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CONVENTION BETWEENJAPAN AND THE REPUBLIC OF CHILE
FOR THE ELIMINATION OF DOUBLE TAXATIONWITH RESPECT TO TAXES ON INCOME
AND THE PREVENTION OF TAX EVASION
AND AVOIDANCECONVENTION BETWEENJAPAN AND THE REPUBLIC OF CHILE
FOR THE ELIMINATION OF DOUBLE TAXATIONWITH RESPECT TO TAXES ON INCOME
AND THE PREVENTION OF TAX EVASION
AND AVOIDANCEJapan and the Republic of Chile,
Desiring to further develop their economic
relationship and to enhance their cooperation in tax
matters,
Intending to conclude a Convention for the eliminationof double taxation with respect to taxes on income without
creating opportunities for non-taxation or reduced taxation
through tax evasion or avoidance (including through treatyshopping arrangements aimed at obtaining reliefs provided
in this Convention for the indirect benefit of residents ofthird States),
Have agreed as follows:
Article 1
PERSONS COVERED1.
This Convention shall apply to persons who areresidents of one or both of the Contracting States.
2.
For the purposes of this Convention, income derived byor through an entity or arrangement that is treated aswholly or partly fiscally transparent under the tax law ofeither Contracting State shall be considered to be incomeof a resident of a Contracting State but only to the extent
that the income is treated, for the purposes of taxation bythat Contracting State, as the income of a resident of thatContracting State. In no case shall the provisions of thisparagraph be construed so as to restrict in any way aContracting State’s right to tax the residents of thatContracting State. For the purposes of this paragraph, theterm “fiscally transparent” means situations where, under
the law of a Contracting State, income or part thereof ofan entity or arrangement is not taxed at the level of theentity or arrangement but at the level of the persons who
have an interest in that entity or arrangement as if that
income or part thereof were directly derived by such
persons at the time when that income or part thereof isrealised whether or not that income or part thereof is
distributed by that entity or arrangement to such persons.

- 1 -Article 2
TAXES COVERED1.
The existing taxes to which this Convention shallapply 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; and(v)

the local inhabitant taxes(hereinafter referred to as “Japanese tax”); and(b)in the case of Chile:the taxes imposed under the Income Tax Act, “Leysobre Impuesto a la Renta” (hereinafter referred
to as “Chilean tax”).

2.
This Convention shall apply also to any identical or
substantially similar taxes that are imposed after the dateof signature of the Convention in addition to, or in placeof, the existing taxes. The competent authorities of theContracting States shall notify each other of any
significant changes that have been made in their taxation
laws.
Article 3
GENERAL DEFINITIONS
1.
For the purposes of this Convention, unless thecontext otherwise requires:(a)the term “Japan”, when used in a geographicalsense, means all the territory of Japan,
including its territorial sea, in which the laws
relating to Japanese tax are in force, and all
the area beyond its territorial sea, including
the seabed and subsoil thereof, over which Japan
has sovereign rights in accordance withinternational law and in which the laws relating
to Japanese tax are in force;

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(b)

the term “Chile” means the Republic of Chile and,
when used in a geographical sense, means all theterritory of the Republic of Chile, including its
territorial sea, and all the area beyond its
territorial sea, including the seabed and subsoil
thereof, over which the Republic of Chile has
sovereign rights in accordance with international
law;

(c)

the terms “a Contracting State” and “the other
Contracting State” mean Japan or Chile, as thecontext requires;(d)the term “person” includes an individual, acompany and any other body of persons;(e)the term “company” means any body corporate or
any entity that is treated as a body corporate
for tax purposes;(f)the terms “enterprise of a Contracting State” and“enterprise of the other Contracting State” mean
respectively an enterprise carried on by aresident of a Contracting State and an enterprise
carried on by a resident of the other Contracting
State;(g)the term “international traffic” means any
transport by a ship or aircraft operated by anenterprise of a Contracting State, except when
the ship or aircraft is operated solely between
places in the other Contracting State;(h)the term “competent authority” means:

(i)

(i)

in the case of Japan, the Minister ofFinance or his authorised representative;
and

(ii)

in the case of Chile, the Minister ofFinance, the Commissioner of the Revenue
Service or their authorised representatives;

the term “national”, in relation to a Contracting
State, means:(i)

any individual possessing the nationality ofthat Contracting State; and(ii)

any legal person, partnership or association
deriving its status as such from the laws inforce in that Contracting State; and

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(j)

the term “pension fund” means any person that:(i)was constituted and is operated in aContracting State exclusively or almost
exclusively to administer or provide pension
or other similar remuneration under thesocial security legislation of thatContracting State recognised as such for tax
purposes in that Contracting State,
primarily for the benefit of residents ofthat Contracting State; or(ii)

was constituted and is operated to invest
funds for the benefit of persons referred toin clause (i), provided that substantially
all the income of that person is derived
from investments made for the benefit ofthese persons.

2.
As regards the application of this Convention at any
time by a Contracting State, any term not defined thereinshall, unless the context otherwise requires, have themeaning that it has at that time under the laws of thatContracting State for the purposes of the taxes to which
the Convention applies, any meaning under the applicable
tax laws of that Contracting State prevailing over ameaning given to the term under other laws of thatContracting State.
Article 4
RESIDENT1.
For the purposes of this Convention, the term
“resident of a Contracting State” means any person who,
under the laws of that Contracting State, is liable to tax
therein by reason of his domicile, residence, place of heador main office, place of incorporation, place of management
or any other criterion of a similar nature, and also
includes that Contracting State and any politicalsubdivision or local authority thereof. This term,
however, does not include any person who is liable to tax
in that Contracting State in respect only of income fromsources in that Contracting State.
2.
Where by reason of the provisions of paragraph 1 an
individual is a resident of both Contracting States, thenhis status shall be determined as follows:

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(a)

he shall be deemed to be a resident only of theContracting State in which he has a permanent
home available to him; if he has a permanent homeavailable to him in both Contracting States, heshall be deemed to be a resident only of theContracting State with which his personal andeconomic relations are closer (centre of vitalinterests);(b)

if the Contracting State in which he has his
centre of vital interests cannot be determined,
or if he has not a permanent home available tohim in either Contracting State, he shall bedeemed to be a resident only of the Contracting
State in which he has an habitual abode;(c)

if he has an habitual abode in both Contracting
States or in neither of them, he shall be deemed
to be a resident only of the Contracting State ofwhich he is a national;(d)

if he is a national of both Contracting States orof neither of them, the competent authorities of
the Contracting States shall settle the question
by mutual agreement.

3.
Where by reason of the provisions of paragraph 1 aperson other than an individual is a resident of bothContracting States, then the competent authorities of theContracting States shall endeavour to determine by mutual
agreement the Contracting State of which that person shallbe deemed to be a resident for the purposes of thisConvention. In the absence of such mutual agreement, theperson shall not be entitled to any reduction or exemptionof tax provided by the Convention.
4.
Where under any provisions of this Convention any
income derived by a resident of a Contracting State isrelieved from tax in the other Contracting State and, under
the law of the first-mentioned Contracting State, that
resident is subject to tax only on income derived in thatContracting State or by reference to the amount thereof
which is remitted to or received in that Contracting Stateand not by reference to the full amount thereof, then therelief to be allowed under the Convention in the other
Contracting State shall apply only to so much of suchincome as is subject to tax in the first-mentioned
Contracting State.

- 5 -Article 5
PERMANENT ESTABLISHMENT
1.
For the purposes of this Convention, the term
“permanent establishment” means a fixed place of businessthrough which the business of an enterprise is wholly or
partly carried on.
2.
The term “permanent establishment” includes
especially:

3.

(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 otherplace of extraction of natural resources.

The term “permanent establishment” shall also include:(a)a building site, a construction or installation
project or the supervisory activities inconnection therewith, but only if such building
site, project or activities last more than six
months; and(b)

the furnishing of services, including consultancy
services, by an enterprise through employees orother individuals engaged by the enterprise forsuch purpose but only if activities of thatnature continue within a Contracting State for aperiod or periods aggregating more than 183 days
within any twelve month period commencing or
ending in the taxable year concerned.

- 6 -The duration of activities under subparagraphs (a) and (b)shall be determined by aggregating the periods during which
activities are carried on in a Contracting State byassociated enterprises, provided that the activities ofsuch an associated enterprise in that Contracting State areconnected with the activities carried on in thatContracting State by its associated enterprises. The
period during which two or more associated enterprises arecarrying on concurrent activities shall be counted only
once for the purpose of determining the duration ofactivities. An enterprise shall be deemed to be associatedwith another enterprise if one participates directly or
indirectly in the management, control or capital of theother, or the same person or persons participate directly
or indirectly in the management, control or capital of both
enterprises.
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 ofstorage, display or delivery of goods ormerchandise belonging to the enterprise;(b)

the maintenance of a stock of goods ormerchandise belonging to the enterprise solely
for the purpose of storage, display or delivery;(c)the maintenance of a stock of goods ormerchandise belonging to the enterprise solely
for the purpose of processing by anotherenterprise;(d)the maintenance of a fixed place of businesssolely for the purpose of purchasing goods ormerchandise or of collecting information, for theenterprise;(e)the maintenance of a fixed place of businesssolely for the purpose of advertising, supplying
information, carrying out scientific research or
any other similar activity for the enterprise,provided that such activity is of a preparatory
or auxiliary character.

5.
Paragraph 4 shall not apply to a fixed place ofbusiness that is used or maintained by an enterprise if thesame enterprise or a closely related enterprise carries on
business activities at the same place or at another placein the same Contracting State and:

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(a)

that place or other place constitutes a permanentestablishment for the enterprise or the closely
related enterprise under the provisions of this
Article; or(b)the overall activity resulting from the
combination of the activities carried on by thetwo enterprises at the same place, or by the same
enterprise or the closely related enterprises at
the two places, is not of a preparatory or
auxiliary character,provided that the business activities carried on by the twoenterprises at the same place, or by the same enterprise or
the closely related enterprises at the two places,
constitute complementary functions that are part of acohesive business operation.
6.
Notwithstanding the provisions of paragraphs 1 and 2
but subject to the provisions of paragraph 7, where aperson is acting in a Contracting State on behalf of anenterprise and, in doing so, habitually concludes
contracts, or habitually plays the principal role leading
to the conclusion of contracts that are routinely concluded
without material modification by the enterprise, and thesecontracts are:(a)in the name of the enterprise; or(b)for the transfer of the ownership of, or for the
granting of the right to use, property owned bythat enterprise or that the enterprise has theright to use; or(c)for the provision of services by that enterprise,that enterprise shall be deemed to have a permanentestablishment in that Contracting State in respect of any
activities which that person undertakes for the enterprise,
unless the activities of such person are limited to thosementioned in paragraph 4 which, if exercised through afixed place of business, would not make this fixed place ofbusiness a permanent establishment under the provisions ofthat paragraph.

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7.
Paragraph 6 shall not apply where the person acting ina Contracting State on behalf of an enterprise of the other
Contracting State carries on business in the firstmentioned Contracting State as an independent agent andacts for the enterprise in the ordinary course of thatbusiness. Where, however, a person acts exclusively or
almost exclusively on behalf of one or more enterprises towhich it is closely related, that person shall not be
considered to be an independent agent within the meaning of
this paragraph with respect to any such enterprise.
8.
The fact that a company which is a resident of aContracting State controls or is controlled by a company
which is a resident of the other Contracting State, or
which carries on business in that other Contracting State(whether through a permanent establishment or otherwise),shall not of itself constitute either company a permanentestablishment of the other.
9.
For the purposes of this Article, a person is closely
related to an enterprise if, based on all the relevantfacts and circumstances, one has control of the other orboth are under the control of the same persons orenterprises. In any case, a person shall be considered to
be closely related to an enterprise if one possesses
directly or indirectly more than 50 per cent of thebeneficial interest in the other (or, in the case of acompany, more than 50 per cent of the aggregate vote andvalue of the company’s shares or of the beneficial equity
interest in the company) or if another person possesses
directly or indirectly more than 50 per cent of thebeneficial interest (or, in the case of a company, morethan 50 per cent of the aggregate vote and value of thecompany’s shares or of the beneficial equity interest in
the company) in the person and the enterprise.
Article 6
INCOME FROM IMMOVABLE PROPERTY
1.
Income derived by a resident of a Contracting State
from immovable property (including income from agriculture
or forestry) situated in the other Contracting State may betaxed in that other Contracting State.

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2.
For the purposes of this Convention, the term
“immovable property” shall have the meaning which it has
under the laws of the Contracting State in which theproperty 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 andrights to variable or fixed payments as consideration for
the working of, or the right to work, mineral deposits,
sources and other natural resources; ships 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 otherform of immovable property.
4.
The provisions of paragraphs 1 and 3 shall also apply
to the income from immovable property of an enterprise andto income from immovable property used for the performanceof independent personal services.
Article 7
BUSINESS PROFITS
1.
The profits of an enterprise of a Contracting State
shall be taxable only in that Contracting State unless theenterprise carries on business in the other Contracting
State through a permanent establishment situated therein.
If the enterprise carries on business as aforesaid, theprofits of the enterprise may be taxed in that other
Contracting State 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 Contracting State carries on business inthe other Contracting State through a permanentestablishment situated therein, there shall in eachContracting State be attributed to that permanentestablishment the profits which it might be expected tomake 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 theenterprise of which it is a permanent establishment.

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3.
In determining the profits of a permanentestablishment, there shall be allowed as deductions
necessary expenses which are incurred for the purposes ofthe permanent establishment, including executive andgeneral administrative expenses so incurred, whether in theContracting State in which the permanent establishment issituated or elsewhere.
4.
For the purposes of the preceding paragraphs of this
Article, the profits to be attributed to the permanentestablishment shall be determined by the same method year
by year unless there is good and sufficient reason to thecontrary.
5.
Where profits include items of income which are dealt
with separately in other Articles of this Convention, thenthe 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 ininternational traffic carried on by an enterprise of aContracting State shall be taxable only in that Contracting
State.
2.
Notwithstanding the provisions of Article 2, where an
enterprise of a Contracting State carries on the operationof ships or aircraft in international traffic, thatenterprise, if an enterprise of Chile, shall be exempt fromthe enterprise tax of Japan, and, if an enterprise ofJapan, shall be exempt from any tax similar to theenterprise tax of Japan which may be imposed after the dateof signature of this Convention in Chile.
3.
For the purposes of this Article, profits from theoperation of ships or aircraft in international trafficcarried on by an enterprise also include:(a)profits derived by the enterprise from the rental
on a bareboat basis of ships and aircraft; and(b)profits derived by the enterprise from the use,maintenance or rental of containers (including
trailers and related equipment used for transportof containers),- 11 -

where such rental or such use, maintenance or rental, as
the case may be, is incidental to the operation of ships oraircraft in international traffic carried on by theenterprise.
4.
The provisions of paragraph 1 shall not apply to
profits derived by an enterprise of a Contracting State
from transport by a ship or aircraft of passengers andgoods which are embarked or shipped at a place in the other
Contracting State and are disembarked or discharged atanother place in that other Contracting State. In suchcase the provisions of Article 7 or Article 14, as the casemay be, shall apply.
5.
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.
Article 9
ASSOCIATED ENTERPRISES
1.

Where
(a)

an enterprise of a Contracting State participates
directly or indirectly in the management, control
or capital of an enterprise of the other
Contracting State, or(b)

the same persons participate directly or
indirectly in the management, control or capitalof an enterprise of a Contracting State and an
enterprise of the other Contracting State,

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 madebetween independent enterprises, then any profits which
would, but for those conditions, have accrued to one of theenterprises, but, by reason of those conditions, have notso accrued, may be included in the profits of thatenterprise and taxed accordingly.

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2.
Where a Contracting State includes in the profits ofan enterprise of that Contracting State - and taxes
accordingly - profits on which an enterprise of the other
Contracting State has been charged to tax in that other
Contracting State and the profits so included are profits
which would have accrued to the enterprise of the firstmentioned Contracting State if the conditions made between
the two enterprises had been those which would have been
made between independent enterprises, then that other
Contracting State, if the competent authority of that other
Contracting State agrees that the adjustment made by the
first-mentioned Contracting State is justified both in theprinciple contained in paragraph 1 and as regards theamount assessed under such principle, shall make anappropriate 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 thisConvention and the competent authorities of the Contracting
States shall if necessary consult each other.
3.
A Contracting State shall not change the profits of anenterprise in the circumstances referred to in paragraph 1
after the expiry of the time limits provided in thedomestic law of that Contracting State and, in any case,after ten years from the end of the taxable year in which
the profits that would be subject to such change would, but
for the conditions referred to in paragraph 1, have accrued
to that enterprise. The provisions of this paragraph shallnot apply in the case of fraud or wilful default.
Article 10
DIVIDENDS
1.
Dividends paid by a company which is a resident of aContracting State to a resident of the other Contracting
State may be taxed in that other Contracting State.
2.
However, such dividends may also be taxed in theContracting State of which the company paying the dividends
is a resident and according to the laws of that Contracting
State, but if the beneficial owner of the dividends is a
resident of the other Contracting State, the tax so charged
shall not exceed:(a)5 per cent of the gross amount of the dividends
if the beneficial owner is a company that has
owned directly, for the period of six months
ending on the date on which entitlement to thedividends is determined, at least 25 per cent of
the voting power in the company paying thedividends; or- 13 -

(b)15 per cent of the gross amount of the dividends
in all other cases.

The provisions of this paragraph shall not affect the
taxation of the company in respect of the profits out of
which the dividends are paid.
3.
Notwithstanding the provisions of paragraph 2, such
dividends shall not be taxed in the Contracting State ofwhich the company paying the dividends is a resident if thebeneficial owner of the dividends is a pension fund which
is a resident of the other Contracting State, provided thatsuch dividends are not derived from the carrying on of abusiness by such pension fund or through an associatedenterprise.
4.
The provisions of paragraphs 2 and 3 shall not limit
the application of the Additional Tax payable in Chile.
5.
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 from otherrights which is subjected to the same taxation treatment asincome from shares by the tax laws of the Contracting Stateof which the company making the distribution is a resident.
6.
The provisions of paragraphs 1 to 4 shall not apply if
the beneficial owner of the dividends, being a resident ofa Contracting State, carries on business in the other
Contracting State of which the company paying the dividends
is a resident through a permanent establishment situatedtherein, or performs in that other Contracting State
independent personal services from a fixed base situatedtherein, and the holding in respect of which the dividends
are paid is effectively connected with such permanentestablishment or fixed base. In such case the provisionsof Article 7 or Article 14, as the case may be, shallapply.

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7.
Where a company which is a resident of a Contracting
State derives profits or income from the other Contracting
State, that other Contracting State 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
Contracting State or insofar as the holding in respect ofwhich the dividends are paid is effectively connected witha permanent establishment or a fixed base situated in that
other Contracting State, nor subject the company’s
undistributed profits to a tax on the company’s
undistributed profits, even if the dividends paid or theundistributed profits consist wholly or partly of profits
or income arising in such other Contracting State.
Article 11
INTEREST
1.
Interest arising in a Contracting State and paid to aresident of the other Contracting State may be taxed inthat other Contracting State.
2.
However, such interest may also be taxed in theContracting State in which it arises and according to thelaws of that Contracting State, but if the beneficial ownerof the interest is a resident of the other Contracting
State, the tax so charged shall not exceed:(a)4 per cent of the gross amount of the interest if
the beneficial owner of the interest is either:(i)a bank;(ii)

an insurance company;(iii)

an enterprise substantially deriving its
gross income from the active and regularconduct of a lending or finance businessinvolving transactions with unrelated
persons, where the enterprise is unrelated
to the payer of the interest. For the
purposes of this clause, the term “lendingor finance business” includes the businessof issuing letters of credit, providing
guarantees or providing credit card
services;(iv)

an enterprise that sold machinery or
equipment, where the interest is paid withrespect to indebtedness arising as part ofthe sale on credit of such machinery or
equipment; or- 15 -

(v)(b)

any other enterprise, provided that in thethree taxable years preceding the taxable
year in which the interest is paid, theenterprise derives more than 50 per cent of
its liabilities from the issuance of bondsin the financial markets or from taking
deposits at interest, and more than 50 per
cent of the assets of the enterprise consistof debt-claims against unrelated persons;10 per cent of the gross amount of the interestin all other cases.

For the purposes of subparagraph (a), an enterprise isunrelated to a person if the enterprise does not have withthe person a relationship described in subparagraph (a) or(b) of paragraph 1 of Article 9.
3.
For a period of two years from the date on which theprovisions of paragraph 2 of this Article shall beapplicable in accordance with the provisions of paragraph 2
of Article 29, the rate of 15 per cent shall apply in placeof the rate provided in subparagraph (b) of paragraph 2 ofthis Article.
4.
Notwithstanding the provisions of subparagraph (a) ofparagraph 2, if interest referred to in that subparagraphis paid as part of an arrangement involving back-to-backloans or other arrangement that is economically equivalentand intended to have a similar effect to an arrangement
involving back-to-back loans, such interest may be taxed in
the Contracting State in which it arises but the tax socharged shall not exceed 10 per cent of the gross amount of
the interest.
5.
The term “interest” as used in this Article means
income from debt-claims of every kind, whether or notsecured by mortgage and in particular, income fromgovernment securities and income from bonds or debentures,
including premiums attaching to such securities, bonds ordebentures, and all other income that is subjected to thesame taxation treatment as income from money lent by the
tax laws of the Contracting State in which the income
arises. Income dealt with in Article 10 shall not,however, be regarded as interest for the purposes of thisConvention.

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6.
The provisions of paragraphs 1, 2 and 4 shall not
apply if the beneficial owner of the interest, being a
resident of a Contracting State, carries on business in theother Contracting State in which the interest arises
through a permanent establishment situated therein, or
performs in that other Contracting State independent
personal services from a fixed base situated therein, andthe debt-claim in respect of which the interest is paid iseffectively connected with such permanent establishment or
fixed base. In such case the provisions of Article 7 or
Article 14, as the case may be, shall apply.
7.
Interest shall be deemed to arise in a Contracting
State when the payer is a resident of that Contracting
State. Where, however, the person paying the interest,
whether a resident of a Contracting State or not, has in aContracting State a permanent establishment or a fixed basein connection with which the indebtedness on which theinterest is paid was incurred, and such interest is borneby such permanent establishment or fixed base, then suchinterest shall be deemed to arise in the Contracting Statein which the permanent establishment or fixed base issituated.
8.
Where, by reason of a special relationship between thepayer and the beneficial owner or between both of them andsome other person, the amount of the interest, for whateverreason, exceeds the amount which would have been agreed
upon by the payer and the beneficial owner in the absenceof such relationship, the provisions of this Article shallapply only to the last-mentioned amount. In such case, theexcess 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 12
ROYALTIES
1.
Royalties arising in a Contracting State and paid to aresident of the other Contracting State may be taxed inthat other Contracting State.
2.
However, such royalties may also be taxed in theContracting State in which they arise and according to thelaws of that Contracting State, but if the beneficial ownerof the royalties is a resident of the other Contracting
State, the tax so charged shall not exceed:(a)2 per cent of the gross amount of the royalties
for the use of, or the right to use, industrial,commercial or scientific equipment;- 17 -

(b)10 per cent of the gross amount of the royalties
in all other cases.

3.
The term “royalties” as used in this Article means
payments of any kind received as a consideration for theuse of, or the right to use, any copyright of literary,artistic or scientific work including cinematograph films
or films, tapes and other means of image or soundreproduction, or any patent, trade mark, design or model,plan, secret formula or process or other similar intangible
property, or for the use of, or the right to use,
industrial, commercial or scientific equipment, or for
information concerning industrial, commercial or scientificexperience.
4.
The provisions of paragraphs 1 and 2 shall not apply
if the beneficial owner of the royalties, being a residentof a Contracting State, carries on business in the other
Contracting State in which the royalties arise through apermanent establishment situated therein, or performs inthat other Contracting State independent personal services
from a fixed base situated therein, and the right orproperty in respect of which the royalties are paid iseffectively connected with such permanent establishment or
fixed base. In such case the provisions of Article 7 or
Article 14, as the case may be, shall apply.
5.
Royalties shall be deemed to arise in a Contracting
State when the payer is a resident of that Contracting
State. Where, however, the person paying the royalties,
whether a resident of a Contracting State or not, has in aContracting State a permanent establishment or a fixed basein connection with which the liability to pay the royalties
was incurred, and such royalties are borne by suchpermanent establishment or fixed base, then such royalties
shall be deemed to arise in the Contracting State in which
the permanent establishment or fixed base is situated.
6.
Where, by reason of a special relationship between thepayer and the beneficial owner or between both of them andsome other person, the amount of the royalties, having
regard to the use, right or information for which they arepaid, exceeds the amount which would have been agreed uponby the payer and the beneficial owner in the absence ofsuch relationship, the provisions of this Article shallapply only to the last-mentioned amount. In such case, theexcess 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.

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Article 13
CAPITAL GAINS
1.
Gains derived by a resident of a Contracting State
from the alienation of immovable property situated in theother Contracting State may be taxed in that other
Contracting State.
2.
Gains from the alienation of any property, other thanimmovable property, forming part of the business property
of a permanent establishment which an enterprise of aContracting State has in the other Contracting State or ofany property, other than immovable property, pertaining toa fixed base available to a resident of a Contracting Statein the other Contracting State for the purpose of
performing independent personal services, including suchgains from the alienation of such a permanent establishment(alone or with the whole enterprise) or of such a fixedbase, may be taxed in that other Contracting State.
3.
Gains derived by an enterprise of a Contracting State
from the alienation of ships or aircraft operated by thatenterprise in international traffic or any property, otherthan immovable property, pertaining to the operation ofsuch ships or aircraft shall be taxable only in thatContracting State.
4.

(a)Gains derived by a resident of a Contracting
State from the alienation of shares, comparable
interests or other rights may be taxed in theother Contracting State if:(i)the alienator at any time during the 365
days preceding such alienation owned,
directly or indirectly, shares, comparable
interests or other rights representing 20
per cent or more of the capital of a company
that is a resident of that other Contracting
State; or(ii)

at any time during the 365 days preceding
such alienation, such shares, comparable
interests or other rights derived 50 per
cent or more of their value, directly or
indirectly, from immovable property situatedin that other Contracting State.

- 19 -

(b)Any other gains derived by a resident of aContracting State from the alienation of shares,
comparable interests or other rights representing
the capital of a company that is a resident of
the other Contracting State may also be taxed inthat other Contracting State but the tax socharged shall not exceed 16 per cent of theamount of the gains.

(c)

Subject to the provisions of clause (ii) of
subparagraph (a), gains derived by a pension fundthat is a resident of a Contracting State fromthe alienation of shares, comparable interests orother rights referred to in subparagraphs (a) and(b) shall be taxable only in that Contracting
State.

5.
Gains from the alienation of any property other thanthat referred to in the preceding paragraphs of this
Article shall be taxable only in the Contracting State ofwhich the alienator is a resident.
Article 14
INDEPENDENT PERSONAL SERVICES
1.
Income derived by an individual who is a resident of aContracting State in respect of professional services orother activities of an independent character shall betaxable only in that Contracting State. However, suchincome may also be taxed in the other Contracting State:(a)if the individual has a fixed base regularly
available in that other Contracting State for the
purpose of performing the activities; in thatcase, only so much of the income as is
attributable to that fixed base may be taxed inthat other Contracting State; or(b)

if the individual is present in that other
Contracting State for a period or periods
amounting to or exceeding in the aggregate 183
days in any twelve month period commencing or
ending in the taxable year concerned; in thatcase, only so much of the income as is derived
from the activities performed in that other
Contracting State may be taxed in that other
Contracting State.

- 20 -

2.
The term “professional services” includes especiallyindependent scientific, literary, artistic, educational orteaching activities as well as the independent activitiesof physicians, lawyers, engineers, architects, dentists andaccountants.
Article 15
INCOME FROM EMPLOYMENT
1.
Subject to the provisions of Articles 16, 18 and 19,
salaries, wages and other remuneration derived by aresident of a Contracting State in respect of an employment
shall be taxable only in that Contracting State unless theemployment is exercised in the other Contracting State. If
the employment is so exercised, such remuneration as isderived therefrom may be taxed in that other Contracting
State.
2.
Notwithstanding the provisions of paragraph 1,
remuneration derived by a resident of a Contracting Statein respect of an employment exercised in the other
Contracting State shall be taxable only in the firstmentioned Contracting State if:(a)the recipient is present in the other Contracting
State for a period or periods not exceeding in
the aggregate 183 days in any twelve month period
commencing or ending in the taxable year
concerned;(b)

the remuneration is paid by, or on behalf of, aperson who is not a resident of the other
Contracting State; and(c)the remuneration is not borne by a permanentestablishment or a fixed base which the employer
has in the other Contracting State.

3.
Notwithstanding the preceding provisions of this
Article, remuneration derived in respect of an employment
exercised aboard a ship or aircraft operated ininternational traffic by an enterprise of a Contracting
State may be taxed in that Contracting State.
Article 16
DIRECTORS’ FEES
Directors’ fees and other similar payments derived bya resident of a Contracting State in his capacity as amember of the board of directors or a similar organ of acompany which is a resident of the other Contracting Statemay be taxed in that other Contracting State.

- 21 -

Article 17
ENTERTAINERS AND SPORTSPERSONS
1.
Notwithstanding the provisions of Articles 14 and 15,
income derived by a resident of a Contracting State as anentertainer, such as a theatre, motion picture, radio or
television artiste, or a musician, or as a sportsperson,from that resident’s personal activities as such exercisedin the other Contracting State, may be taxed in that other
Contracting State.
2.
Where income in respect of personal activities
exercised by an entertainer or a sportsperson acting as
such accrues not to the entertainer or sportsperson but toanother person, that income may, notwithstanding theprovisions of Articles 14 and 15, be taxed in theContracting State in which the activities of theentertainer or sportsperson are exercised.
Article 18
PENSIONS
Pensions and other similar remuneration under thesocial security legislation of a Contracting State
recognised as such for tax purposes in that Contracting
State arising in that Contracting State and paid to aresident of the other Contracting State shall be taxable
only in that other Contracting State.
Article 19
GOVERNMENT SERVICE
1.

(a)Salaries, wages and other remuneration paid by aContracting State or a political subdivision or
local authority thereof to an individual inrespect of services rendered to that Contracting
State or political subdivision or local authority
shall be taxable only in that Contracting State.

(b)

However, such salaries, wages and other
remuneration shall be taxable only in the other
Contracting State if the services are rendered inthat other Contracting State and the individual
is a resident of that other Contracting State
who:
(i)

is a national of that other Contracting
State; or(ii)

did not become a resident of that other
Contracting State solely for the purpose of
rendering the services.

- 22 -

2.
The provisions of Articles 15, 16 and 17 shall apply
to salaries, wages and other remuneration in respect ofservices rendered in connection with a business carried on
by a Contracting State or a political subdivision or local
authority thereof.
Article 20
STUDENTS
Payments which a student or business apprentice who isor was immediately before visiting a Contracting State aresident of the other Contracting State and who is present
in the first-mentioned Contracting State 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 Contracting State, provided
that such payments arise from sources outside the firstmentioned Contracting State. The exemption provided bythis Article shall apply to a business apprentice only fora period not exceeding one year from the date on which hefirst begins his training in the first-mentioned
Contracting State.
Article 21
OTHER INCOME
1.
Items of income beneficially owned by a resident of aContracting State, wherever arising, not dealt with in theforegoing Articles of this Convention shall be taxable onlyin that Contracting State.
2.
The provisions of paragraph 1 shall not apply toincome, other than income from immovable property, if thebeneficial owner of such income, being a resident of aContracting State, carries on business in the other
Contracting State through a permanent establishment
situated therein, or performs in that other Contracting
State independent personal services from a fixed basesituated therein, and the right or property in respect ofwhich the income is paid is effectively connected with suchpermanent establishment or fixed base. In such case theprovisions of Article 7 or Article 14, as the case may be,shall apply.
3.
Notwithstanding the provisions of paragraphs 1 and 2,
items of income of a resident of a Contracting State notdealt with in the foregoing Articles of this Convention andarising in the other Contracting State may also be taxed inthat other Contracting State.

- 23 -

Article 22
LIMITATION OF RELIEF
1.
Notwithstanding any other provisions of thisConvention, a benefit under the Convention shall not be
granted in respect of an item of income if it is reasonable
to conclude, having regard to all relevant facts andcircumstances, that obtaining that benefit was one of theprincipal purposes of any arrangement or transaction that
resulted directly or indirectly in that benefit, unless it
is established that granting that benefit in thesecircumstances would be in accordance with the object andpurpose of the relevant provisions of the Convention.
2.
Where an enterprise of a Contracting State derives
income from the other Contracting State, and the firstmentioned Contracting State treats that income as
attributable to a permanent establishment of thatenterprise in a third jurisdiction, the tax benefits that
otherwise would apply under the other provisions of thisConvention shall not apply to that income if:(a)the combined tax that is actually paid withrespect to such income in the first-mentioned
Contracting State and in that third jurisdictionis less than 60 per cent of the tax that would
have been payable on that income in the firstmentioned Contracting State if the income were
accrued or received in the first-mentioned
Contracting State by the enterprise and were not
attributable to the permanent establishment inthat third jurisdiction; or(b)the permanent establishment is situated in athird jurisdiction that does not have acomprehensive convention with respect to taxes on
income in force with the other Contracting State
from which the benefits of this Convention arebeing claimed, unless the income attributable tothe permanent establishment is included in thetax base of the enterprise in the first-mentioned
Contracting State.

Any income to which the provisions of this paragraph apply
may be taxed in accordance with the domestic law of theother Contracting State, notwithstanding any otherprovisions of this Convention. However, any interest or
royalties to which the provisions of this paragraph apply
shall remain taxable in that other Contracting State but
the tax so charged shall not exceed 25 per cent of thegross amount thereof.

- 24 -

Article 23
ELIMINATION OF DOUBLE TAXATION
1.
Subject to the provisions of the laws of Japan
regarding the allowance as a credit against Japanese tax oftax payable in any country other than Japan, where aresident of Japan derives income from Chile which may betaxed in Chile in accordance with the provisions of thisConvention, the amount of Chilean tax payable in respect ofthat income shall be allowed as a credit against theJapanese tax imposed on that resident. The amount ofcredit, however, shall not exceed the amount of theJapanese tax which is appropriate to that income.
2.

In Chile, double taxation shall be avoided as follows:(a)residents of Chile, obtaining income which has,in accordance with the provisions of thisConvention, been subject to taxation in Japan,
may credit the tax so paid against any Chilean
tax payable in respect of the same income,subject to the applicable provisions of laws ofChile. This paragraph shall apply to all income
referred to in the Convention;(b)

where, in accordance with any provision of theConvention, income derived by a resident of Chile
is exempt from tax in Chile, Chile may
nevertheless, in calculating the amount of tax onother income, take into account the exempted
income.
Article 24
NON-DISCRIMINATION

1.
Nationals of a Contracting State shall not be
subjected in the other Contracting State to any taxation or
any requirement connected therewith, which is other or moreburdensome than the taxation and connected requirements towhich nationals of that other Contracting State in the same
circumstances, in particular with respect to residence, areor may be subjected. The provisions of this paragraphshall, notwithstanding the provisions of Article 1, also
apply to persons who are not residents of one or both of
the Contracting States.
2.
The taxation on a permanent establishment which anenterprise of a Contracting State has in the other
Contracting State shall not be less favourably levied inthat other Contracting State than the taxation levied onenterprises of that other Contracting State carrying on thesame activities.

- 25 -

3.
Nothing in this Article shall be construed as obliging
a Contracting State to grant to residents of the other
Contracting State any personal allowances, reliefs andreductions for taxation purposes on account of civil status
or family responsibilities which it grants to its own
residents.
4.
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 byan enterprise of a Contracting State to a resident of theother Contracting State shall, for the purposes ofdetermining 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 Contracting
State.
5.
Enterprises of a Contracting State, the capital ofwhich is wholly or partly owned or controlled, directly or
indirectly, by one or more residents of the other
Contracting State, shall not be subjected in the firstmentioned Contracting State to any taxation or any
requirement connected therewith which is other or moreburdensome than the taxation and connected requirements towhich other similar enterprises of the first-mentioned
Contracting State are or may be subjected.
Article 25
MUTUAL AGREEMENT PROCEDURE
1.
Where a person considers that the actions of one orboth of the Contracting States result or will result for
him in taxation not in accordance with the provisions of
this Convention, he may, irrespective of the remedies
provided by the domestic law of those Contracting States,
present his case to the competent authority of theContracting State of which he is a resident or, if his casecomes under paragraph 1 of Article 24, to that of theContracting State of which he is a national. The case must
be presented within three years from the first notificationof the action resulting in taxation not in accordance withthe provisions of the Convention.
2.
The competent authority shall endeavour, if theobjection appears to it to be justified and if it is notitself able to arrive at a satisfactory solution, toresolve the case by mutual agreement with the competentauthority of the other Contracting State, with a view tothe avoidance of taxation which is not in accordance withthe provisions of this Convention. Any agreement reachedshall be implemented notwithstanding any time limits in thedomestic law of the Contracting States.

- 26 -

3.
The competent authorities of the Contracting Statesshall endeavour to resolve by mutual agreement any
difficulties or doubts arising as to the interpretation orapplication of this Convention. They may also consult
together for the elimination of double taxation in cases
not provided for in the Convention.
4.
The competent authorities of the Contracting States
may communicate with each other directly, including througha joint commission consisting of themselves or theirrepresentatives, for the purposes of reaching an agreementin the sense of the preceding paragraphs of this Article.
5.

Where,(a)under paragraph 1, a person has presented a caseto the competent authority of a Contracting Stateon the basis that the actions of one or both of
the Contracting States have resulted for that
person in taxation not in accordance with theprovisions of this Convention, and(b)the competent authorities are unable to reach an
agreement to resolve that case pursuant toparagraph 2 within two years from thepresentation of the case to the competentauthority of the other Contracting State,

any unresolved issues arising from the case shall be
submitted to arbitration if the person so requests and thecompetent authorities of the Contracting States so agree.
These unresolved issues shall not, however, be submitted toarbitration if a decision on these issues has already been
rendered by a court or administrative tribunal of either
Contracting State. Unless a person directly affected by
the case does not accept the mutual agreement that
implements the arbitration decision, that decision shall bebinding on both Contracting States and shall be implemented
notwithstanding any time limits in the domestic laws ofthese Contracting States. The competent authorities of theContracting States shall by mutual agreement settle themode of application of this paragraph.

- 27 -

6.
For the purposes of applying the provisions ofparagraph 5:(a)

The competent authorities shall by mutual
agreement establish a procedure in order toensure that an arbitration decision will be
implemented within two years from a request forarbitration as referred to in paragraph 5 unlessactions or inaction of a person directly affectedby the case presented pursuant to that paragraphhinder the resolution of the case or unless thecompetent authorities and that person otherwise
agree.

(b)

An arbitration panel shall be established inaccordance with the following rules:(i)

An arbitration panel shall consist of threearbitrators with expertise or experience ininternational tax matters.

(ii)

Each competent authority shall appoint one
arbitrator who may be its national. The two
arbitrators appointed by the competentauthorities shall appoint the third
arbitrator who serves as the chair of thearbitration panel in accordance with theprocedures agreed by the competentauthorities.

(iii)

All arbitrators shall not be employees of
the tax authorities of the Contracting
States, nor have had dealt with the casepresented pursuant to paragraph 1 in any
capacity. The third arbitrator shall not be
a national of either Contracting State, norhave had his usual place of residence ineither Contracting State, nor have been
employed by either Contracting State.

(iv)

The competent authorities shall ensure that
all arbitrators and their staff agree, instatements sent to each competent authority,
prior to their acting in an arbitration
proceeding, to abide by and be subject tothe same confidentiality and non-disclosure
obligations as those described in paragraph
2 of Article 26 and under the applicable
domestic laws of the Contracting States.

- 28 -

(v)Each competent authority shall bear thecosts of its appointed arbitrator and its
own expenses. The costs of the chair of anarbitration panel and other expenses
associated with the conduct of theproceedings shall be borne by the competentauthorities in equal shares.

(c)

The competent authorities shall provide theinformation necessary for the arbitration
decision to all arbitrators and their staff
without undue delay.

(d)An arbitration decision shall be treated asfollows:(e)(i)

An arbitration decision has no formal
precedential value.

(ii)

An arbitration decision shall be final,
unless that decision is found to be
unenforceable by the courts of one of theContracting States due to a violation ofparagraph 5, of this paragraph or of any
procedural rule determined in accordancewith subparagraph (a) of this paragraph that
may reasonably have affected the decision.
If the decision is found to be unenforceable
due to the violation, the request forarbitration shall be considered not to havebeen made and the arbitration process shallbe considered not to have taken place(except for the purposes of clauses (iv) and(v) of subparagraph (b) of this paragraph).

Where at any time before the arbitration panel
has delivered a decision to the competentauthorities of the Contracting States and theperson who made the request for arbitration:(i)the competent authorities of the Contracting
States reach a mutual agreement to resolve
the case pursuant to paragraph 2;(ii)that person withdraws the request forarbitration; or- 29 -

(iii)

a decision concerning the case is rendered
by a court or administrative tribunal of oneof the Contracting States during thearbitration proceedings;

the mutual agreement procedure, including thearbitration proceedings, with respect to the caseshall terminate.
(f)

In the event a case is pending in litigation orappeal, the mutual agreement that implements thearbitration decision shall be considered not tobe accepted by the presenter of the case if any
person directly affected by the case who is aparty to the litigation or appeal does notwithdraw within 60 days after receiving thedetermination of the arbitration panel fromconsideration by the relevant court oradministrative tribunal all issues resolved in
the arbitration proceeding. In this case, thecase will not be eligible for any further
consideration by the competent authorities of theContracting States.

(g)

The provisions of paragraph 5 and this paragraphshall not apply to cases falling within paragraph
3 of Article 4.
Article 26
EXCHANGE OF INFORMATION

1.
The competent authorities of the Contracting Statesshall exchange such information as is foreseeably relevant
for carrying out the provisions of this Convention or to
the administration or enforcement of the domestic law
concerning taxes of every kind and description imposed onbehalf of the Contracting States, or of their politicalsubdivisions or local authorities, insofar as the taxation
thereunder is not contrary to the Convention. The exchange
of information is not restricted by Articles 1 and 2.

- 30 -

2.
Any information received under paragraph 1 by aContracting State shall be treated as secret in the samemanner as information obtained under the domestic law ofthat Contracting State and shall be disclosed only topersons or authorities (including courts and administrative
bodies) concerned with the assessment or collection of, theenforcement or prosecution in respect of, the determinationof appeals in relation to the taxes referred to inparagraph 1, or the oversight of the above. Such persons
or authorities shall use the information only for such
purposes. They may disclose the information in public
court proceedings or in judicial decisions. Notwithstanding
the foregoing, information received by a Contracting Statemay be used for other purposes when such information may be
used for such other purposes under the laws of bothContracting States and the competent authority of theContracting State supplying the information authorises suchuse.
3.
In no case shall the provisions of paragraphs 1 and 2
be construed so as to impose on a Contracting State theobligation:(a)

to carry out administrative measures at variancewith the laws and administrative practice of thator of the other Contracting State;(b)to supply information which is not obtainable
under the laws or in the normal course of theadministration of that or of the other
Contracting State;(c)to supply information which would disclose any
trade, business, industrial, commercial or
professional secret or trade process, orinformation the disclosure of which would becontrary to public policy.

4.
If information is requested by a Contracting State inaccordance with this Article, the other Contracting State
shall use its information gathering measures to obtain therequested information, even though that other Contracting
State may not need such information for its own tax
purposes. The obligation contained in the preceding
sentence is subject to the limitations of paragraph 3 but
in no case shall such limitations be construed to permit aContracting State to decline to supply information solely
because it has no domestic interest in such information.

- 31 -

5.
In no case shall the provisions of paragraph 3 beconstrued to permit a Contracting State to decline tosupply information solely because the information is heldby a bank, other financial institution, nominee or person
acting in an agency or a fiduciary capacity or because it
relates to ownership interests in a person.
Article 27
MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS
Nothing in this Convention shall affect the fiscal
privileges of members of diplomatic missions or consular
posts under the general rules of international law or under
the provisions of special agreements.
Article 28
HEADINGS
The headings of the Articles of this Convention are
inserted for convenience of reference only and shall notaffect the interpretation of the Convention.
Article 29
ENTRY INTO FORCE
1.
This Convention shall be approved in accordance withthe legal procedures of each of the Contracting States andshall enter into force on the date of exchange of
diplomatic notes indicating such approval.
2.

The provisions of this Convention shall have effect:(a)in Japan:(i)with respect to taxes levied on the basis ofa taxable year, for taxes for any taxable
years beginning on or after the first day ofJanuary in the calendar year next followingthat in which the Convention enters into
force; and- 32 -

(ii)(b)

with respect to taxes not levied on thebasis of a taxable year, for taxes levied on
or after the first day of January in thecalendar year next following that in which
the Convention enters into force; andin Chile:with respect to taxes on income obtained andamounts paid, credited to an account, put at thedisposal or accounted as an expense, on or after
the first day of January in the calendar year
next following that in which the Convention
enters into force.

3.
Notwithstanding the provisions of paragraph 2, theprovisions of Article 26 shall have effect from the date ofentry into force of this Convention without regard to thedate on which the taxes are withheld at source or the
taxable year to which the matter relates.
Article 30
TERMINATIONThis Convention shall remain in force until terminatedby a Contracting State. Either Contracting State may
terminate this Convention, through diplomatic channels, bygiving written notice of termination on or before thethirtieth day of June of any calendar year beginning after
the expiry of five years from the date of entry into forceof this Convention. In such event, the Convention shallcease to have effect:(a)in Japan:(i)with respect to taxes levied on the basis ofa taxable year, for taxes for any taxable
years beginning on or after the first day ofJanuary in the calendar year next followingthat in which the notice is given; and(ii)

with respect to taxes not levied on thebasis of a taxable year, for taxes levied on
or after the first day of January in thecalendar year next following that in which
the notice is given;- 33 -

(b)in Chile:with respect to taxes on income obtained andamounts paid, credited to an account, put at thedisposal or accounted as an expense, on or after
the first day of January in the calendar year
next following that in which the notice is given;
and

(c)

with respect to the provisions of Article 26, on
the first day of January in the calendar year
next following that in which the notice is given.
Requests for information received before theeffective date of termination will be dealt within accordance with the terms of this Convention.
The Contracting States shall remain bound by theconfidentiality duties provided for in Article 26
with respect to any information obtained under
the Convention.

IN WITNESS WHEREOF the undersigned, being duly
authorised thereto by their respective Governments, havesigned this Convention.
DONE in duplicate at Santiago this twenty-first day ofJanuary, 2016 in the English language.

For Japan:

For the Republic of Chile:

Naoto Nikai

Micco. A- 34 -PROTOCOL TO THE CONVENTION BETWEENJAPAN AND THE REPUBLIC OF CHILE
FOR THE ELIMINATION OF DOUBLE TAXATIONWITH RESPECT TO TAXES ON INCOME
AND THE PREVENTION OF TAX EVASION
AND AVOIDANCEAt the signing of the Convention between Japan and theRepublic of Chile for the Elimination of Double Taxation
with respect to Taxes on Income and the Prevention of Tax
Evasion and Avoidance (hereinafter referred to as “theConvention”), Japan and the Republic of Chile have agreed
upon the following provisions, which shall form an integral
part of the Convention:
1.

With reference to the Convention,(a)

In relation to the investment accounts or funds
which are established under the laws of Chile andare not residents of Chile within the meaning ofparagraph 1 of Article 4 of the Convention, theprovisions of the Convention shall not beinterpreted to restrict the imposition of tax
under the laws of Chile on the remittances madeby such investment accounts or funds as well ason the income derived from the redemption oralienation of the quotas held by the participantsin such investment accounts or funds.

(b)

Nothing in the Convention shall affect theapplication of the existing provisions of theChilean legislation Decree Law No. 600 (Foreign
Investment Statute) as they are in force at thetime of signature of the Convention and as they
may be amended from time to time without changing
the general principle thereof.

(c)Nothing in the Convention shall affect the
taxation in Chile of a resident of Japan inrespect of profits attributable to a permanentestablishment situated in Chile in accordancewith the provisions of Article 7 of theConvention under both the First Category Tax and
the Additional Tax provided that the First
Category Tax is fully creditable in computing theamount of the Additional Tax.

- 35 -

(d)Any question arising as to the interpretation orapplication of the Convention and, in particular,
whether a measure is within the scope of theConvention, shall be determined exclusively inaccordance with the provisions of Article 25 of
the Convention, and the provisions of Article
XVII of the General Agreement on Trade inServices shall not apply to a measure unless thecompetent authorities of the Contracting Statesagree that the measure is not within the scope of
Article 24 of the Convention. For the purposesof this subparagraph, the term “measure” means alaw, regulation, rule, procedure, decision,
administrative action, or any other similar
provision or action, as related to taxes coveredby the Convention.

2.
With reference to paragraph 2 of Article 2 of theConvention,
If a Contracting State introduces new taxes on capital
after the date of signature of the Convention, thecompetent authority of that Contracting State shall notify
the competent authority of the other Contracting State ofsuch new taxes in accordance with the provisions of thesecond sentence of paragraph 2 of Article 2 of theConvention.
3.
With reference to paragraph 1 of Article 4 of theConvention,
The term “resident of a Contracting State” includes:(a)a legal person that is established and maintainedin that Contracting State exclusively for
religious, charitable, educational, cultural orscientific purposes;(b)a pension fund as defined in subparagraph (j) of
paragraph 1 of Article 3 of the Convention whichis established under the law of that Contracting
State; and(c)any institution which is established for
promoting exports, investment or development andthe capital of which is wholly owned by thatContracting State,

notwithstanding that all or part of its income may be
exempt from tax under the laws of that Contracting State.

- 36 -

4.

With reference to Article 7 of the Convention,

Where an enterprise of a Contracting State which has
carried on business in the other Contracting State througha permanent establishment situated therein, receives, after
the enterprise has ceased to carry on business as
aforesaid, profits attributable to the permanentestablishment, such profits may be taxed in that other
Contracting State in accordance with the principles statedin Article 7 of the Convention.
5.

With reference to Article 10 of the Convention,(a)Where in any other convention Chile agrees tolimit the application of the Additional Tax
payable in Chile, the Contracting States shallconsult with each other with a view to amending
the Convention in order to re-establish thebalance of benefits under the Convention.

(b)

Where
(i)

the rate of the Additional Tax imposed under
the domestic law of Chile exceeds 35 per
cent; or(ii)

the First Category Tax ceases to be fully
creditable in determining the amount of
Additional Tax to be paid,

then paragraph 4 of Article 10 of the Convention shall not
apply and the tax charged under subparagraphs (a) and (b)of paragraph 2 of Article 10 of the Convention shall not
exceed 20 per cent of the gross amount of dividends paid by
a company which is a resident of a Contracting State andbeneficially owned by a resident of the other Contracting
State. In this case the Contracting States shall consult
with each other with a view to amending the Convention inorder to re-establish the balance of benefits under theConvention.

- 37 -

6.
With reference to paragraph 4 of Article 11 of theConvention,
It is understood that the term "arrangement involving backto-back loans" would cover, inter alia, any kind of
arrangement structured in such a way that a financial
institution which is a resident of a Contracting State
receives interest arising in the other Contracting Stateand the financial institution pays an equivalent interest
to another person which, if the person received theinterest directly from the other Contracting State, would
not be entitled to limitation of tax under subparagraph (a)of paragraph 2 of Article 11 of the Convention with respect
to that interest in that other Contracting State.
7.
With reference to Articles 11, 12 and 13 of theConvention,
If Chile concludes a convention with a state other thanJapan and the provisions of the convention impose a limit
on taxes on payments of interest or royalties lower thanthose imposed under paragraph 2 of Article 11 or paragraph
2 of Article 12 of the Convention or that contains terms
that further limit the right of the Contracting States totax gains under Article 13 of the Convention, theContracting States shall, at the request of Japan, consult
with a view to amending the Convention to incorporate such
lower taxes or limiting terms into the Convention.
8.
With reference to paragraph 3 of Article 25 of theConvention,
It is understood that the term “difficulties or doubts
arising as to the interpretation or application of thisConvention” in paragraph 3 of Article 25 of the Convention
includes cases where the provisions of the Convention areused in a manner as to provide benefits not contemplated or
not intended, considering that the object and purpose of
the Convention is to avoid international double taxation.
9.
With reference to paragraphs 5 and 6 of Article 25 of
the Convention,
It is understood that paragraph 6 of Article 25 of theConvention only applies where the competent authorities of
the Contracting States have agreed, in accordance withparagraph 5 of Article 25 of the Convention, to submit theunresolved issues to arbitration.

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10.

With reference to Article 26 of the Convention,

It is understood that in no case shall the provisions ofparagraphs 1 and 2 of Article 26 of the Convention be
construed so as to impose on a Contracting State theobligation to obtain or provide information that would
reveal confidential communications between a client and an
attorney, solicitor or other admitted legal representative
where such communications are:(a)

produced for the purposes of seeking or providing
legal advice; or(b)produced for the purposes of use in existing orcontemplated legal proceedings.

IN WITNESS WHEREOF the undersigned, being duly
authorised thereto by their respective Governments, havesigned this Protocol.
DONE in duplicate at Santiago this twenty-first day ofJanuary, 2016 in the English language.

For Japan:

For the Republic of Chile:

Naoto Nikai

Micco. A- 39
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