The tax treaty between Japan and Iceland will enter into force on October 31, 2018, Japan’s Finance Ministry has announced.
The tax treaty will be effective in both countries from January 1, 2019.
The provisions concerning the exchange of information and the assistance in the collection of taxes shall be effective from October 31, 2018.
The tax treaty was signed on January 15, 2018. The tax treaty exempts interest and royalty payments from withholding tax. Dividends are also exempt in certain cases.
The tax treaty contains an anti-abuse clause to deny treaty benefits where it is reasonable to conclude that obtaining benefits was one of the principal purposes of any transaction.
An arbitration clause is included in the tax treaty to resolve treaty disputes.