S.I. No. 259/1974 - Double Taxation Relief (Taxes on Income) (Japan) Order, 1974.

1. With reference to Article 17 of the said Convention, in relation to remuneration of a director of a company derived from the company in respect of the discharge of day-to-day functions of a managerial or technical nature, the provisions of Article 16 shall apply as if the remuneration were remuneration of an employee in respect of an employment and as if references to "employer" were references to the company.

2. With reference to paragraph 2 of Article 20 of the said Convention, the expression "out of funds created by" covers the situation where the pension is not paid directly by a Contracting State, but out of separate funds which are created by that Contracting State or a local authority thereof or to which contributions are made by that Contracting State or a local authority thereof.

I have further the honour to request Your Excellency to be good enough to confirm the foregoing understandings on behalf of the Government of Japan."

I have further the honour to confirm, on behalf of the Government of Japan, the understandings contained in Your Excellency's Note.

I avail myself of this opportunity to renew to Your Excellency the assurance of my highest consideration.

MASAYOSHI OHIRA,

Minister for Foreign Affairs.

His Excellency,

Mr. Masayoshi Ohira,

Minister for Foreign Affairs

of Japan.

Tokyo, January 18, 1974.

Excellency,

I have the honour to refer to paragraph 2 (

c

) of Article 24 of the Convention between Ireland and Japan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income signed today and to propose, on behalf of the Government of Ireland, that the two Governments shall agree that "the special incentive measures designed to promote economic development in Ireland effective on the date of signature of this Convention" referred to in the said paragraph are those set forth in the following provisions of Acts of Ireland

(

a

) The

Finance (Profits of Certain Mines) (Temporary Relief from Taxation) Act, 1956

(No. 8 of 1956), as amended, relating to relief from corporation profits tax on profits from certain mining operations;

(

b

) Part III of the

Finance (Miscellaneous Provisions) Act, 1956

(No. 47 of 1956), as amended, relating to relief from corporation profits tax on profits from export of certain goods;

(

c

) Part II of the

Finance (Miscellaneous Provisions) Act, 1958

(No. 28 of 1958), as amended, relating to relief from corporation profits tax on profits from trading within Shannon Airport; and

(

d

) Part XXV of the

Income Tax Act, 1967

(No. 6 of 1967), as amended, relating to relief from income tax on profits from certain mining operations, export of certain goods and trading within Shannon Airport.

I have further the honour to propose that the present Note and Your Excellency's reply confirming the acceptance by the Government of Japan of the above proposal shall be regarded as constituting an agreement between the two Governments under paragraph 2 (

c

) of Article 24 of the said Convention.

I avail myself of this opportunity to renew to Your Excellency the assurance of my highest consideration.

CHRISTOPHER P. FOGARTY,

Ambassador Extraordinary

and Plenipotentiary of

Ireland to Japan.

His Excellency,

Mr. Christopher P. Fogarty,

Ambassador Extraordinary and

Plenipotentiary of Ireland

to Japan.

Tokyo, January 18, 1974.

Excellency,

I have the honour to acknowledge the receipt of Your Excellency's Note of today's date which reads as follows

"I have the honour to refer to paragraph 2 (

c

) of Article 24 of the Convention between Ireland and Japan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income signed today and to propose, on behalf of the Government of Ireland, that the two Governments shall agree that "the special incentive measures designed to promote economic development in Ireland effective on the date of signature of this Convention" referred to in the said paragraph are those set forth in the following provisions of Acts of Ireland

(

a

) The

Finance (Profits of Certain Mines) (Temporary Relief from Taxation) Act, 1956

(No. 8 of 1956), as amended, relating to relief from corporation profits tax on profits from certain mining operations;

(

b

) Part III of the

Finance (Miscellaneous Provisions) Act, 1956

(No. 47 of 1956), as amended, relating to relief from corporation profits tax on profits from export of certain goods;

(

c

) Part II of the

Finance (Miscellaneous Provisions) Act, 1958

(No. 28 of 1958), as amended, relating to relief from corporation profits tax on profits from trading within Shannon Airport; and

(

d

) Part XXV of the

Income Tax Act, 1967

(No. 6 of 1967), as amended, relating to relief from income tax on profits from certain mining operations, export of certain goods and trading within Shannon Airport.

I have further the honour to propose that the present Note and Your Excellency's reply confirming the acceptance by the Government of Japan of the above proposal shall be regarded as constituting an agreement between the two Governments under paragraph 2 (

c

) of Article 24 of the said Convention."

I have further the honour to confirm that the Government of Japan accepts the proposal contained in Your Excellency's Note and to agree that the same and the present reply shall be regarded as constituting an agreement between the two Governments under paragraph 2 (

c

) of Article 24 of the said Convention.

I avail myself of this opportunity to renew to Your Excellency the assurance of my highest consideration.

MASAYOSHI OHIRA,

Minister for Foreign Affairs.

GIVEN under the Official Seal of the Government this 27th day of

August, 1974.

BRENDAN CORISH,

Tánaiste.

EXPLANATORY NOTE.

This Order gives the force of law to the Convention with Japan as set out in the Schedule.

Under the Convention certain classes of income derived from one country by a resident of the other country are (subject to certain conditions) to be exempt from tax in the former country. These classes are trading profits not arising through a " permanent establishment " [Article 8], shipping and air transport profits [Article 9], gains from property [Article 14], profits from professional or other independent activities not attributable to a "fixed base" [Article 15], pensions (other than Government pensions) and annuities [Article 19], and certain income of temporary residents [Articles 21 and 22]. Government salaries and pensions are normally to be taxed by the paying country only [Article 20].

In general, dividends paid by Irish companies to residents of Japan are to be exempted from Irish sur-tax; the rate of withholding tax on dividends payable by Japanese companies to residents of Ireland is not to exceed 15 per cent, and where the Irish resident is a company owning at least 25 per cent of the entire voting shares of the Japanese company is not to exceed 10 per cent [Article 11].

Income from interest and royalties arising in one country and payable to a resident of the other country may be taxed in the arising country at a rate not exceeding 10 per cent [Articles 12 and 13]. Where, under the Convention, income derived from one country by a person resident in the other country may be taken into account for tax purposes in both countries, a measure of double taxation relief is to be granted by the country of residence. In Ireland relief is to be given by allowing against the Irish tax payable on Japanese income, a credit in respect of the Japanese tax which the income has borne including generally, in the case of dividends, an appropriate proportion of the Japanese tax on the profits out of which the dividends are paid. In Japan credit will be allowed to a resident of Japan against Japanese tax charged on income arising in Ireland (other than a dividend), in respect of the Irish tax payable on that income. The credit is not to exceed the Japanese tax appropriate to that income. Where a Japanese company owning not less than 25 per cent of the voting shares of an Irish company or of the total issued shares of that company, receives a dividend from the Irish company, the credit allowable will take into account the Irish tax payable by that company on its profits. Further, where the Irish tax has been relieved or eliminated under the incentive relief schemes promoted by Ireland the Irish company paying the dividend shall be deemed to have paid the Irish tax which would have been paid if the Irish tax had not been relieved or reduced under the incentive tax provisions [Article 24].

Each country is to treat residents of the other country, in the matter of personal allowances and reliefs for tax purposes, in the same way as it treats its own non-resident citizens or nationals [Article 25]. Provision is made for safeguarding nationals and enterprises of one country against discriminatory taxation in the other [Article 26], for consultation between the two revenue authorities for the purpose of resolving doubts or difficulties as to the interpretation or application of the Convention [Article 27], and for the exchange of information necessary to give effect to the Convention [Article 28].

The Convention is to enter into force on the thirtieth day after the date of the exchange of instruments of ratification [Article 30].

3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of this Convention. They may also consult together for the elimination of double taxation in cases not provided for in this Convention.

4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs.

ARTICLE 28

5. In this Article the term "taxation" means taxes of every kind and description.

ARTICLE 27

6. Where, owing to a special relationship between the payer and the recipient or between both of them and some other person, the amount of the interest paid, 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 recipient in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention.

ARTICLE 13

7. Where profits include items of income which are dealt with separately in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article.

ARTICLE 9

S.I. No. 259 of 1974.

DOUBLE TAXATION RELIEF (TAXES ON INCOME) (JAPAN) ORDER, 1974.

WHEREAS it is enacted by

section 361

(1) of the

Income Tax Act, 1967

(No. 6 of 1967), that if the Government by order declare that arrangements specified in the order have been made with the government of any territory outside the State in relation to affording relief from double taxation in respect of income tax, sur-tax or corporation profits tax and any taxes of a similar character, imposed by the laws of the State or by the laws of that territory, and that it is expedient that those arrangements should have the force of law, the arrangements shall, notwithstanding anything in any enactment, have the force of law

AND WHEREAS it is further enacted by section 361 (6) of that Act that where such an order is proposed to be made, a draft thereof shall be laid before Dáil Éireann and the order shall not be made until a resolution approving of the draft has been passed by Dáil Éireann

AND WHEREAS a draft of this Order has been laid before Dáil Éireann and a resolution approving of the draft has been passed by Dáil Éireann

NOW, the Government, in exercise of the powers conferred on them by

section 361

of the

Income Tax Act, 1967

(No. 6 of 1967), hereby order as follows