U.S. TREASURY DEPARTMENT 

JOINT STATEMENT FROM THE UNITED STATES AND JAPAN REGARDING A 

FRAMEWORK FOR INTERGOVERNMENTAL COOPERATION TO FACILITATE 

THE IMPLEMENTATION OF FATCA AND IMPROVE INTERNATIONAL TAX 

COMPLIANCE

I. General Considerations:

A. Building on their longstanding and close relationship with respect to mutual assistance in 

tax matters, the United States and Japan wish to intensify their co-operation in combating 

international tax evasion.

B. On 18 March 2010 the United States enacted provisions commonly referred to as the 

Foreign Account Tax Compliance Act (FATCA), which introduce reporting requirements 

for foreign financial institutions (FFIs) with respect to certain accounts. FATCA, 

however, has raised some issues, including that financial institutions in Japan may not be 

able to comply with all of the reporting, withholding and account closure requirements of 

FATCA because of legal restrictions.

C. Intergovernmental cooperation to facilitate FATCA implementation would address these 

legal impediments to compliance, simplify practical implementation, and reduce FFI 

costs.

D. In furtherance of the policy objectives of FATCA, the United States is open to adopting 

with interested countries, either an intergovernmental approach to implement FATCA 

(which would involve reporting by FFIs to their own governments followed by the 

automatic exchange of this information with the United States), or a framework for 

intergovernmental cooperation to facilitate the implementation of FATCA (which would 

provide for reporting directly between the FFIs and the United States in a manner 

consistent with FATCA requirements, supplemented by exchange of information on 

request).

E. Japan is supportive of the underlying goals of FATCA, and is interested in exploring a 

framework for intergovernmental cooperation to facilitate the implementation of FATCA 
and improve international tax compliance. The United States affirms its willingness to 

cooperate with Japan by collecting and exchanging information under the existing 

income tax convention on accounts held in U.S. financial institutions by residents of 

Japan.

F. The United States and Japan would be willing to work with other FATCA partners and 

the OECD in the medium term on developing a common model for automatic exchange 

of information, including the development of reporting and due diligence standards. Such 

collaboration ultimately would enhance compliance and facilitate enforcement to the 

benefit of all parties. The United States and Japan are cognizant of the need to keep 

compliance costs as low as possible for financial institutions and other stakeholders and 

are committed to working together and with other cooperative jurisdictions over the 

longer term towards achieving common reporting and due diligence standards.

G. In light of these considerations, the authorities of the United States and Japan have agreed 

to explore a framework for intergovernmental cooperation to facilitate the 

implementation of FATCA and improve international tax compliance based on the 

existing bilateral tax treaty between the U.S. and Japan.

II. Key Elements of the Framework:

A. The U.S. authorities (the Treasury Department and the Internal Revenue Service (IRS)) 

and the Japanese authorities (the Ministry of Finance (MOF), the National Tax Agency 

(NTA), and the Financial Services Agency (FSA)) would agree to a Framework pursuant 

to which, and subject to certain terms and conditions: 

1. The Japanese authorities would agree to: 

a. Direct and enable financial institutions in Japan, not otherwise exempt or deemed 

compliant pursuant to the Framework, to register with the IRS and confirm their 

intention to comply with official guidance issued by the FSA that is consistent 

with the obligations of participating FFIs under FATCA, including: (i) applying 

the due diligence rules prescribed under FATCA to identify U.S. accounts; (ii) 

annually reporting, in the time and manner prescribed by the FATCA rules, the 

information required with respect to identified U.S. accounts directly to the IRS if 

consent is obtained from the U.S. account holders; and (iii) annually reporting, in 

the time and manner prescribed by the FATCA rules, the aggregate number and 

aggregate value of accounts held by recalcitrant account holders to the IRS. 

b. Accept and promptly honor group requests made under the Framework by the 

U.S. competent authority for additional information about U.S. accounts 

identified as recalcitrant and reported on an aggregate basis by Japanese financial 

institutions. The Japanese competent authority would obtain the requested 

information from the identified Japanese financial institution and promptly 

exchange the information with the U.S. competent authority under Article 26 of 
the Convention Between the Government of the United States of America and the 

Government of Japan for the Avoidance of Double Taxation and the Prevention of 

Fiscal Evasion With Respect to Taxes on Income, signed on November 6, 2003, at 

Washington, DC.

2. The U.S. authorities would agree to:

a. Eliminate the obligation of each FFI in Japan to enter into a separate 

comprehensive FFI agreement directly with the IRS, provided that each FFI is 

registered with the IRS or is excepted from registration pursuant to the 

Framework or IRS guidance;

b. Identify in the Framework specific categories of Japanese financial institutions or 

entities (including in particular certain Japanese Pension funds) that would be 

treated as deemed compliant or exempt due to presenting a low risk of tax 

evasion;

c. Eliminate U.S. withholding under FATCA on payments to Financial Institutions 

in Japan that have registered or entered into an FFI agreement with the IRS and 

conduct due diligence and reporting in a manner consistent with FATCA 

requirements or are treated as deemed compliant or exempt pursuant to the 

Framework (i.e., by identifying all such financial institutions as participating 

FFIs, deemed-compliant FFIs or exempt as appropriate); and

d. Provide certain other measures to reduce burdens and simplify the implementation 

of FATCA.

B. In addition, as a result of the Framework, financial institutions in Japan that comply with 

their obligations would not be required to:

1. Terminate the account of a recalcitrant account holder; or

2. Impose passthru payment withholding on payments to recalcitrant account holders, to 

FFIs organized in Japan that have registered or entered into an FFI agreement with 

the IRS, or are otherwise exempt or deemed compliant, or to FFIs in another 

jurisdiction with which the United States has in effect either an agreement for an 

intergovernmental approach to FATCA implementation or an agreement such as the 

Framework for intergovernmental cooperation to facilitate the implementation of 

FATCA and improve international tax compliance.

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