Application procedure simplified under the tax treaty relating to withholding income tax

By the end of 2013, the reduced withholding income tax rate of 7.147% applicable to cross-border dividend payout of listing shares will be abolished, and the standard withholding tax rate of 15.315% will then be applied. As a result, many overseas investors who are the recipients of the dividend will incline to apply for the tax treaty benefits in Japan.

Thus, to simplify the submission procedure of the application form for withholding income tax reduction relating to cross-border dividend payout of listing shares, the requirement of administrative works has been modified as follows:

• The recipient who is a non resident in Japan for tax purpose can submit the application form through the payment agent. The application form must include the information of the foreign recipient but does not require the information of the dividend payout. If certain requirements met, the recipient can submit the form in every three years.
• The recipient must inform the payment agent of the submission of the application form before the day he/she receives the dividend payout. The payment agent must submit such application form to the competent tax authority by the 10th day of the month subsequent to the month of the dividend payment. The application form can be in the form of paper, digital optical disk etc.

The above procedure will be applied to listing shares' dividend payout made on or after 1 January 2014.