CONVENTION BETWEENJAPAN AND THE STATE OF KUWAITFOR THE AVOIDANCE OF DOUBLE TAXATION
AND THE PREVENTION OF FISCAL EVASION
WITH RESPECT TO TAXES ON INCOME

The Government of Japan and the Government of theState of Kuwait,
Desiring to conclude a Convention for the avoidance of
double taxation and the prevention of fiscal evasion withrespect to taxes on income,Have agreed as follows:
Article 1
Persons Covered
This Convention shall apply to persons who areresidents of one or both of the Contracting States.
Article 2
Taxes Covered
1.

This Convention shall apply to the following taxes:(a)in the case of Japan:(1)

the income tax;

(2)

the corporation tax; and(3)

the local inhabitant taxes(hereinafter referred to as “Japanese tax”); and(b)in the case of Kuwait:(1)

the corporate income tax;

(2)

the contribution from the net profits of the
Kuwaiti shareholding companies payable tothe Kuwait Foundation for Advancement of
Science (KFAS);(3)

the contribution from the net profits of
Kuwaiti shareholding companies payable tosupport the national budget;(4)the Zakat; and(5)the tax imposed to support national
employees(hereinafter referred to as “Kuwaiti 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, those referred to in paragraph 1. The competentauthorities of the Contracting States shall notify eachother of any significant changes that have been made in
their respective taxation laws, within a reasonable periodof time after such changes.
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;(b)

the term “Kuwait” means the territory of theState of Kuwait including any area beyond theterritorial sea which in accordance withinternational law has been or may hereafter be
designated, under the laws of Kuwait, as an area
over which Kuwait may exercise sovereign rights
or jurisdiction;(c)the terms “a Contracting State” and “the other
Contracting State” mean Japan or Kuwait, as thecontext requires;(d)the term “tax” means Japanese tax or Kuwaiti tax,
as the context requires;(e)the term “person” includes an individual, acompany and any other body of persons;(f)the term “company” means any body corporate or
any entity that is treated as a body corporate
for tax purposes;(g)the term “enterprise” applies to the carrying onof any business;(h)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;(i)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;(j)the term “national” means:

(k)

(l)

(1)

in the case of Japan, any individual
possessing the nationality of Japan, any
juridical person created or organised under
the laws of Japan and any organisation
without juridical personality treated forthe purposes of Japanese tax as a juridical
person created or organised under the lawsof Japan; and(2)

in the case of Kuwait, any individual
possessing the nationality of Kuwait and any
legal person, partnership or association
deriving its status as such from the laws inforce in Kuwait;

the term “competent authority” means:(1)in the case of Japan, the Minister ofFinance or an authorised representative of
the Minister of Finance; and(2)

in the case of Kuwait, the Minister ofFinance or an authorised representative of
the Minister of Finance; andthe term “business” includes the performance ofprofessional services and of other activities ofan independent character.

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 which 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
Resident
1.
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 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:(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 his status cannot be determined under theprovisions of subparagraphs (a) to (c), thecompetent authorities of the Contracting Statesshall 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 it shall be deemed to be aresident only of the Contracting State where its head or
main office is situated.
4.
Where, pursuant to any provisions of this Convention,a Contracting State reduces the rate of tax on, or exempts
from tax, income of a resident of the other Contracting
State and under the laws in force in that other Contracting
State the resident is subjected to tax by that other
Contracting State only on that part of such income which isremitted to or received in that other Contracting State,then the reduction or exemption shall apply only to so muchof such income as is remitted to or received in that other
Contracting State.
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:(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.

3.
A building site or a construction or installation
project constitutes a permanent establishment only if it
lasts more than nine months.

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 carrying on, for theenterprise, any other activity of a preparatory
or auxiliary character;(f)the maintenance of a fixed place of businesssolely for any combination of activities
mentioned in subparagraphs (a) to (e), provided
that the overall activity of the fixed place ofbusiness resulting from this combination is of apreparatory 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 the provisions of paragraph 6 apply - isacting on behalf of an enterprise and has, and habitually
exercises, in a Contracting State an authority to conclude
contracts in the name of the enterprise, that enterpriseshall be deemed to have a permanent establishment in thatContracting State 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 permanentestablishment under the provisions of that paragraph.

6.
An enterprise shall not be deemed to have a permanentestablishment in a Contracting State merely because it
carries on business in that Contracting State 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. However, when
the activities of such an agent are devoted wholly or
almost wholly on behalf of that enterprise he will not be
considered an agent of an independent status within themeaning of this paragraph.
7.
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.
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.
2.
The term “immovable property” shall have the meaning
which it has under the laws of the Contracting State inwhich the property in question is situated. The term shallin any case include property accessory to immovable
property, livestock and equipment used in agriculture andforestry, 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 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.

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.
3.
In determining the profits of a permanentestablishment, there shall be allowed as deductions
expenses of the enterprise, being expenses which are
incurred for the purposes of the permanent establishment,
including executive and general administrative expenses soincurred, and which would be deductible if the permanentestablishment were an independent enterprise which paid
those expenses, whether incurred in the Contracting Statein which the permanent establishment is situated orelsewhere.
4.
Insofar as it has been customary in a Contracting
State to determine the profits to be attributed to apermanent 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 Contracting
State from determining the profits to be taxed by such anapportionment as may be customary; the method ofapportionment adopted shall, however, be such that theresult shall be in accordance with the principles containedin this Article.
5.
No profits shall be attributed to a permanentestablishment by reason of the mere purchase by thatpermanent establishment of goods or merchandise for theenterprise.

6.
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.
7.
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
International Traffic
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 Kuwait, shall be exempt
from the enterprise tax of Japan, and, if an enterprise ofJapan, shall be exempt from any tax similar to theenterprise tax of Japan which may hereafter be imposed in
Kuwait.
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.
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.
2.
Where a Contracting State includes, in accordance withthe provisions of paragraph 1, in the profits of anenterprise 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 where the competent authorities of
the Contracting States agree, upon consultation, that allor part of the profits so included are profits which would
have accrued to the enterprise of the first-mentioned
Contracting State if the conditions made between the twoenterprises had been those which would have been madebetween independent enterprises, then that other
Contracting State shall make an appropriate adjustment tothe amount of the tax charged therein on those agreed
profits. In determining such adjustment, due regard shallbe had to the other provisions of this Convention.
3.
Notwithstanding the provisions of paragraph 1, aContracting State shall not change the profits of anenterprise of that Contracting State in the circumstancesreferred to in that paragraph, if an examination of thatenterprise is not initiated within seven years from the endof the taxable year in which the profits that would be
subject to such change would, but for the conditions
referred to in that paragraph, have accrued to thatenterprise. The provisions of this paragraph shall not
apply in the case of fraud or wilful default or if theinability to initiate an examination within the prescribedperiod is attributable to the actions or inaction of thatenterprise.
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 or indirectly, for the period of
six months ending on the date on which
entitlement to the dividends is determined, atleast 10 per cent of the voting shares of thecompany paying the dividends; or(b)

10 per cent of the gross amount of the dividends
in all other cases.

This paragraph shall not affect the taxation of thecompany in respect of the profits out of which thedividends are paid.
3.
The provisions of subparagraph (a) of paragraph 2
shall not apply in the case of dividends paid by a company
which is entitled to a deduction for dividends paid to its
beneficiaries in computing its taxable income in Japan.
4.
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 fromshares by the tax laws of the Contracting State of which
the company making the distribution is a resident.
5.
The provisions of paragraphs 1 and 2 shall not apply
if the beneficial owner of the dividends, being a residentof a 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 and the holding in respect of which the dividends
are paid is effectively connected with such permanentestablishment. In such case the provisions of Article 7
shall apply.
6.
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 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 the undistributed profits
consist wholly or partly of profits or income arising insuch 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 10 per cent of
the gross amount of the interest.
3.
Notwithstanding the provisions of paragraph 2,interest arising in a Contracting State shall be taxable
only in the other Contracting State if:(a)the interest is beneficially owned by theGovernment of that other Contracting State, apolitical subdivision or local authority thereof,or the central bank of that other Contracting
State or any institution wholly owned by that
Government; or(b)

the interest is beneficially owned by a residentof that other Contracting State with respect to
debt-claims guaranteed, insured or indirectly
financed by the Government of that other
Contracting State, a political subdivision or
local authority thereof, or the central bank ofthat other Contracting State or any institution
wholly owned by that Government.

4.
For the purposes of paragraph 3, the terms “thecentral bank” and “institution wholly owned by that
Government” mean:
(a)

(b)

in the case of Japan:(1)

the Bank of Japan;(2)

the Japan Finance Corporation;(3)

the Japan International Cooperation Agency;
and

(4)

the Nippon Export and Investment Insurance;in the case of Kuwait:(1)

the Central Bank of Kuwait;

(c)

(2)

Kuwait Investment Authority;(3)

Kuwait Petroleum Corporation;(4)

the Public Institution for Social Security;
and

(5)

Kuwait Fund for Arab Economic Development;
andsuch other similar institution the capital ofwhich is wholly owned by the Government of aContracting State as based upon the exchange of
diplomatic notes between the Governments of theContracting States.

5.
The term “interest” as used in this Article means
income from debt-claims of every kind, whether or notsecured by mortgage and whether or not carrying a right toparticipate in the debtor’s profits, and in particular,
income from government securities and income from bonds ordebentures, including premiums and prizes attaching to suchsecurities, bonds or debentures, and all other income thatis subjected to the same taxation treatment as income frommoney lent by the tax laws of the Contracting State inwhich the income arises. Income dealt with in Article 10
shall not be regarded as interest for the purposes of thisConvention.
6.
The provisions of paragraphs 1 and 2 shall not apply
if the beneficial owner of the interest, being a residentof a Contracting State, carries on business in the other
Contracting State in which the interest arises through apermanent establishment situated therein and the debt-claim
in respect of which the interest is paid is effectively
connected with such permanent establishment. In such casethe provisions of Article 7 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 he is a resident of a Contracting State or not, hasin a Contracting State a permanent establishment inconnection with which the indebtedness on which theinterest is paid was incurred, and such interest is borneby such permanent establishment, then such interest shallbe deemed to arise in the Contracting State in which thepermanent establishment is situated.

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, having
regard to the debt-claim for which it is paid, exceeds theamount which would have been agreed upon by the payer andthe beneficial owner in the absence of such relationship,
the provisions of this Article shall apply only to thelast-mentioned amount. In such case, the excess part ofthe payments shall remain taxable according to the laws ofeach Contracting State, due regard being had to the otherprovisions 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 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 theuse of, or the right to use, any copyright of literary,artistic or scientific work including cinematograph films
and films or tapes for radio or television broadcasting,
any patent, trade mark, design or model, plan, or secretformula or process, or for information concerningindustrial, commercial or scientific experience.
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 and the right orproperty in respect of which the royalties are paid iseffectively connected with such permanent establishment.
In such case the provisions of Article 7 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 he is a resident of a Contracting State or not, hasin a Contracting State a permanent establishment inconnection with which the liability to pay the royalties
was incurred, and such royalties are borne by suchpermanent establishment, then such royalties shall bedeemed to arise in the Contracting State in which thepermanent establishment 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.
Article 13
Capital Gains
1.
Gains derived by a resident of a Contracting State
from the alienation of immovable property referred to in
Article 6 and situated in the other Contracting State may
be taxed in that other Contracting State.
2.
Gains derived by a resident of a Contracting State
from the alienation of shares in a company or of interests
in a partnership or trust may be taxed in the other
Contracting State where the shares or the interests derive
at least 50 per cent of their value directly or indirectlyfrom immovable property referred to in Article 6 andsituated in that other Contracting State unless therelevant class of the shares or the interests is traded ona recognised stock exchange and the resident and persons
related or connected to that resident own in the aggregate
5 per cent or less of that class of the shares or theinterests.

3.

(a)

Where
(1)

substantial financial assistance to afinancial institution that is a resident ofa Contracting State is provided by theGovernment of that Contracting State
pursuant to the laws concerning failure
resolution involving imminent insolvency offinancial institutions of that Contracting
State, and(2)a resident of the other Contracting Stateacquires shares in the financial institution
from the Government of the first-mentioned
Contracting State,

the first-mentioned Contracting State may tax
gains derived by the resident of the other
Contracting State from the alienation of suchshares, provided that the alienation is madewithin five years from the first date on whichsuch financial assistance was provided.
(b)

The provisions of subparagraph (a) shall not
apply if the resident of that other Contracting
State acquired any shares in a financial
institution from the Government of the firstmentioned Contracting State before the entry into
force of the Convention or pursuant to a binding
contract entered into before the entry into forceof the Convention.

4.
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,including such gains from the alienation of such apermanent establishment (alone or with the wholeenterprise), may be taxed in that other Contracting State.
5.
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.
6.
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
Income from Employment
1.
Subject to the provisions of Articles 15, 17 and 18,
salaries, wages and other similar 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 that other
Contracting State for a period or periods notexceeding 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, anemployer who is not a resident of that other
Contracting State; and(c)the remuneration is not borne by a permanentestablishment which the employer has in that
other Contracting State.

3.
Notwithstanding the provisions of the preceding
paragraphs of this Article, remuneration derived in respectof an employment exercised aboard a ship or aircraft
operated in international traffic by an enterprise of aContracting State may be taxed in that Contracting State.
Article 15
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 of a company which is a
resident of the other Contracting State may be taxed inthat other Contracting State.

Article 16
Artistes and Sportsmen
1.
Notwithstanding the provisions of Articles 7 and 14,
income derived by an individual who is a resident of aContracting State as an entertainer, such as a theatre,
motion picture, radio or television artiste, or a musician,or as a sportsman, from his personal activities as such
exercised in the other Contracting State, may be taxed inthat other Contracting State.
2.
Where income in respect of personal activities
exercised in a Contracting State by an individual in his
capacity as an entertainer or a sportsman accrues not to
the individual himself but to another person who is a
resident of the other Contracting State, that income may,notwithstanding the provisions of Articles 7 and 14, be
taxed in the Contracting State in which the activities of
the individual are exercised.
Article 17
Pensions
Subject to the provisions of paragraph 2 of Article
18, pensions and other similar remuneration beneficiallyowned by a resident of a Contracting State shall be taxable
only in that Contracting State.
Article 18
Government Service
1.

(a)Salaries, wages and other similar remuneration
paid by a Contracting State or a politicalsubdivision or local authority thereof to anindividual in respect of services rendered tothat Contracting State or political subdivisionor local authority, in the discharge of functionsof a governmental nature, shall be taxable onlyin that Contracting State.

(b)

However, such salaries, wages and other similar
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:
(1)

is a national of that other Contracting
State; or(2)

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

2.

(a)

(b)

rendering the services.
Notwithstanding the provisions of paragraph 1,
pensions and other similar remuneration paid by,or out of funds to which contributions are madeor created by, a Contracting State or a politicalsubdivision or local authority thereof to anindividual in respect of services rendered tothat Contracting State or political subdivisionor local authority shall be taxable only in thatContracting State.
However, such pensions and other similar
remuneration shall be taxable only in the other
Contracting State if the individual is a residentof, and a national of, that other Contracting
State.

3.
The provisions of Articles 14, 15, 16 and 17 shallapply to salaries, wages, pensions, and other similar
remuneration in respect of services rendered in connection
with a business carried on by a Contracting State or apolitical subdivision or local authority thereof.
Article 19Students
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 are made to him from 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 he first
begins his training in the first-mentioned Contracting
State.
Article 20
Sleeping Partnership
Notwithstanding any other provisions of thisConvention, any income and gains derived by a sleeping
partner in respect of a sleeping partnership (Tokumei
Kumiai) contract or other similar contract may be taxed in
the Contracting State in which such income and gains arise
and according to the laws of that 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 (hereinafter referred
to as “other income” in this Article) shall be taxable onlyin that Contracting State.
2.
The provisions of paragraph 1 shall not apply to otherincome, other than income from immovable property as
defined in paragraph 2 of Article 6, if the beneficial
owner of such other income, being a resident of aContracting State, carries on business in the other
Contracting State through a permanent establishment
situated therein and the right or property in respect ofwhich the other income is paid is effectively connectedwith such permanent establishment. In such case theprovisions of Article 7 shall apply.
3.
Notwithstanding the provisions of paragraphs 1 and 2,
other income beneficially owned by a resident of aContracting State and arising in the other Contracting
State may also be taxed in that other Contracting State.
Article 22
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 Kuwait which may betaxed in Kuwait in accordance with the provisions of thisConvention, the amount of Kuwaiti 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 that part of the Japanese
tax which is appropriate to that income.
2.

In the case of Kuwait:(a)Where a resident of Kuwait derives income or owns
capital which, in accordance with the provisionsof this Convention, may be taxed in both Kuwait
and Japan, Kuwait shall allow as a deduction fromthe tax on the income of that resident, an amountequal to the income tax paid in Japan and as adeduction from the tax on the capital of that
resident, an amount equal to the capital tax paidin Japan.

(b)Such deduction in either case shall not, however,exceed that part of the tax on income or on
capital, as computed before the deduction is
given, which is attributable, as the case may be,to the income or the capital which may be taxed
in Japan.

3.
For the purposes of the preceding paragraphs of this
Article, income beneficially owned by a resident of aContracting State which may be taxed in the other
Contracting State in accordance with the provisions of thisConvention shall be deemed to arise from sources in that
other Contracting State.
Article 23
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 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. The provisions of this paragraph shallnot be construed as obliging a Contracting State to grant
to residents of the other Contracting State 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 bya resident of a Contracting State to a resident of theother Contracting State shall, for the purposes ofdetermining the taxable profits of the first-mentioned
resident, be deductible under the same conditions as if
they had been paid to a resident of the first-mentioned
Contracting State.

4.
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.
5.
In this Article, the term "taxation" means taxes which
are the subject of this Convention.
Article 24
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 23, 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.
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 for the purposesof reaching an agreement in the sense of the preceding
paragraphs of this Article.

Article 25
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.
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.
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 (ordre public).

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.
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 26
Miscellaneous Rules
The provisions of this Convention shall not be
construed to restrict in any manner any exclusion,
exemption, deduction, credit or other allowance now orhereafter accorded either:(a)by the laws of a Contracting State in thedetermination of the tax imposed by thatContracting State; or(b)by any other bilateral agreement between theContracting States or any multilateral agreement
to which the Contracting States are parties.

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 Force1.
This Convention shall be approved in accordance withthe legal procedures of each of the Contracting States andshall enter into force on the thirtieth day after the dateof exchange of diplomatic notes indicating such approval.
2.

This Convention shall be applicable:(a)with respect to taxes withheld at source, foramounts taxable on or after 1 January in thecalendar year next following that in which theConvention enters into force;(b)with respect to taxes on income which are notwithheld at source, as regards income for any
taxable year beginning on or after 1 January inthe calendar year next following that in which
the Convention enters into force; and(c)with respect to other taxes, as regards taxes forany taxable year beginning on or after 1 January
in the calendar year next following that in which
the Convention enters into force.
Article 30
Termination

This Convention shall remain in force until terminatedby a Contracting State. Either Contracting State may
terminate the Convention by giving written notice to theother Contracting State, through the diplomatic channel, atleast six months before the end of any calendar year
beginning after the expiry of five years from the date ofentry into force of the Convention. In such event, theConvention shall cease to have effect:(a)with respect to taxes withheld at source, foramounts taxable on or after 1 January in thecalendar year next following that in which thenotice is given;(b)with respect to taxes on income which are notwithheld at source, as regards income for any
taxable year beginning on or after 1 January inthe calendar year next following that in which
the notice is given; and(c)with respect to other taxes, as regards taxes forany taxable year beginning on or after 1 January
in the calendar year next following that in which
the notice is given.

IN WITNESS WHEREOF the undersigned, being duly
authorised thereto by their respective Governments, havesigned this Convention.
DONE in two originals at Kuwait this seventeenth day
of February, 2010, in the Japanese, Arabic and English
languages, all the three texts being equally authentic. In
case of any divergence of interpretation, the English text
shall prevail.

For the Governmentof Japan:

For the Governmentof the State of Kuwait:

Masatoshi Muto

Khalifa M. Hamada

Protocol
At the signing of the Convention between Japan and theState of Kuwait for the Avoidance of Double Taxation and
the Prevention of Fiscal Evasion with respect to Taxes on
Income (hereinafter referred to as “the Convention”), theGovernment of Japan and the Government of the State of
Kuwait have agreed upon the following provisions, whichshall form an integral part of the Convention.
1.
With reference to paragraph 1 of Article 4 of theConvention:
(a)

(b)

It is understood that the term “resident of aContracting State” includes:(1)

a pension fund established under the laws ofthat Contracting State; and(2)an organisation, an institution or an entity
the capital of which is owned by thatContracting State (together with suchcapital owned by any other state or statesother than that Contracting State),established under the laws of thatContracting State and operated for areligious, charitable, educational,
scientific, artistic, cultural or public
purpose.

It is further understood that, in the case of
Kuwait, the term “resident of a Contracting
State” includes:(1)

an individual who is a Kuwaiti national,
provided that the individual has asubstantial presence, permanent home orhabitual abode in Kuwait and that his
personal and economic relations are closer
to Kuwait than to any state other than
Kuwait; and(2)

a company which is incorporated in Kuwait
and has its place of head or main office
there.

2.
With reference to paragraph 6 of Article 5 of theConvention, it is understood the fact that an enterprise ofa Contracting State is acting in that Contracting State asa sole distributor of an enterprise of the other
Contracting State or has an exclusive sales agreement withan enterprise of the other Contracting State shall not of
itself constitute either enterprise a permanentestablishment of the other.
3.
With reference to Article 7 of the Convention, it isunderstood that in the case of profits from any activity
performed for a building site or a construction or
installation project, only so much of them will be
attributable to a permanent establishment as results fromthe actual performance of such activity by that permanentestablishment.
4.
With reference to Article 8 of the Convention, it isunderstood that profits from the operation of ships oraircraft in international traffic include:(a)profits from the rental on a bareboat basis ofships or aircraft; and(b)profits from the use, maintenance or rental ofcontainers, including trailers and related
equipment for the transport of containers, used
for the transport of goods or merchandise;

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.
5.
With reference to paragraph 3 of Article 10 of theConvention, it is understood that a company referred to inthat paragraph includes any entity which is established or
created under the Act on Securitisation of Assets (Law No.
105 of 1998) or the Act on Securities Investment Trust andSecurities Investment Corporations (Law No. 198 of 1951) ofJapan, and which is entitled to a deduction for dividends
paid to its beneficiaries in computing its taxable income
in Japan in accordance with the taxation laws of Japan.
6.
With reference to Article 11 of the Convention,
notwithstanding the provisions of paragraph 2 of that
Article, interest arising in Kuwait and beneficially owned
by a pension fund established under the laws of Japan shallbe taxable only in Japan.
7.
With reference to paragraph 2 of Article 13 of theConvention, it is understood that the term “recognised
stock exchange” means:(a)any stock exchange established by a Financial
Instruments Exchange or an approved-typefinancial instruments firms association under
the Financial Instruments and Exchange Law (Law
No. 25 of 1948) of Japan;(b)

Kuwait Stock Exchange; and(c)any other stock exchange which the competentauthorities of the Contracting States agree torecognise for the purposes of that paragraph.

8.
With reference to paragraph 3 of Article 13 of theConvention, for the purposes of applying that paragraph, inthe case of Japan, the term “the Government of thatContracting State” includes the Deposit Insurance
Corporation of Japan.
9.
Notwithstanding the provisions of paragraph 1 of
Article 14 of the Convention, remuneration which an
employee of an air carrier wholly owned by the governmentof a Contracting State who is or was immediately before
visiting the other Contracting State a resident of thefirst-mentioned Contracting State receives in respect ofservices rendered to the air carrier in that other
Contracting State shall not be taxed in that other
Contracting State. The exemption provided by thisparagraph shall apply to the employee only for a period notexceeding five years from the date on which he begins
rendering services in that other Contracting State.
10. With reference to Article 22 of the Convention, it isunderstood that the implementation of the provisions of thelaws of each Contracting State relevant to the applicationof that Article is not affected by the provisions of
subparagraph (b)(4) of paragraph 1 of Article 2 of theConvention.
11.

With reference to Article 23 of the Convention:(a)the provisions of that Article shall not be
construed as obliging a Contracting State to
grant to a resident of the other Contracting
State the benefit of preference, privilege or any
other treatment which shall be accorded to aresident of a state other than the Contracting
States by virtue of the formation of a customs
union or a free trade area or by virtue of any
regional arrangement relating wholly or partly totaxation, to which the first-mentioned
Contracting State is a party;(b)the provisions of paragraphs 2 and 4 of that
Article will not be fully implemented by Kuwait
until Kuwait or any political subdivision or
local authority thereof establishes the taxation
generally applicable to enterprises which arecarrying on activities in Kuwait;(c)the taxation on a resident of Japan in respect ofa permanent establishment which that resident has
in Kuwait shall not be less favourably levied in
Kuwait than the taxation levied on a resident ofa state other than the Contracting States
carrying on the same activities in respect of apermanent establishment in Kuwait; and(d)enterprises of Kuwait, the capital of which iswholly or partly owned or controlled, directly or
indirectly, by one or more residents of Japan,
shall not be subjected in Kuwait to any taxationor any requirement connected therewith which isother or more burdensome than the taxation andconnected requirements to which other similar
enterprises the capital of which is wholly or
partly owned or controlled, directly or
indirectly, by one or more residents of any stateother than the Contracting States are or may besubjected.

12. With reference to paragraph 5 of Article 25 of theConvention, a Contracting State may decline to supply
information relating to confidential communications between
attorneys, solicitors or other admitted legal
representatives in their role as such and their clients tothe extent that the communications are protected fromdisclosure under the domestic law of that Contracting
State.
IN WITNESS WHEREOF the undersigned, being duly
authorised thereto by their respective Governments, havesigned this Protocol.

DONE in two originals at Kuwait this seventeenth day
of February, 2010, in the Japanese, Arabic and English
languages, all the three texts being equally authentic. In
case of any divergence of interpretation, the English text
shall prevail.

For the Governmentof Japan:

For the Governmentof the State of Kuwait:

Masatoshi Muto

Khalifa M. Hamada