corresponding toparagraph 2 of this Article (or for thepurposes of subparagraph (g) ofparagraph 2 of this Article, aprovision corresponding to clause (i)of that subparagraph); and

(cc) with respect to an item of income,profit or gain referred to in Article7; in paragraph 3 of Article 10 orparagraph 3 of Article 11; or inArticles 12, 13 or 21 of thisConvention that resident would beentitled under that convention to arate of tax with respect to theparticular class of income, profit orgain for which the benefits are beingclaimed under this Convention that isat least as low as the rate applicableunder this Convention, under conditionsin that convention which are no lessrestrictive than those in thisConvention; or

(ii) a qualified person by reason ofsubparagraphs (a), (b), (c), (d) or (e) ofparagraph 2 of this Article.

Article 23

1. Subject to the provisions of the laws of the UnitedKingdom regarding the allowance as a credit against UnitedKingdom tax of tax payable in a territory outside theUnited Kingdom (which shall not affect the generalprinciple hereof):


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(a) Japanese tax payable under the laws of Japan andin accordance with this Convention, whetherdirectly or by deduction, on income, profits orchargeable gains from sources within Japan

(excluding in the case of a dividend, tax payablein respect of the profits out of which thedividend is paid) shall be allowed as a creditagainst any United Kingdom tax computed byreference to the same income, profits orchargeable gains by reference to which theJapanese tax is computed;

(b) in the case of a dividend paid by a company whichis a resident of Japan to a company which is aresident of the United Kingdom and which controlsdirectly or indirectly at least 10 per cent ofthe voting power in the company paying thedividend, the credit shall take into account (inaddition to any Japanese tax for which credit maybe allowed under the provisions ofsubparagraph (a) of this paragraph) the Japanesetax payable by the company in respect of theprofits out of which such dividend is paid.

2. Subject to the provisions of the laws of Japanregarding the allowance as a credit against the Japanesetax of tax payable in any country other than Japan:

(a) Where a resident of Japan derives income from theUnited Kingdom which may be taxed in the UnitedKingdom in accordance with the provisions of thisConvention, the amount of the United Kingdom taxpayable in respect of that income shall beallowed as a credit against the Japanese taximposed on that resident. The amount of credit,however, shall not exceed that part of theJapanese tax which is appropriate to that income;

(b) Where the income derived from the United Kingdom

is dividends paid by a company which is aresident of the United Kingdom to a company whichis a resident of Japan and which has owned atleast 25 per cent of the voting shares issued bythe company paying the dividends during theperiod of six months immediately before the daywhen the obligation to pay dividends isconfirmed, the credit shall take into account theUnited Kingdom tax payable by the company payingthe dividends in respect of its income.


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3. For the purposes of the preceding paragraphs of thisArticle, income, profits or gains beneficially owned by aresident of a Contracting State which may be taxed in theother Contracting State in accordance with this Convention

shall be deemed to arise from sources in that otherContracting State.

Article 24

1. Nationals of a Contracting State shall not besubjected in the other Contracting State to any taxation orany requirement connected therewith which is other or moreburdensome than the taxation and connected requirements towhich nationals of that other Contracting State in the samecircumstances, in particular with respect to residence, areor may be subjected.

2. The taxation on a permanent establishment which anenterprise of a Contracting State has in the otherContracting State shall not be less favourably levied inthat other Contracting State than the taxation levied onenterprises of that other Contracting State carrying on thesame activities. The provisions of this paragraph shallnot be construed as obliging a Contracting State to grantto residents of the other Contracting State any personalallowances, reliefs and reductions for taxation purposes onaccount of civil status or family responsibilities which itgrants to its own residents.

3. Except where the provisions of paragraph 1 of Article9, paragraphs 8 or 9 of Article 10, paragraphs 8, 9 or 10of Article 11, paragraphs 4, 5 or 6 of Article 12, orparagraphs 3, 4 or 5 of Article 21 of this Conventionapply, dividends, interest, royalties and otherdisbursements paid by a resident of a Contracting State toa resident of the other Contracting State shall, for thepurposes of determining the taxable profits of the first-mentioned resident, be deductible under the same conditionsas if they had been paid to a resident of the first-

mentioned Contracting State.

4. Enterprises of a Contracting State, the capital ofwhich is wholly or partly owned or controlled, directly orindirectly, by one or more residents of the otherContracting State, shall not be subjected in the first-mentioned Contracting State to any taxation or anyrequirement connected therewith which is other or moreburdensome than the taxation and connected requirements towhich other similar enterprises of the first-mentionedContracting State are or may be subjected.


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Article 25

1. Where a resident of a Contracting State considers thatthe actions of one or both of the Contracting States result

or will result for him in taxation not in accordance withthe provisions of this Convention, he may, irrespective ofthe remedies provided by the domestic law of thoseContracting States, present his case to the competentauthority of the Contracting State of which he is aresident or, if his case comes under paragraph 1 of Article24 of the Convention, to that of the Contracting State ofwhich he is a national. The case must be presented withinthree years from the first notification of the actionresulting in taxation not in accordance with the provisionsof the Convention or, if later, within six years from theend of the taxable year or chargeable period in respect ofwhich that taxation is imposed or proposed.

2. The competent authority shall endeavour, if theobjection appears to it to be justified and if it is notitself able to arrive at a satisfactory solution, toresolve the case by mutual agreement with the competentauthority of the other Contracting State, with a view tothe avoidance of taxation which is not in accordance withthe provisions of this Convention. Any agreement reachedshall be implemented notwithstanding any time limits orother procedural limitations in the domestic law of theContracting States, except such limitations as apply forthe purposes of giving effect to such an agreement.

3. The competent authorities of the Contracting Statesshall endeavour to resolve by mutual agreement anydifficulties or doubts arising as to the interpretation orapplication of this Convention.

4. The competent authorities of the Contracting Statesmay communicate with each other directly for the purposesof reaching an agreement in the sense of the precedingparagraphs of this Article.

Article 26

1. The competent authorities of the Contracting Statesshall exchange such information as is foreseeably relevantfor carrying out the provisions of this Convention or ofthe domestic laws of the Contracting States concerningtaxes covered by the Convention and of every kind anddescription imposed by a Contracting State insofar as thetaxation thereunder is not contrary to the provisions ofthe Convention. The exchange of information is notrestricted by Article 1 of the Convention.


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2. Any information received under paragraph 1 of thisArticle by a Contracting State shall be treated as secretin the same manner as information obtained under thedomestic laws of that Contracting State and shall be

disclosed only to persons or authorities (including courtsand administrative bodies) concerned with the assessment orcollection of, the enforcement or prosecution in respectof, or the determination of appeals in relation to, thetaxes referred to in paragraph 1 of this Article, or theoversight of the above, and only to the extent necessaryfor those persons or authorities to perform theirrespective responsibilities. Such persons or authoritiesshall use the information only for the purposes ofdischarging such responsibilities. They may disclose theinformation in public court proceedings or in judicialdecisions.

3. In no case shall the provisions of paragraphs 1 and 2of this Article be construed so as to impose on aContracting State the obligation:

(a) to carry out administrative measures at variancewith the laws and administrative practice of thator of the other Contracting State;

(b) to supply information which is not obtainableunder the laws or in the normal course of theadministration of that or of the otherContracting State;

(c) to supply information which would disclose anytrade, business, industrial, commercial orprofessional secret or trade process, orinformation the disclosure of which would becontrary to public policy.

4. If information is requested by a Contracting State inaccordance with this Article, the other Contracting Stateshall use its information gathering measures to obtain the

requested information, even though that other ContractingState may not need such information for its own taxpurposes. The obligation contained in the precedingsentence is subject to the limitations of paragraph 3 ofthis Article but in no case shall such limitations beconstrued to permit a Contracting State to decline tosupply information solely because it has no domesticinterest in such information.


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5. In no case shall the provisions of paragraph 3 of thisArticle be construed to permit a Contracting State todecline to supply information solely because theinformation is held by a bank or other financial

institution, nominee or person acting in an agency or afiduciary capacity or because it relates to ownershipinterests in a person. However, a Contracting State maydecline to supply information relating to confidentialcommunications between attorneys, solicitors or otheradmitted legal representatives in their role as such andtheir clients to the extent that the communications areprotected from disclosure under the domestic laws of thatContracting State.

Article 27

Nothing in this Convention shall affect the fiscalprivileges of members of diplomatic missions or consularposts under the general rules of international law or underthe provisions of special agreements.

Article 28

1. This Convention shall be approved in accordance withthe legal procedures of each of the Contracting States andshall enter into force on the thirtieth day after the dateof exchange of diplomatic notes indicating such approval.

2. This Convention shall be applicable:

(a) in the United Kingdom:

(i) with respect to taxes withheld at source, toincome derived on or after 1st January inthe calendar year next following that inwhich the Convention enters into force;

(ii) subject to clause (i) of subparagraph (a) ofthis paragraph, with respect to income tax

and capital gains tax, for any year ofassessment beginning on or after 6th Aprilin the calendar year next following that inwhich the Convention enters into force; and

(iii) with respect to corporation tax, for anyfinancial year beginning on or after1st April in the calendar year nextfollowing that in which the Conventionenters into force; and


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(b) in Japan:

(i) with respect to taxes withheld at source,for amounts taxable on or after 1st January

in the calendar year next following that inwhich the Convention enters into force; and

(ii) with respect to taxes on income which arenot withheld at source and the enterprisetax, as regards income for any taxable yearbeginning on or after 1st January in thecalendar year next following that in whichthe Convention enters into force.

3. The Convention between Japan and the United Kingdom ofGreat Britain and Northern Ireland for the avoidance ofdouble taxation and the prevention of fiscal evasion withrespect to taxes on income signed at Tokyo on 10th February1969 as amended by the Protocol signed at Tokyo on 14thFebruary 1980 (the prior Convention) shall cease to beeffective from the date upon which this Convention haseffect in respect of the taxes to which the Conventionapplies in accordance with the provisions of paragraph 2 ofthis Article.

4. In respect of the development land tax and thepetroleum revenue tax to which the prior Conventionapplies, the prior Convention shall cease to be effectivefrom the date upon which this Convention enters into force.

5. The prior Convention shall terminate on the last dateon which it has effect in accordance with this Article.

6. Notwithstanding the entry into force of thisConvention, an individual who is entitled to the benefitsof Article 22 of the prior Convention at the time of theentry into force of this Convention shall continue to beentitled to such benefits until such time as he would haveceased to be entitled to such benefits if the prior

Convention had remained in force.

Article 29

This Convention shall remain in force until terminatedby a Contracting State. Either Contracting State mayterminate the Convention, through diplomatic channels, bygiving notice of termination at least six months before theend of any calendar year beginning after the expiry of fiveyears from the date of entry into force of the Convention.In such event, the Convention shall cease to have effect:

(a) in the United Kingdom:


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(i) with respect to taxes withheld at source, toincome derived on or after 1st January inthe calendar year next following that inwhich the notice is given;

(ii) subject to clause (i) of subparagraph (a) ofthis paragraph, with respect to income taxand capital gains tax, for any year ofassessment beginning on or after 6th Aprilin the calendar year next following that inwhich the notice is given; and

(iii) with respect to corporation tax, for anyfinancial year beginning on or after 1stApril in the calendar year next followingthat in which the notice is given; and

(b) in Japan:

(i) with respect to taxes withheld at source,for amounts taxable on or after 1st Januaryin the calendar year next following that inwhich the notice is given; and

(ii) with respect to taxes on income which arenot withheld at source and the enterprisetax, as regards income for any taxable yearbeginning on or after 1st January in thecalendar year next following that in whichthe notice is given.

IN WITNESS WHEREOF the undersigned, being dulyauthorised thereto by their respective Governments, havesigned this Convention.

DONE in duplicate at London this second day ofFebruary, 2006, in the Japanese and English languages, eachtext being equally authoritative.

For Japan: For the United Kingdomof Great Britainand Northern Ireland:

Yoshiji Nogami Dawn Primarolo


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Protocol

At the signing of the Convention between Japan and theUnited Kingdom of Great Britain and Northern Ireland forthe Avoidance of Double Taxation and the Prevention ofFiscal Evasion with respect to Taxes on Income and onCapital Gains (hereinafter referred to as theConvention), Japan and the United Kingdom of Great Britainand Northern Ireland have agreed upon the followingprovisions, which shall form an integral part of theConvention.

1. With reference to subparagraph (m) of paragraph 1 ofArticle 3 of the Convention:

A pension fund or pension scheme shall be treated asexempt from tax on income derived with respect to theactivities described in clause (ii) of that subparagrapheven though it is subject to the tax stipulated in Articles8 or 10-3 of the Corporation Tax Law (Law No. 34 of 1965)of Japan or paragraph 1 of Article 20 of its supplementaryprovisions.

2. With reference to Article 7 of the Convention:

Where a resident of the United Kingdom is a member ofa partnership established under the laws of Japan, nothingin the Convention shall prevent the United Kingdom fromtaxing that resident on his share of any income, profits orgains of that partnership.

3. With reference to paragraph 6 of Article 13 of theConvention:

The provisions of paragraph 6 of Article 13 of theConvention shall not affect the right of the United Kingdomto levy according to its law a tax chargeable in respect of

gains from the alienation of any property on a person whois a resident of the United Kingdom at any time during thefiscal year in which the property is alienated, or has beenso resident at any time during the six fiscal yearsimmediately preceding that year.


It is understood that the benefits, income or gainsenjoyed by employees under share or stock option plansrelating to the period between grant and exercise of anoption are regarded as other similar remuneration for thepurposes of that Article.


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It is further understood that where an employee:

(a) has been granted a share or stock option in thecourse of an employment;

(b) has exercised that employment in both ContractingStates during the period between grant andexercise of the option;

(c) remains in that employment at the date of theexercise; and

(d) under the domestic law of the Contracting States,would be taxable in both Contracting States inrespect of such benefits, income or gains;

then, in order to avoid double taxation, the ContractingState of which, at the time of the exercise of the option,the employee is not a resident may tax only that proportionof such benefits, income or gains which relates to theperiod or periods between grant and exercise of the optionduring which the individual has exercised the employment inthat Contracting State.

With the aim of ensuring that no unrelieved doubletaxation arises, the competent authorities of theContracting States shall endeavour to resolve by mutualagreement under Article 25 of the Convention anydifficulties or doubts arising as to the interpretation orapplication of Articles 14 and 23 of the Convention inrelation to such share or stock option plans.

5. With reference to subparagraph (e) of paragraph 7 ofArticle 22 of the Convention:

It is understood that for the purpose of applyingparagraph 3 of Article 10 of the Convention, in order todetermine whether a person, owning shares, directly orindirectly, in the company claiming the benefits of the

Convention, is an equivalent beneficiary, such person shallbe deemed to hold the same voting power in the companypaying the dividends as the company claiming the benefitsholds in such company.


Where gains are taxable by the United Kingdom byreason of the provisions of paragraph 3 of this Protocol,the United Kingdom shall eliminate double taxation inaccordance with the methods set out in Article 23 of theConvention as if the gains arose from sources in Japan.


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IN WITNESS WHEREOF the undersigned, being dulyauthorised thereto by their respective Governments, havesigned this Protocol.

DONE in duplicate at London this second day ofFebruary, 2006, in the Japanese and English languages, eachtext being equally authoritative.

For Japan: For the United Kingdomof Great Britainand Northern Ireland:

Yoshiji Nogami Dawn Primarolo

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DTC agreement between United Kingdom and Japan

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