Japan, Estonia Sign Double Tax Treaty

Japan and Estonia signed a convention to eliminate double taxation on cross-border trade and investment on August 30.

The treaty sets out the taxing rights of both countries on cross-border income deriving from investment or trade between the two. It also provides for assistance in the collection of tax and that they will promote investment in the other’s economy.

Following implementation, withholding tax on dividends will be capped in the source country at a rate of 10 percent. A zero rate will apply if the recipient was a shareholder holding at least 10 percent voting power in the payee company for at least six months prior to the payment.

Withholding tax on interest income will be capped at 10 percent at source. Tax on income from royalties will be taxed in the source country at a flat rate of five percent.

The treaty is due to come into force 30 days after final approval from the respective governments.