Double Taxation Relief Manual: Guidance by country: Japan: Interest
Interest arising in Japan and beneficially owned by a United Kingdom resident may be taxed in Japan at a rate of 10 per cent (Article 11(2)).
Interest arising in Japan and paid to a United Kingdom resident is, however, exempt from Japanese tax if the beneficial owner is:
- the United Kingdom government or the Bank of England (or the loan is guaranteed by the government or the Bank of England)
- a bank
- an insurance company
- a securities dealer
- other financial enterprises (subject to various provisos)
- a pension fund or scheme
- or the interest arises in connection with the sale on credit of equipment or merchandise.
Where the interest is effectively connected with a permanent establishment which the United Kingdom resident recipient has in Japan, the provisions of Article 7 will apply.