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Estonia and Japan sign a convention for the elimination of double taxation

30. August 2017 - 14:09

On Wednesday, Finance Minister Toomas Tõniste and Ambassador of Japan to the Republic of Estonia Yoko Yanagisawa signed the Convention for the elimination of double taxation with respect to taxes on income and the prevention of tax evasion and avoidance in Tallinn.
“Japan, as one of the biggest economies of the world, is a very attractive market for Estonian companies. Estonian companies have already concluded detailed cooperation agreements with their counterparts in Japan, such as in dairy and in IT sectors,” said Minister of Finance Toomas Tõniste. “The Convention for elimination of double taxation will promote further investments and enhance cooperation between companies in both countries,” added minister.
The Convention for elimination of double taxation creates conditions and gives certainty for mutual investments and free movement of people, goods and services. The Convention clarifies the taxing rights of both countries on all forms of income flows arising from cross-border business activities, and enables more favourable tax treatment compared to the domestic law. Furthermore, the Convention provides the legal basis for eliminating international double taxation that arises in interaction of tax systems of two states.
According to the statistics of Eesti Pank (the Central bank of Estonia), foreign direct investment flows from Japan to Estonia reached 18.2 million euros as of 31 March 2017, Estonian direct investments to Japan amounted only to 0.1 million euros.
The full text of the Convention signed between Estonia and Japan is available on the website of the Ministry of Finance. The Convention will enter into force after its ratification by both countries and the exchange of diplomatic notes.
The double tax conventions concluded by Estonia largely follow the OECD Model Convention and Estonia has 57 double tax treaties in force. Among the East Asian countries, Estonia has effective double tax conventions with China and South Korea. The treaty text of the Convention for the elimination of double taxation between Estonia and Japan was agreed in principle on 16 March 2017 in Tokyo.