What is tax treaty? | 外資系企業の税務・経理代行サポート| 国際税務に強い森永会計事務所

Tax Treaty

A tax treaty is a written consent to be signed by between the two countries, in order to promote a sound investment and economic exchanges between them through the adjustment of double taxation and the response to tax avoidance.

As of October 2010, Japan signed 48 tax treaties which are effective among the 59 locations.

A treaty with Kuwait has not been effective yet and a basic agreement has been reached on new treaties with Hong Kong and Saudi Arabia.

In a tax treaty, various fundamental agreements between the two countries are declared on tax matters such as the range of residents, the withholding of income, the range of taxation, limit tax rate of withholding tax, the taxation privileges and mutual cooperation. These provisions are applied in preference to the domestic law.