The Association of East Asian Relations and the Interchange
Association,
Having regard to paragraph 3 of the Arrangement between the
Association of East Asian Relations and the Interchange
Association for the Establishment of the Respective Overseas
Offices of 26th December 1972,
Shall cooperate with each other to obtain necessary consent of
the authorities concerned of the respective Territories with a
view to carrying out the matters as contained in Articles 1
through 29 below:
Article 1
PERSONS COVERED
1. This Agreement shall apply to persons who are residents of
one or both of the Territories.
2. For the purposes of this Agreement, income derived by or
through an entity or arrangement that is established in
either Territory and that is treated as wholly or partly
fiscally transparent under the tax law of either Territory
shall be considered to be income of a resident of a Territory
but only to the extent that the income is treated, for
purposes of taxation by that Territory, as the income of a
resident of that Territory. In no case shall the provisions
of this paragraph be construed so as to restrict in any way a
Territory ’ s right to tax the residents of that Territory.
For the purposes of this paragraph, the term “ fiscally
transparent ” means situations where, under the tax law of a
Territory, income or part thereof of an entity or arrangement
is not taxed at the level of the entity or arrangement but at
the level of the persons who have an interest in that entity
or arrangement.
Article 2
TAXES COVERED
1. The existing taxes to which this Agreement shall apply are:
(a) in the case of Japan:
(i) the income tax;
(ii) the corporation tax;
(iii) the special income tax for reconstruction;
(iv) the local corporation tax;
(v) the local inhabitant taxes; and
(b) in the case of Taiwan:
(i) the profit-seeking enterprise income tax;
(ii) the individual consolidated income tax;
(iii) the income basic tax;
including the surcharges levied thereon.
2. This Agreement shall apply also to any identical or
substantially similar taxes that are imposed after the date
of signature of the Agreement in addition to, or in place of,
the existing taxes. The competent authorities of the
Territories shall notify each other of any significant
changes that have been made in their taxation laws in
accordance with Article 25.
Article 3
GENERAL DEFINITIONS
1. For the purposes of this Agreement, unless the context
otherwise requires:
(a) the term “ Territory ” means a tax territory in which
the taxation laws administered by the Ministry of Finance
of Japan or the Ministry of Finance of Taiwan, as the case
may be, are applied. The terms “ other Territory ” and
“ Territories ” shall be construed accordingly;
(b) the term “ person ” includes an individual, a company
and any other body of persons;
(c) the term “ company ” means any body corporate or any
entity that is treated as a body corporate for tax
purposes;
(d) the terms “ enterprise of a Territory ” and “
enterprise of the other Territory ” mean respectively an
enterprise carried on by a resident of a Territory and an
enterprise carried on by a resident of the other
Territory;
(e) the term “ international traffic ” means any transport
by a ship or aircraft operated by an enterprise of a
Territory, except when the ship or aircraft is operated
solely between places in the other Territory;
(f) the term “competent authority” means:
(i) in the case of Japan, the Minister of Finance or his
authorised representative;
(ii) in the case of Taiwan, the Minister of Finance or his
authorised representative; and
(g) the term “ national or citizen ”, in relation to a
Territory, means:
(i) any individual who:
(aa) in the case of Japan, is in a family register of
Japan in accordance with the relevant laws of Japan;
(bb) in the case of Taiwan, is entitled to possess a
passport of Taiwan;
(ii) any legal person, partnership or association deriving
its status as such from the laws in force in that
Territory.
2. As regards the application of this Agreement at any time by a
Territory, any term not defined therein shall, unless the
context otherwise requires, have the meaning that it has at
that time under the laws of that Territory for the purposes
of the taxes to which the Agreement applies, any meaning
under the applicable tax laws of that Territory prevailing
over a meaning given to the term under other laws of that
Territory.
Article 4
RESIDENT
1. For the purposes of this Agreement, the term “ resident of a
Territory ” means any person who, under the laws of that
Territory, is liable to tax therein by reason of his
domicile, residence, place of management, place of head or
main office, place of incorporation or any other criterion of
a similar nature, and also includes the administrative
authority of that Territory or any political subdivision or
local authority thereof.
2. A person is not a resident of a Territory for the purposes of
this Agreement if that person is liable to tax in that
Territory in respect only of income from sources in that
Territory. However, this provision shall not apply to
individuals who are residents of Taiwan under the taxation
laws of Taiwan, as long as they are liable to tax only in
respect of income from sources in Taiwan provided that they
are not required to include their overseas income in the
basic income in accordance with the Income Basic Tax Act of
Taiwan.
3. Where by reason of the provisions of paragraphs 1 and 2 an
individual is a resident of both Territories, then his status
shall be determined as follows:
(a) he shall be deemed to be a resident only of the Territory
in which he has a permanent home available to him; if he
has a permanent home available to him in both Territories,
he shall be deemed to be a resident only of the Territory
with which his personal and economic relations are closer
(centre of vital interests);
(b) if the Territory in which he has his centre of vital
interests cannot be determined, or if he has not a
permanent home available to him in either Territory, he
shall be deemed to be a resident only of the Territory in
which he has an habitual abode;
(c) if he has an habitual abode in both Territories or in
neither of them, he shall be deemed to be a resident only
of the Territory of which he is a national or citizen.
Where his status cannot be determined in accordance with the
provisions of subparagraphs (a) to (c), he shall not be
entitled to any reduction in or exemption from tax provided
for in this Agreement.
4. Where by reason of the provisions of paragraphs 1 and 2 a
person other than an individual is a resident of both
Territories, then it shall be deemed to be a resident only of
the Territory in which its place of head or main office is
situated.
Article 5
PERMANENT ESTABLISHMENT
1. For the purposes of this Agreement, the term “ permanent
establishment ” means a fixed place of business through
which the business of an enterprise is wholly or partly
carried on.
2. The term “permanent establishment” includes especially:
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop, and
(f) a mine, an oil or gas well, a quarry or any other place of
extraction of natural resources.
3. The term “permanent establishment” also encompasses:
(a) a building site, a construction, assembly or installation
project or supervisory activities in connection therewith,
but only if such site, project or activities last more
than six months;
(b) the furnishing of services, including consultancy
services, by an enterprise through employees or other
personnel or persons engaged by the enterprise for such
purpose, but only if activities of that nature continue
(for the same or a connected project) within a Territory
for a period or periods aggregating more than 183 days in
any twelve-month period commencing or ending in the
taxable year concerned.
4. Notwithstanding the preceding provisions of this Article, the
term “ permanent establishment ” shall be deemed not to
include:
(a) the use of facilities solely for the purpose of storage,
display or delivery of goods or merchandise belonging to
the enterprise;
(b) the maintenance of a stock of goods or merchandise
belonging to the enterprise solely for the purpose of
storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise
belonging to the enterprise solely for the purpose of
processing by another enterprise;
(d) the maintenance of a fixed place of business solely for
the purpose of purchasing goods or merchandise or of
collecting information, for the enterprise;
(e) the maintenance of a fixed place of business solely for
the purpose of carrying on, for the enterprise, any other
activity of a preparatory or auxiliary character;
(f) the maintenance of a fixed place of business solely for
any combination of activities mentioned in subparagraphs
(a) to (e), provided that the overall activity of the
fixed place of business resulting from this combination is
of a preparatory or auxiliary character.
5. Notwithstanding the provisions of paragraphs 1 and 2, where a
person - other than an agent of an independent status to whom
paragraph 6 applies - is acting on behalf of an enterprise
and has, and habitually exercises, in a Territory an
authority to conclude contracts in the name of the
enterprise, that enterprise shall be deemed to have a
permanent establishment in that Territory in respect of any
activities which that person undertakes for the enterprise,
unless the activities of such person are limited to those
mentioned in paragraph 4 which, if exercised through a fixed
place of business, would not make this fixed place of
business a permanent establishment under the provisions of
that paragraph.
6. An enterprise shall not be deemed to have a permanent
establishment in a Territory merely because it carries on
business in that Territory through a broker, general
commission agent or any other agent of an independent status,
provided that such persons are acting in the ordinary course
of their business.
7. The fact that a company which is a resident of a Territory
controls or is controlled by a company which is a resident of
the other Territory, or which carries on business in that
other Territory (whether through a permanent establishment or
otherwise), shall not of itself constitute either company a
permanent establishment of the other.
Article 6
INCOME FROM IMMOVABLE PROPERTY
1. Income derived by a resident of a Territory from immovable
property (including income from agriculture or forestry)
situated in the other Territory may be taxed in that other
Territory.
2. The term “ immovable property ” shall have the meaning
which it has under the laws of the Territory in which the
property in question is situated. The term shall in any case
include property accessory to immovable property, livestock
and equipment used in agriculture and forestry, rights to
which the provisions of general law respecting landed
property apply, usufruct of immovable property and rights to
variable or fixed payments as consideration for the working
of, or the right to work, mineral deposits, sources and other
natural resources; ships, boats and aircraft shall not be
regarded as immovable property.
3. The provisions of paragraph 1 shall apply to income derived
from the direct use, letting, or use in any other form of
immovable property.
4. The provisions of paragraphs 1 and 3 shall also apply to the
income from immovable property of an enterprise and to income
from immovable property used for the performance of
independent personal services.
Article 7
BUSINESS PROFITS
1. The profits of an enterprise of a Territory shall be taxable
only in that Territory unless the enterprise carries on
business in the other Territory through a permanent
establishment situated therein. If the enterprise carries on
business as aforesaid, the profits of the enterprise may be
taxed in that other Territory but only so much of them as is
attributable to that permanent establishment.
2. Subject to the provisions of paragraph 3, where an enterprise
of a Territory carries on business in the other Territory
through a permanent establishment situated therein, there
shall in each Territory be attributed to that permanent
establishment the profits which it might be expected to make
if it were a distinct and separate enterprise engaged in the
same or similar activities under the same or similar
conditions and dealing wholly independently with the
enterprise of which it is a permanent establishment.
3. In determining the profits of a permanent establishment,
there shall be allowed as deductions expenses which are
incurred for the purposes of the permanent establishment,
including executive and general administrative expenses so
incurred, whether in the Territory in which the permanent
establishment is situated or elsewhere.
4. Insofar as it has been customary in a Territory to determine
the profits to be attributed to a permanent establishment on
the basis of an apportionment of the total profits of the
enterprise to its various parts, nothing in paragraph 2 shall
preclude that Territory from determining the profits to be
taxed by such an apportionment as may be customary; the
method of apportionment adopted shall, however, be such that
the result shall be in accordance with the principles
contained in this Article.
5. No profits shall be attributed to a permanent establishment
by reason of the mere purchase by that permanent
establishment of goods or merchandise for the enterprise.
6. For the purposes of the preceding paragraphs of this Article,
the profits to be attributed to the permanent establishment
shall be determined by the same method year by year unless
there is good and sufficient reason to the contrary.
7. Where profits include items of income which are dealt with
separately in other Articles of this Agreement, then the
provisions of those Articles shall not be affected by the
provisions of this Article.
Article 8
SHIPPING AND AIR TRANSPORT
1. Profits from the operation of ships or aircraft in
international traffic carried on by an enterprise of a
Territory shall be taxable only in that Territory.
2. Notwithstanding the provisions of Article 2, where an
enterprise of a Territory carries on the operation of ships
or aircraft in international traffic, that enterprise, if an
enterprise of Taiwan, shall be exempt from the enterprise tax
of Japan, and, if an enterprise of Japan, shall be exempt
from any tax similar to the enterprise tax of Japan which may
hereafter be imposed in Taiwan.
3. The provisions of the preceding paragraphs of this Article
shall also apply to profits from the participation in a pool,
a joint business or an international operating agency, but
only to so much of the profits so derived as is attributable
to the participant in proportion to its share in the joint
operation.
Article 9
ASSOCIATED ENTERPRISES
1. Where
(a) an enterprise of a Territory participates directly or
indirectly in the management, control or capital of an
enterprise of the other Territory, or
(b) the same persons participate directly or indirectly in the
management, control or capital of an enterprise of a
Territory and an enterprise of the other Territory,
and in either case conditions are made or imposed between the
two enterprises in their commercial or financial relations
which differ from those which would be made between
independent enterprises, then any profits which would, but
for those conditions, have accrued to one of the enterprises,
but, by reason of those conditions, have not so accrued, may
be included in the profits of that enterprise and taxed
accordingly.
2. Where a Territory includes, in accordance with the provisions
of paragraph 1, in the profits of an enterprise of that
Territory - and taxes accordingly - profits on which an
enterprise of the other Territory has been charged to tax in
that other Territory and that other Territory agrees that the
profits so included are profits which would have accrued to
the enterprise of the first-mentioned Territory if the
conditions made between the two enterprises had been those
which would have been made between independent enterprises,
then that other Territory shall make an appropriate
adjustment to the amount of the tax charged therein on those
profits. In determining such adjustment, due regard shall be
had to the other provisions of this Agreement and the
competent authorities of the Territories shall if necessary
consult each other in accordance with Articles 24 and 25.
Article 10
DIVIDENDS
1. Dividends paid by a company which is a resident of a
Territory to a resident of the other Territory may be taxed
in that other Territory.
2. However, such dividends may also be taxed in the Territory of
which the company paying the dividends is a resident and
according to the laws of that Territory, but if the
beneficial owner of the dividends is a resident of the other
Territory, the tax so charged shall not exceed 10 per cent of
the gross amount of the dividends.
This paragraph shall not affect the taxation of the company
in respect of the profits out of which the dividends are
paid.
3. The term “ dividends ” as used in this Article means income
from shares or other rights, not being debt-claims,
participating in profits, as well as income which is
subjected to the same taxation treatment as income from
shares by the laws of the Territory of which the company
making the distribution is a resident.
4. The provisions of paragraphs 1 and 2 shall not apply if the
beneficial owner of the dividends, being a resident of a
Territory, carries on business in the other Territory of
which the company paying the dividends is a resident through
a permanent establishment situated therein, or performs in
that other Territory independent personal services from a
fixed base situated therein, and the holding in respect of
which the dividends are paid is effectively connected with
such permanent establishment or fixed base. In such case the
provisions of Article 7 or 14, as the case may be, shall
apply.
5. Where a company which is a resident of a Territory derives
profits or income from the other Territory, that other
Territory may not impose any tax on the dividends paid by the
company, except insofar as such dividends are paid to a
resident of that other Territory or insofar as the holding in
respect of which the dividends are paid is effectively
connected with a permanent establishment or fixed base
situated in that other Territory, nor subject the company ’
s undistributed profits to a tax on the company ’ s
undistributed profits, even if the dividends paid or the
undistributed profits consist wholly or partly of profits or
income arising in such other Territory.
Article 11
INTEREST
1. Interest arising in a Territory and paid to a resident of the
other Territory may be taxed in that other Territory.
2. However, such interest may also be taxed in the Territory in
which it arises and according to the laws of that Territory,
but if the beneficial owner of the interest is a resident of
the other Territory, the tax so charged shall not exceed 10
per cent of the gross amount of the interest.
3. Notwithstanding the provisions of paragraph 2, interest
arising in a Territory shall be taxable only in the other
Territory if:
(a) the interest is beneficially owned by the administrative
authority of that other Territory, a political subdivision
or local authority thereof, the central bank of that other
Territory or any financial institution which aims at
promoting export and is wholly owned by the administrative
authority of that other Territory or a political
subdivision or local authority thereof;
(b) the interest is beneficially owned by a resident of that
other Territory with respect to debt-claims guaranteed,
insured or indirectly financed by any financial
institution which aims at promoting export and is wholly
owned by the administrative authority of that other
Territory or a political subdivision or local authority
thereof.
4. For the purposes of paragraph 3, the terms “ the central
bank ” and “ financial institution which aims at promoting
export and is wholly owned by the administrative authority of
that other Territory or a political subdivision or local
authority thereof ” mean:
(a) in the case of Japan:
(i) the Bank of Japan;
(ii) the Japan Bank for International Cooperation;
(iii) the Nippon Export and Investment Insurance;
(b) in the case of Taiwan:
(i) the Central Bank;
(ii) the Export-Import Bank; and
(c) such other similar financial institution the capital of
which is wholly owned by the administrative authority of a
Territory or a political subdivision or local authority
thereof as may be agreed upon from time to time between
the Association of East Asian Relations and the
Interchange Association.
5. The term “ interest ” as used in this Article means income
from debt-claims of every kind, whether or not secured by
mortgage and whether or not carrying a right to participate
in the debtor ’ s profits, and in particular, income from
government securities and income from bonds or debentures,
including premiums and prizes attaching to such securities,
bonds or debentures, and all other income that is subjected
to the same taxation treatment as income from money lent by
the tax laws of the Territory in which the income arises.
Income dealt with in Article 10, penalty charges for late
payment and income from debt-claims arising as a part of the
sale on credit of equipment, merchandise or service shall not
be regarded as interest for the purposes of this Article.
6. The provisions of paragraphs 1, 2 and 3 shall not apply if
the beneficial owner of the interest, being a resident of a
Territory, carries on business in the other Territory in
which the interest arises through a permanent establishment
situated therein, or performs in that other Territory
independent personal services from a fixed base situated
therein, and the debt-claim in respect of which the interest
is paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of
Article 7 or 14, as the case may be, shall apply.
7. Interest shall be deemed to arise in a Territory when the
payer is a resident of that Territory. Where, however, the
person paying the interest, whether he is a resident of a
Territory or not, has in a Territory a permanent
establishment or a fixed base in connection with which the
indebtedness on which the interest is paid was incurred, and
such interest is borne by such permanent establishment or
fixed base, then such interest shall be deemed to arise in
the Territory in which the permanent establishment or fixed
base is situated.
8. Where, by reason of a special relationship between the payer
and the beneficial owner or between both of them and some
other person, the amount of the interest, having regard to
the debt-claim for which it is paid, exceeds the amount which
would have been agreed upon by the payer and the beneficial
owner in the absence of such relationship, the provisions of
this Article shall apply only to the last-mentioned amount.
In such case, the excess part of the payments shall remain
taxable according to the laws of each Territory, due regard
being had to the other provisions of this Agreement.
Article 12
ROYALTIES
1. Royalties arising in a Territory and paid to a resident of
the other Territory may be taxed in that other Territory.
2. However, such royalties may also be taxed in the Territory in
which they arise and according to the laws of that Territory,
but if the beneficial owner of the royalties is a resident of
the other Territory, the tax so charged shall not exceed 10
per cent of the gross amount of the royalties.
3. The term “ royalties ” as used in this Article means
payments of any kind received as a consideration for the use
of, or the right to use, any copyright of literary, artistic
or scientific work including cinematograph films and films or
tapes for television or radio broadcasting, any patent, trade
mark, design or model, plan, secret formula or process, or
for information concerning industrial, commercial or
scientific experience.
4. The provisions of paragraphs 1 and 2 shall not apply if the
beneficial owner of the royalties, being a resident of a
Territory, carries on business in the other Territory in
which the royalties arise through a permanent establishment
situated therein, or performs in that other Territory
independent personal services from a fixed base situated
therein, and the right or property in respect of which the
royalties are paid is effectively connected with such
permanent establishment or fixed base. In such case the
provisions of Article 7 or 14, as the case may be, shall
apply.
5. Royalties shall be deemed to arise in a Territory when the
payer is a resident of that Territory. Where, however, the
person paying the royalties, whether he is a resident of a
Territory or not, has in a Territory a permanent
establishment or a fixed base in connection with which the
liability to pay the royalties was incurred, and such
royalties are borne by such permanent establishment or fixed
base, then such royalties shall be deemed to arise in the
Territory in which the permanent establishment or fixed base
is situated.
6. Where, by reason of a special relationship between the payer
and the beneficial owner or between both of them and some
other person, the amount of the royalties, having regard to
the use, right or information for which they are paid,
exceeds the amount which would have been agreed upon by the
payer and the beneficial owner in the absence of such
relationship, the provisions of this Article shall apply only
to the last-mentioned amount. In such case, the excess part
of the payments shall remain taxable according to the laws of
each Territory, due regard being had to the other provisions
of this Agreement.
Article 13
CAPITAL GAINS
1. Gains derived by a resident of a Territory from the
alienation of immovable property referred to in Article 6 and
situated in the other Territory may be taxed in that other
Territory.
2. Gains from the alienation of any property, other than
immovable property, forming part of the business property of
a permanent establishment which an enterprise of a Territory
has in the other Territory or of any property, other than
immovable property, pertaining to a fixed base available to a
resident of a Territory in the other Territory for the
purpose of performing independent personal services,
including such gains from the alienation of such a permanent
establishment (alone or with the whole enterprise) or of such
fixed base, may be taxed in that other Territory.
3. Gains derived by an enterprise of a Territory from the
alienation of ships or aircraft operated by that enterprise
in international traffic or any property, other than
immovable property, pertaining to the operation of such ships
or aircraft shall be taxable only in that Territory.
4. Gains derived by a resident of a Territory from the
alienation of shares in a company or of interests in a
partnership or trust deriving at least 50 per cent of the
value of its property directly or indirectly from immovable
property referred to in Article 6 and situated in the other
Territory may be taxed in that other Territory.
5. Gains from the alienation of any property other than that
referred to in the preceding paragraphs of this Article shall
be taxable only in the Territory of which the alienator is a
resident.
Article 14
INDEPENDENT PERSONAL SERVICES
1. Income derived by a resident of a Territory in respect of
professional services or other activities of an independent
character shall be taxable only in that Territory except in
the following circumstances, when such income may also be
taxed in the other Territory:
(a) if he has a fixed base regularly available to him in the
other Territory for the purpose of performing his
activities; in that case, only so much of the income as is
attributable to that fixed base may be taxed in that other
Territory; or
(b) if his stay in the Territory is for a period or periods
amounting to or exceeding in the aggregate 183 days in any
twelve-month period commencing or ending in the calendar
year concerned; in that case, only so much of the income
as is derived from his activities performed in that other
Territory may be taxed in that other Territory.
2. The term “ professional services ” includes especially
independent scientific, literary, artistic, educational or
teaching activities as well as the independent activities of
physicians, lawyers, engineers, architects, dentists and
accountants.
Article 15
DEPENDENT PERSONAL SERVICES
1. Subject to the provisions of Articles 16, 18 and 19,
salaries, wages and other similar remuneration derived by a
resident of a Territory in respect of an employment shall be
taxable only in that Territory unless the employment is
exercised in the other Territory. If the employment is so
exercised, such remuneration as is derived therefrom may be
taxed in that other Territory.
2. Notwithstanding the provisions of paragraph 1, remuneration
derived by a resident of a Territory in respect of an
employment exercised in the other Territory shall be taxable
only in the first-mentioned Territory if:
(a) the recipient is present in that other Territory for a
period or periods not exceeding in the aggregate 183 days
in any twelve-month period commencing or ending in the
calendar year concerned, and
(b) the remuneration is paid by, or on behalf of, an employer
who is not a resident of that other Territory, and
(c) the remuneration is not borne by a permanent establishment
or a fixed base which the employer has in that other
Territory.
3. Notwithstanding the preceding provisions of this Article,
remuneration derived in respect of an employment exercised
aboard a ship or aircraft operated in international traffic
by an enterprise of a Territory may be taxed in that
Territory.
Article 16
DIRECTORS’ FEES
Directors ’ fees and other similar payments derived by a
resident of a Territory in his capacity as a member of the board
of directors of a company which is a resident of the other
Territory may be taxed in that other Territory.
Article 17
ENTERTAINERS AND SPORTSPERSONS
1. Notwithstanding the provisions of Articles 14 and 15, income
derived by a resident of a Territory as an entertainer, such
as a theatre, motion picture, radio or television artiste, or
a musician, or as a sportsperson, from his personal
activities as such exercised in the other Territory, may be
taxed in that other Territory.
2. Where income in respect of personal activities exercised by
an entertainer or a sportsperson in his capacity as such
accrues not to the entertainer or sportsperson himself but to
another person, that income may, notwithstanding the
provisions of Articles 7, 14 and 15, be taxed in the
Territory in which the activities of the entertainer or
sportsperson are exercised.
Article 18
PENSIONS
Subject to the provisions of paragraph 2 of Article 19, pensions
and other similar remuneration arising in a Territory and paid
to a resident of the other Territory may be taxed in the
first-mentioned Territory.
Article 19
PUBLIC SERVICE
1. (a) Salaries, wages and other similar remuneration paid by
the administrative authority of a Territory or a
political subdivision or local authority thereof to an
individual in respect of services rendered to that
administrative authority or political subdivision or
local authority shall be taxable only in that Territory.
(b) However, such salaries, wages and other similar
remuneration shall be taxable only in the other Territory
if the services are rendered in that other Territory and
the individual is a resident of that other Territory who:
(i) is a national or citizen of that other Territory; or
(ii) did not become a resident of that other Territory
solely for the purpose of rendering the services.
2. (a) Notwithstanding the provisions of paragraph 1, pensions
and other similar remuneration paid by, or out of funds
which are created by or to which contributions are made
by, the administrative authority of a Territory or a
political subdivision or local authority thereof to an
individual in respect of services rendered to that
administrative authority or political subdivision or
local authority shall be taxable only in that Territory.
(b) However, such pensions and other similar remuneration
shall be taxable only in the other Territory if the
individual is a resident of, and a national or citizen
of, that other Territory.
3. The provisions of Articles 15, 16, 17 and 18 shall apply to
salaries, wages, pensions, and other similar remuneration in
respect of services rendered in connection with a business
carried on by the administrative authority of a Territory or
a political subdivision or local authority thereof.
Article 20
STUDENTS
Payments which a student or business apprentice who is or was
immediately before visiting a Territory a resident of the other
Territory and who is present in the first-mentioned Territory
solely for the purpose of his education or training receives for
the purpose of his maintenance, education or training shall not
be taxed in the first-mentioned Territory, provided that such
payments arise from sources outside the first-mentioned
Territory. The exemption provided by this Article shall apply to
a business apprentice only for a period not exceeding two years
from the date on which he first begins his training in the
first-mentioned Territory.
Article 21
OTHER INCOME
1. Items of income of a resident of a Territory, wherever
arising, not dealt with in the foregoing Articles of this
Agreement shall be taxable only in that Territory.
2. The provisions of paragraph 1 shall not apply to income,
other than income from immovable property as defined in
paragraph 2 of Article 6, if the recipient of such income,
being a resident of a Territory, carries on business in the
other Territory through a permanent establishment situated
therein, or performs in that other Territory independent
personal service from a fixed base situated therein, and the
right or property in respect of which the income is paid is
effectively connected with such permanent establishment or
fixed base. In such case the provisions of Article 7 or 14,
as the case may be, shall apply.
3. Notwithstanding the provisions of paragraphs 1 and 2 of this
Article, items of income of a resident of a Territory not
dealt with in the foregoing Articles of this Agreement and
arising in the other Territory may also be taxed in that
other Territory.
Article 22
ELIMINATION OF DOUBLE TAXATION
1. Subject to the provisions of the laws of Japan regarding the
allowance as a credit against tax referred to in paragraph 1
(a) of Article 2 (hereinafter referred to as the “ Japanese
tax ” )of tax payable outside Japan, where a resident of
Japan derives income from Taiwan which may be taxed in Taiwan
in accordance with the provisions of this Agreement, the
amount of tax payable in Taiwan in respect of that income
shall be allowed as a credit against the Japanese tax on that
resident. The amount of credit, however, shall not exceed the
amount of the Japanese tax which is appropriate to that
income.
2. Subject to the provisions of the laws of Taiwan, where a
resident of Taiwan derives income from Japan, the amount of
tax on that income paid in Japan (but excluding, in the case
of a dividend, tax paid in respect of the profits out of
which the dividend is paid) and in accordance with the
provisions of this Agreement, shall be credited against the
tax levied in Taiwan imposed on that resident. The amount of
credit, however, shall not exceed the amount of the tax in
Taiwan on that income computed in accordance with its
taxation laws and regulations.
Article 23
NON-DISCRIMINATION
1. Nationals or citizens of a Territory shall not be subjected
in the other Territory to any taxation or any requirement
connected therewith, which is other or more burdensome than
the taxation and connected requirements to which nationals or
citizens of that other Territory in the same circumstances,
in particular with respect to residence, are or may be
subjected. This provision shall, notwithstanding the
provisions of Article 1, also apply to persons who are not
residents of one or both of the Territories.
2. The taxation on a permanent establishment which an enterprise
of a Territory has in the other Territory shall not be less
favourably levied in that other Territory than the taxation
levied on enterprises of that other Territory carrying on the
same activities. This provision shall not be construed as
obliging a Territory to grant to residents of the other
Territory any personal allowances, reliefs and reductions for
taxation purposes on account of civil status or family
responsibilities which it grants to its own residents.
3. Except where the provisions of paragraph 1 of Article 9,
paragraph 8 of Article 11, or paragraph 6 of Article 12,
apply, interest, royalties and other disbursements paid by an
enterprise of a Territory to a resident of the other
Territory shall, for the purposes of determining the taxable
profits of such enterprise, be deductible under the same
conditions as if they had been paid to a resident of the
first-mentioned Territory.
4. Enterprises of a Territory, the capital of which is wholly or
partly owned or controlled, directly or indirectly, by one or
more residents of the other Territory shall not be subjected
in the first-mentioned Territory to any taxation or any
requirement connected therewith which is other or more
burdensome than the taxation and connected requirements to
which other similar enterprises of the first-mentioned
Territory are or may be subjected.
5. The provisions of this Article shall apply to taxes which are
the subject of this Agreement.
Article 24
MUTUAL AGREEMENT PROCEDURE
1. Where a person considers that the actions of one or both of
the Territories result or will result for him in taxation not
in accordance with the provisions of this Agreement, he may,
irrespective of the remedies provided by the law of those
Territories, present his case to the competent authority of
the Territory of which he is a resident or, if his case comes
under paragraph 1 of Article 23, to that of the Territory of
which he is a national or citizen. The case must be presented
within three years from the first notification of the action
resulting in taxation not in accordance with the provisions
of the Agreement.
2. The competent authority shall endeavour, if the objection
appears to it to be justified and if it is not itself able to
arrive at a satisfactory solution, to resolve the case by
mutual agreement with the competent authority of the other
Territory, with a view to the avoidance of taxation which is
not in accordance with the provisions of this Agreement. Any
agreement reached shall be implemented notwithstanding any
time limits in the law of the Territories.
3. The competent authorities of the Territories shall endeavour
to resolve by mutual agreement any difficulties or doubts
arising as to the interpretation or application of this
Agreement.
Article 25
EXCHANGE OF INFORMATION
1. The competent authorities of the Territories shall exchange
such information as is foreseeably relevant for carrying out
the provisions of this Agreement or to the administration or
enforcement of the law of the respective Territories
concerning taxes of every kind and description imposed on
behalf of the Territories, or of their political subdivisions
or local authorities, insofar as the taxation thereunder is
not contrary to the Agreement. The exchange of information is
not restricted by Articles 1 and 2.
2. Any information received under paragraph 1 by a Territory
shall be treated as secret in the same manner as information
obtained under the law of the respective Territories and
shall be disclosed only to persons or authorities (including
courts and administrative bodies) concerned with the
assessment or collection of, the enforcement in respect of,
or the determination of appeals in relation to the taxes
referred to in paragraph 1, or the oversight of the above.
Such persons or authorities shall use the information only
for such purposes and shall not use the information for the
purposes of criminal tax matters. They may disclose the
information in public court proceedings or in judicial
decisions.
3. In no case shall the provisions of paragraphs 1 and 2 be
construed so as to impose on a Territory the obligation:
(a) to carry out administrative measures at variance with the
laws and administrative practice of that or of the other
Territory;
(b) to supply information which is not obtainable under the
laws or in the normal course of the administration of that
or of the other Territory;
(c) to supply information which would disclose any trade,
business, industrial, commercial or professional secret or
trade process, or information the disclosure of which
would be contrary to public policy; or
(d) to provide information that would reveal confidential
communications between a client and an attorney, solicitor
or other admitted legal representative where such
communications are:
(i) produced for the purposes of seeking or providing legal
advice; or
(ii) produced for the purposes of use in existing or
contemplated legal proceedings.
Article 26
LIMITATION OF RELIEF
Notwithstanding the provisions of any other Article of this
Agreement, a resident of a Territory shall not receive the
benefit of any reduction in or exemption from tax provided for
in the Agreement in the other Territory if the conduct of
operations by such resident or a person connected with such
resident had for the main purpose or one of the main purposes to
obtain the benefit of the Agreement.
Article 27
RECIPROCITY
A Territory is not obliged to grant the benefit of any reduction
in or exemption from tax provided for in this Agreement to a
resident of the other Territory following the finding of the
non-application of equivalent benefit provided for in the
Agreement in that other Territory.
Article 28
ENTRY INTO FORCE
1. The Association of East Asian Relations and the Interchange
Association shall notify each other in writing about the
completion of the procedures required for the entry into
force of this Agreement in their respective Territories. The
Agreement shall enter into force on the date on which the
later of these written notifications is received.
2. This Agreement shall have effect:
(a) in the case of Japan:
(i) with respect to taxes levied on the basis of a taxable
year, for taxes for any taxable years beginning on or
after 1st January of the calendar year next following
the year in which the Agreement enters into force;
(ii) with respect to taxes not levied on the basis of a
taxable year, for taxes levied on or after 1st January
of the calendar year next following the year in which
the Agreement enters into force;
(b) in the case of Taiwan:
(i) in respect of taxes withheld at source, to income
payable on or after 1st January of the calendar year
next following the year in which the Agreement enters
into force;
(ii) in respect of taxes on income which are not withheld at
source, to the income for any taxable year beginning on
or after 1st January of the calendar year next
following the year in which the Agreement enters into
force; and
(c) in respect of Article 25, to information that relates to
taxes for taxable years beginning, or taxes levied, on or
after 1st January of the calendar year next following the
year in which the Agreement enters into force.
Article 29
TERMINATION
1. This Agreement shall remain in force until terminated by
either of the Association of East Asian Relations and the
Interchange Association. Either Association may terminate the
Agreement by giving notice of termination at least six months
before the end of any calendar year beginning after the
expiration of a period of five years from the date of the
entry into force of the Agreement.
2. This Agreement shall cease to have effect:
(a) in the case of Japan:
(i) with respect to taxes levied on the basis of a taxable
year, for taxes for any taxable years beginning on or
after 1st January of the calendar year next following
the year in which the notice of termination is given;
(ii) with respect to taxes not levied on the basis of a
taxable year, for taxes levied on or after 1st January
of the calendar year next following the year in which
the notice of termination is given; and
(b) in the case of Taiwan:
(i) in respect of taxes withheld at source, to the income
payable on or after 1st January of the calendar year
next following the year in which the notice of
termination is given;
(ii) in respect of taxes on income which are not withheld at
source, to the income for any taxable year beginning on
or after 1st January of the calendar year next
following the year in which the notice of termination
is given.
This Agreement has been made in the English language.
In witness whereof the representative of the Association of East
Asian Relations and the representative of the Interchange
Association signed this Agreement in Tokyo, on November 26,
2015.
FOR THE FOR THE
ASSOCIATION OF INTERCHANGE
EAST ASIAN ASSOCIATION
RELATIONS
__________________ __________________
LEE Chia-chin OHASHI Mitsuo
Chairman Chairman