Entry into force of Protocol Amending Tax Convention between Japan and Switzerland
On October 31, Japan received from the Swiss Confederation the notification confirming that its internal procedures necessary for the entry into force of the “Protocol Amending the Convention between Japan and Switzerland for the Avoidance of Double Taxation with respect to Taxes on Income” (hereinafter referred to as this Protocol) (signed on July 16, 2021) were completed. Thus, all the necessary procedures for the entry into force of this Protocol have been completed.
- This Protocol, therefore, will enter into force on November 30, 2022, on the thirtieth day after the date of receipt of the latter notification and will have effect:
- (a) in Japan:
- (i) with respect to taxes levied on the basis of a taxable year, for taxes for any taxable years beginning on or after January 1, 2023;
- (ii) with respect to taxes levied not on the basis of a taxable year, for taxes levied on or after January 1, 2023;
- (b) in the Swiss Confederation:
- (i) with respect to taxes withheld at source, on amounts paid or credited on or after January 1, 2023;
- (ii) with respect to other taxes, for taxable years beginning on or after January 1, 2023.
- The provisions of paragraph 1 of Article 25 of the Convention (Mutual Agreement Procedure), as amended by this Protocol, will have effect from November 30, 2022 without regard to the date on which the taxes are levied or the taxable year to which the taxes relate.
- The provisions concerning the arbitration proceedings will have effect from November 30, 2022 with respect to:
- (a) cases that are under consideration by the competent authorities of the Contracting States on the date on which this Protocol enters into force. For such cases, no unresolved issues arising therefrom will be submitted to arbitration earlier than three years after the date on which this Protocol enters into force;
- (b) cases that come under consideration by the competent authorities of the Contracting States after the date on which this Protocol enters into force.
- This Protocol amends part of the existing Convention, which entered into force in 1971 and was partly amended in 2011 (hereinafter the amended Convention is referred to as “the Convention”), in particular, by revising the taxation on business profits, expanding the extent of reduction of taxation on investment income, amending measures for prevention of abuse of the Convention and introducing arbitration proceedings in mutual agreement procedures. It is expected that, while eliminating double taxation and preventing international tax evasion and tax avoidance, this Protocol promotes further mutual investments and economic exchanges between the two countries.