PROTOCOL 

AMENDING 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 

 The Government of the United States of America and the 

Government of Japan, 

 Desiring to amend 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 at 

Washington on 6 November 2003 (hereinafter referred to as “the 

Convention”) and the Protocol, which forms an integral part of 

the Convention, signed at Washington on 6 November 2003 

(hereinafter referred to as “the Protocol of 2003”), 

 Have agreed as follows: 

 
2 

ARTICLE I 

 Paragraph 5 of Article 1 of the Convention shall be 

deleted and replaced by the following: 

 “5. The provisions of paragraph 4 shall not affect the 

benefits conferred by a Contracting State under 

paragraphs 2 and 3 of Article 9, paragraph 3 of Article 

17, and Articles 18, 19, 23, 24, 25 and 28, but in the 

case of benefits conferred by the United States under 

Articles 18 and 19 only if the individuals claiming the 

benefits are neither citizens of, nor have been lawfully 

admitted for permanent residence in, the United States.” 

ARTICLE II 

 Paragraph 4 of Article 4 of the Convention shall be 

deleted and replaced by the following: 

 “4. Where by reason of the provisions of paragraph 1 a 

person other than an individual is a resident of both 

Contracting States, such person shall not be considered a 

resident of either Contracting State for the purposes of 

its claiming any benefits provided by this Convention.” 

ARTICLE III 

1. Subparagraph (a) of paragraph 3 of Article 10 of the 

Convention shall be amended by deleting the terms “more than 

50 percent” and replacing them with the terms “at least 50 

percent”, and deleting the words “twelve months” and replacing 

them with the words “six months”. 

2. Paragraph 9 of Article 10 of the Convention shall be 

amended by deleting the terms “or 2” everywhere they appear 

within the paragraph. 

ARTICLE IV 

 Article 11 of the Convention shall be deleted and 

replaced by the following: 

“ARTICLE 11 

 1. Interest arising in a Contracting State and 

beneficially owned by a resident of the other Contracting 

State may be taxed only in that other Contracting State. 

 2. Notwithstanding the provisions of paragraph 1: 

 (a) interest arising in a Contracting State that is 

determined by reference to receipts, sales, 

income, profits or other cash flow of the 

debtor or a related person, to any change in 

the value of any property of the debtor or a 

related person or to any dividend, partnership 

distribution or similar payment made by the 

debtor or a related person, or any other 

interest similar to such interest arising in a 

Contracting State, may be taxed in the 

Contracting State in which it arises, and 

according to the laws of that Contracting 

State, but if the beneficial owner of the 
3 

interest is a resident of the other Contracting 

State, the tax so charged shall not exceed 10 

percent of the gross amount of the interest; 

and 

 (b) a Contracting State may tax, in accordance with 

its domestic law, interest paid with respect to 

the ownership interests in an entity used for 

the securitization of real estate mortgages or 

other assets, to the extent that the amount of 

interest paid exceeds the return on comparable 

debt instruments as specified by the law of 

that Contracting State. 

 3. Interest shall be deemed to arise in a Contracting 

State when the payor is a resident of that Contracting 

State. Where, however, the person paying the interest, 

whether such person is a resident of a Contracting State 

or not, has in a state other than that of which such 

person is a resident a permanent establishment in 

connection with which the indebtedness on which the 

interest is paid was incurred, and such interest is borne 

by such permanent establishment, then: 

 (a) if the permanent establishment is situated in a 

Contracting State, such interest shall be 

deemed to arise in that Contracting State, and 

 (b) if the permanent establishment is situated in a 

state other than the Contracting States, such 

interest shall not be deemed to arise in either 

Contracting State. 

 4. The term “interest” as used in this Article means 

income from debt-claims of every kind, whether or not 

secured by mortgage and whether or not carrying a right 

to participate in the debtor’s profits, and in 

particular, income from government securities and income 

from bonds or debentures, including premiums and prizes 

attaching to such securities, bonds or debentures, and 

all other income that is subjected to the same 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 be regarded as 

interest for the purposes of this Convention. 

 5. The provisions of paragraphs 1 and 2 shall not apply 

if the beneficial owner of the interest, being a resident 

of a Contracting State, carries on business in the other 

Contracting State in which the interest arises, through a 

permanent establishment situated therein and the debtclaim in respect of which the interest is paid is 

effectively connected with such permanent establishment. 

In such case the provisions of Article 7 shall apply. 

 6. Where, by reason of a special relationship between 

the payor and the beneficial owner or between both of 

them and some other person, the amount of the interest, 

having regard to the debt-claim for which it is paid, 

exceeds the amount which would have been agreed upon by 

the payor and the beneficial owner in the absence of such 

relationship, the provisions of this Article shall apply 

only to the last-mentioned amount. In such case, the 

excess part of the payment may be taxed in the 

Contracting State in which it arises at a rate not to 

exceed 5 percent of the gross amount of the excess. 
4 

 7. A resident of a Contracting State shall not be 

considered the beneficial owner of interest in respect of 

a debt-claim if such debt-claim would not have been 

established unless a person: 

 (a) that is not entitled to benefits with respect 

to interest arising in the other Contracting 

State which are equivalent to, or more 

favorable than, those available under this 

Convention to a resident of the first-mentioned 

Contracting State; and 

 (b) that is not a resident of either Contracting 

State; 

 held an equivalent debt-claim against the 

 first-mentioned resident.” 

ARTICLE V 

1. Paragraph 2 of Article 13 of the Convention shall be 

deleted and replaced by the following: 

 “2. For the purposes of this Article the term “real 

property situated in the other Contracting State” shall 

include: 

 (a) real property referred to in Article 6; 

 (b) where that other Contracting State is Japan, 

shares or interests in a company, partnership 

or trust deriving the value of its property 

directly or indirectly principally from real 

property referred to in Article 6 and situated 

in Japan; and 

 (c) where that other Contracting State is the 

United States, a United States real property 

interest.” 

2. Paragraph 4 of Article 13 of the Convention shall be 

deleted and replaced by the following: 

“4. Notwithstanding the provisions of paragraph 3, gains 

from the alienation of any property, other than real 

property, forming part of the business property of a 

permanent establishment which an enterprise of a 

Contracting State has in the other Contracting State, 

including such gains from the alienation of such a 

permanent establishment (alone or with the whole 

enterprise), may be taxed in that other Contracting 

State.” 

ARTICLE VI 

 Article 15 of the Convention shall be deleted and 

replaced by the following: 

“ARTICLE 15 

 Directors’ fees and other similar payments derived 

by a resident of a Contracting State in his capacity as a 

member of the board of directors of a company which is a 

resident of the other Contracting State may be taxed in 

that other Contracting State.” 
5 

ARTICLE VII 

 Article 20 of the Convention shall be deleted and 

replaced by the following: 

“ARTICLE 20 (Deleted)” 

ARTICLE VIII 

 Clause (i) of subparagraph (b) of paragraph 5 of Article 

22 of the Convention shall be amended by deleting the words 

“the Securities and Exchange Law” and replacing them with the 

words “the Financial Instruments and Exchange Law”. 

ARTICLE IX 

 Paragraph 1 of Article 23 of the Convention shall be 

deleted and replaced by the following: 

 “1. (a) Subject to the provisions of the laws of Japan 

regarding the allowance as a credit against the 

Japanese tax of tax payable in any country 

other than Japan, where a resident of Japan 

derives income from the United States which may 

be taxed in the United States in accordance 

with the provisions of this Convention, the 

amount of the United States tax payable in 

respect of that income shall be allowed as a 

credit against the Japanese tax imposed on that 

resident. The amount of credit, however, shall 

not exceed the amount of the Japanese tax which 

is appropriate to that income. For the purposes 

of the preceding provisions of this 

subparagraph, income beneficially owned by a 

resident of Japan which may be taxed in the 

United States in accordance with the Convention 

shall be deemed to arise from sources in the 

United States. 

 (b) Subject to the provisions, other than the 

provisions with regard to ownership 

requirements of shares, of the laws of Japan 

regarding the exclusion of dividends from the 

basis upon which the Japanese tax is imposed, 

where the income derived from the United States 

is dividends paid by a company which is a 

resident of the United States to a company 

which is a resident of Japan and has owned at 

least 10 percent of the total shares issued by 

that company, during the period of six months 

immediately before the day when the obligation 

to pay dividends is confirmed, such dividends 

shall be excluded from the basis upon which the 

Japanese tax is imposed.” 

ARTICLE X 

1. Paragraph 3 of Article 24 of the Convention shall be 

amended by deleting the words “paragraph 8 of Article 11” and 

replacing them with the words “paragraph 6 of Article 11”. 

2. Paragraph 5 of Article 24 of the Convention shall be 
6 

amended by deleting the words “or paragraph 10 of Article 11”. 

ARTICLE XI 

 Article 25 of the Convention shall be amended by adding 

the following after paragraph 4: 

 “5. Where, pursuant to this Article, a person has 

presented a case to the competent authority of the 

Contracting State of which he is a resident or, if his 

case comes under paragraph 1 of Article 24, to that of 

the Contracting State of which he is a national, on the 

basis that the actions of one or both of the Contracting 

States have resulted for that person in taxation not in 

accordance with the provisions of this Convention, and 

the competent authorities of the Contracting States are 

unable to reach an agreement to resolve that case, the 

case shall be resolved through arbitration conducted in 

the manner prescribed by, and subject to the requirements 

of, this paragraph, paragraphs 6 and 7, and any rules or 

procedures agreed upon by the competent authorities of 

both Contracting States pursuant to subparagraph (i) of 

paragraph 7, if: 

 (a) the presenter of the case has submitted a 

written request to the relevant competent 

authority for resolution of the case through 

arbitration; and 

 (b) all concerned persons and their authorized 

representatives or agents have provided written 

statements not to disclose to any person 

(except other concerned persons) any 

information received during the course of the 

arbitration proceeding from the competent 

authorities of either Contracting State or the 

arbitration panel, other than the determination 

of such panel. 

 6. Notwithstanding the provisions of paragraph 5, a 

case shall not be submitted to arbitration if: 

 (a) a decision with respect to such case has 

already been rendered by a court or 

administrative tribunal of either Contracting 

State; 

 (b) the competent authorities of both Contracting 

States have agreed that the case is not 

suitable for resolution through arbitration and 

have notified the presenter of the case of such 

agreement no later than two years after the 

commencement date; or 

 (c) the case is the subject only of the provisions 

set forth in the final sentence of paragraph 3. 

 7. For the purposes of paragraphs 5, 6 and this 

paragraph, the following rules and definitions shall 

apply: 

 (a) The term “concerned person” means the presenter 

of a case to a competent authority for 

consideration under this Article and all other 

persons, if any, whose tax liability to either 
7 

Contracting State may be directly affected by a 

mutual agreement arising from that 

consideration. 

 (b) The “commencement date” for a case is the 

earliest date on which the information 

necessary to undertake substantive 

consideration for a mutual agreement has been 

received by the competent authorities of both 

Contracting States. 

 (c) An arbitration proceeding pursuant to this 

Article with respect to a case (other than a 

case described in subparagraph (d)) shall begin 

on the later of: 

 (i) two years after the commencement date of 

that case, unless the competent 

authorities of both Contracting States 

have agreed to a different date and 

notified the presenter of the case of such 

agreement; and 

 (ii) the earliest date upon which the 

requirements of subparagraphs (a) and (b) 

of paragraph 5 have been satisfied. 

 (d) An arbitration proceeding pursuant to this 

Article with respect to a case that is the 

subject of a request for an advance pricing 

arrangement, shall begin on the later of: 

 (i) six months after an official notification 

has been issued by the tax authority of 

either Contracting State of a correction 

of, or an intent to adjust, the pricing of 

a transaction or transfer covered by a 

request for an advance pricing arrangement 

regarding a concerned person, unless the 

competent authorities of both Contracting 

States have agreed to a different date and 

notified the presenter of the case of such 

agreement; and 

 (ii) the earliest date upon which the 

requirements of subparagraphs (a) and (b) 

of paragraph 5 have been satisfied. 

 However, in no event shall the arbitration 

proceeding begin any earlier than two years 

after the date on which the information 

necessary to undertake substantive 

consideration for a mutual agreement on the 

advance pricing arrangement has been received 

by the competent authorities of both 

Contracting States. 

 (e) Unless the presenter of the case does not 

accept the determination of the arbitration 

panel, such determination shall constitute a 

resolution by mutual agreement of the entire 

case under this Article at the time it is 

timely accepted by the presenter and shall be 

binding on both Contracting States. The 

resolution resulting from the determination of 

the arbitration panel shall be implemented 

notwithstanding any time limits or procedural 
8 

limitations in the law of the Contracting 

States, except such limitations as apply for 

the purposes of giving effect to such a 

resolution. 

 (f) For the purposes of an arbitration proceeding 

under paragraph 5 and this paragraph, the 

members of the arbitration panel and their 

staff shall be considered to be “persons or 

authorities” to whom information may be 

disclosed under Article 26. 

 (g) No information relating to an arbitration 

proceeding (including the determination of the 

arbitration panel) may be disclosed by the 

competent authorities of the Contracting 

States, except as permitted by this Convention 

and the laws of the Contracting States. In 

addition, all material prepared in the course 

of, or relating to, an arbitration proceeding 

shall be considered to be information exchanged 

between the competent authorities of the 

Contracting States pursuant to Article 26. 

 (h) The competent authorities of both Contracting 

States shall ensure that all members of the 

arbitration panel and their staff agree in 

written statements sent to each of the 

competent authorities of the Contracting States 

not to disclose any information relating to an 

arbitration proceeding (including the 

determination of the arbitration panel), and to 

abide by and be subject to the confidentiality 

and nondisclosure provisions of Article 26 and 

similar provisions of relevant laws of the 

Contracting States. Such statements shall also 

include their acceptance to serve on the 

arbitration panel. Notwithstanding the 

provisions of this subparagraph, the members of 

the arbitration panel or their staff shall 

disclose the determination of the arbitration 

panel to the competent authorities of both 

Contracting States. 

 (i) The competent authorities of both Contracting 

States shall agree in writing, before the date 

that the first arbitration proceeding 

commences, on time periods and procedures that 

are consistent with paragraphs 5, 6 and this 

paragraph for: 

 (i) notifying the presenter of the case of a 

modified date for the beginning of an 

arbitration proceeding under clause (i) of 

subparagraph (c) and clause (i) of 

subparagraph (d); 

 (ii) the appropriate application of arbitration 

in the context of advance pricing 

arrangements, including rules concerning 

the date on which an arbitration 

proceeding shall begin with respect to 

such arrangements; 

 (iii) obtaining the nondisclosure statements 

required by subparagraph (b) of paragraph 

5 and subparagraph (h) of this paragraph 
9 

from each concerned person, authorized 

representative or agent, and member of the 

arbitration panel (including their staff); 

 (iv) the appointment of the members of the 

arbitration panel; 

 (v) the submission of proposed resolutions, 

position papers, and reply submissions by 

the competent authorities of the 

Contracting States to the arbitration 

panel; 

 (vi) the submission by the presenter of the 

case of a paper setting forth the 

presenter’s views and analysis of the case 

for consideration by the arbitration 

panel; 

 (vii) the delivery by the arbitration panel of 

its determination to the competent 

authorities of both Contracting States; 

 (viii) the acceptance or rejection by the 

presenter of the case of the determination 

of the arbitration panel; and 

 (ix) the adoption by the arbitration panel of 

any additional procedures necessary for 

the conduct of its business. 

 The competent authorities of both Contracting States 

may agree in writing on such other rules and procedures 

as may be necessary for the effective and timely 

implementation of the provisions of paragraphs 5, 6 and 

this paragraph.” 

ARTICLE XII 

 Article 26 of the Convention shall be deleted and 

replaced by the following: 

“ARTICLE 26 

 1. The competent authorities of the Contracting States 

shall exchange such information as is foreseeably 

relevant for carrying out the provisions of this 

Convention or to the administration or enforcement of the 

domestic laws concerning taxes of every kind and 

description imposed on behalf of the Contracting States, 

insofar as the taxation thereunder is not contrary to the 

Convention. The exchange of information is not restricted 

by paragraph 1 of Article 1 and Article 2. If 

specifically requested by the competent authority of a 

Contracting State, the competent authority of the other 

Contracting State shall provide information under this 

Article in the form of authenticated copies of original 

documents (including books, papers, statements, records, 

accounts, and writings). 

 2. Any information received under paragraph 1 by a 

Contracting State shall be treated as secret in the same 

manner as information obtained under the laws of that 

Contracting State and shall be disclosed only to persons 

or authorities (including courts and administrative 

bodies) involved in the assessment, collection or 
10 

administration of, the enforcement or prosecution in 

respect of, or the determination of appeals in relation 

to, the taxes referred to in paragraph 1, or the 

oversight of such functions. 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 the 

obligation: 

 (a) to carry out administrative measures at 

variance with the laws and administrative 

practice of that or of the other Contracting 

State; 

 (b) to supply information which is not obtainable 

under the laws or in the normal course of the 

administration 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, or 

information the disclosure of which would be 

contrary to public policy; or 

 (d) 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: 

 (i) produced for the purposes of seeking or 

providing legal advice; or 

 (ii) produced for the purposes of use in 

existing or contemplated legal 

proceedings. 

 4. If information is requested by a Contracting State 

in accordance with this Article, the other Contracting 

State shall use its information gathering measures to 

obtain the requested 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 a Contracting 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 be 

construed to permit a Contracting State to decline to 

supply information solely because the information is held 

by 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.” 

 
11 

ARTICLE XIII 

 Article 27 of the Convention shall be deleted and 

replaced by the following: 

“ARTICLE 27 

 1. Subject to the provisions of this Article, the 

Contracting States shall lend assistance to each other in 

the collection of taxes, insofar as the taxation is not 

contrary to this Convention or any other agreement to 

which the Contracting States are parties, together with 

interest, costs of collection, additions to such taxes, 

and civil or administrative penalties related to such 

taxes (hereinafter referred to in this Article as a 

“revenue claim”). This assistance is not restricted by 

paragraph 1 of Article 1 and Article 2. Any assistance 

provided by a Contracting State shall be only to the 

extent allowable under the law of that Contracting State. 

 2. The assistance under paragraph 1 shall be lent only 

in the collection of the following revenue claims: 

 (a) a revenue claim in respect of a company: 

 (i) the determination of which is not eligible 

to be resolved by mutual agreement 

procedure pursuant to Article 25; 

 (ii) the determination of which has been 

mutually agreed upon pursuant to Article 

25; or 

 (iii) with respect to the determination of which 

the company has terminated the mutual 

agreement procedure; 

 (b) a revenue claim in respect of an individual. 

However, if the individual is a national of the 

Contracting State from which assistance is 

requested (hereinafter referred to as the 

“requested State”) at the time the application 

for assistance is received, assistance shall be 

lent only for revenue claims with respect to 

which the individual or a person acting on 

behalf of the individual: 

 (i) has filed a fraudulent tax return or a 

fraudulent claim for refund; 

 (ii) has willfully failed to file a tax return 

to evade taxes; or 

 (iii) has transferred assets into the requested 

State to avoid collection of the revenue 

claim. 

 3. Notwithstanding the provisions of paragraph 2, the 

assistance under paragraph 1 shall be lent in the 

collection of revenue claims that is necessary to ensure 

that any exemption or reduced rate of tax granted under 

this Convention shall not be enjoyed by persons not 

entitled thereto, provided that the requested State 

agrees with such determination of improper granting of 

benefits. 

 4. The provisions of this Article shall only apply to 
12 

revenue claims in respect of the taxes covered by Article 

2 and in addition, the following taxes: 

 (a) in the case of Japan: 

 (i) the consumption tax; 

 (ii) the inheritance tax; and 

 (iii) the gift tax; 

 (b) in the case of the United States: 

 (i) the Federal estate and gift taxes; 

 (ii) the Federal excise tax on insurance 

policies issued by foreign insurers; 

 (iii) the Federal excise taxes imposed with 

respect to private foundations; and 

 (iv) the Federal taxes related to employment 

and self-employment. 

 5. An application for assistance in the collection of a 

revenue claim, other than the collection of a revenue 

claim described in paragraph 3, shall include a 

certification by the competent authority of the 

Contracting State applying for such assistance 

(hereinafter referred to as the “applicant State”) that, 

under the laws of the applicant State, the revenue claim 

has been finally determined. For the purposes of this 

Article, a revenue claim is finally determined when the 

applicant State has the right under its domestic law to 

collect the revenue claim and all applicable 

administrative and judicial rights of the taxpayer to 

dispute or appeal the revenue claim have lapsed or been 

exhausted. 

 6. When an application for assistance by the applicant 

State has been accepted for collection by the requested 

State pursuant to the provisions of this Article, the 

revenue claim of the applicant State shall be treated, to 

the extent necessary for collection under the laws of the 

requested State, as assessed under the laws of the 

requested State (as of the time the application is 

received), and shall be collected by the requested State 

as though such revenue claim were the requested State’s 

own revenue claim in accordance with the laws applicable 

to the collection of the requested State’s own revenue 

claims. 

 7. Notwithstanding the provisions of paragraph 6, acts 

of collection carried out by the requested State in 

pursuance of an application for assistance, which, 

according to the laws of the applicant State, would have 

the effect of suspending or interrupting the period of 

limitation on the collection of a revenue claim in the 

applicant State if carried out by the applicant State, 

shall also have this effect with respect to the revenue 

claim under the laws of the applicant State. The 

requested State shall inform the applicant State about 

such acts. 

 8. A revenue claim with respect to which assistance is 

being lent by the requested State shall not, in that 

Contracting State, be subject to the time limits, or 
13 

accorded any priority, applicable to a revenue claim 

under the laws of that Contracting State by reason of its 

nature as such. 

 9. Nothing in this Article shall be construed as 

creating or providing any rights of administrative or 

judicial review by the requested State of the applicant 

State’s finally determined revenue claim, irrespective of 

any such rights that may be available under the laws of 

either Contracting State. 

 10. If, at any time pending execution of an application 

for assistance under this Article, the applicant State 

loses the right under its domestic law to collect the 

revenue claim or otherwise terminates collection, the 

competent authority of the applicant State shall promptly 

withdraw the application for assistance in collection and 

the requested State shall cease all measures of 

collection of the revenue claim. 

 11. If, at any time pending execution of an application 

for assistance under this Article, the applicant State 

suspends collection of the revenue claim according to the 

laws of the applicant State, the competent authority of 

the applicant State shall promptly notify the competent 

authority of the requested State of that fact, and the 

competent authority of the applicant State shall either 

suspend or withdraw its request at the option of the 

competent authority of the requested State and the 

requested State shall suspend or cease all measures of 

collection of the revenue claim accordingly. 

 12. Amounts collected by the requested State pursuant to 

this Article shall be remitted to the competent authority 

of the applicant State. 

 13. Unless the competent authorities of both Contracting 

States otherwise agree, the ordinary costs incurred in 

providing assistance in collection shall be borne by the 

requested State and any extraordinary costs so incurred 

shall be borne by the applicant State. 

 14. In no case shall the provisions of this Article be 

construed so as to impose on the requested State the 

obligation to carry out: 

 (a) administrative measures at variance with the 

laws and administrative practices of the 

requested State or of the applicant State; or 

 (b) measures which would be contrary to public 

policy. 

 15. In no case shall the provisions of this Article be 

construed so as to impose on the requested State an 

obligation to accept an application of the applicant 

State: 

 (a) if the applicant State has not pursued all 

appropriate measures to collect the revenue 

claim that is the subject of the application 

for assistance available under its laws or 

administrative practices; or 

 (b) if the administrative burden for the requested 

State is substantially disproportionate to the 

benefit to be derived by the applicant State. 
14 

 16. Before assistance is lent under the provisions of 

this Article, other than under paragraph 3, the competent 

authorities of both Contracting States shall agree upon 

the mode of application of this Article, including an 

agreement to ensure comparable levels of assistance to 

each of the Contracting States. In particular, the 

competent authorities of both Contracting States shall 

agree on a limit to the number of applications for 

assistance that a Contracting State may make in a 

particular year, as well as a minimum monetary threshold 

for a revenue claim for which assistance is sought, and 

procedural rules related to the remittance of amounts 

collected pursuant to the provisions of this Article.” 

ARTICLE XIV 

1. Subparagraph (a) of paragraph 1 of the Protocol of 2003 

shall be amended by deleting the words “United States excise 

tax” and replacing them with the words “Federal excise tax,” 

and subparagraph (b) of that paragraph shall be amended by 

deleting the words “United States excise tax” and replacing 

them with the words “Federal excise taxes”. 

2. Paragraph 9 of the Protocol of 2003 shall be deleted and 

replaced by the following: 

 “9. (Deleted)” 

3. The Protocol of 2003 shall be amended by adding the 

following after paragraph 13: 

 “14. With reference to paragraphs 5, 6 and 7 of Article 

25 of the Convention: 

 (a) It is understood that taxation shall be 

considered to have resulted for the purpose of 

paragraph 5 of Article 25 of the Convention 

from the actions of one or both of the 

Contracting States as soon as tax has been 

paid, assessed or otherwise determined (for 

example, a notification of correction, 

determination or deficiency of a tax liability 

has been issued), or in cases where the 

taxpayer is officially notified by the tax 

authorities that they intend to tax him on a 

certain element of income (for example, a 

notice of proposed adjustment has been issued). 

 (b) The arbitration panel shall consist of three 

individual members. The members appointed shall 

not be employees nor have been employees within 

the twelve-month period prior to the date on 

which the arbitration proceeding begins, of the 

tax administration, the Treasury Department, or 

the Ministry of Finance of the Contracting 

State which identifies them. Each competent 

authority of the Contracting States shall 

select one member of the arbitration panel. In 

the event that the competent authority of a 

Contracting State fails to make such selection 

in the manner and within the time periods 

agreed by the competent authorities of both 

Contracting States pursuant to subparagraph (i) 

of paragraph 7 of Article 25 of the Convention, 

the competent authority of the other 
15 

Contracting State shall select a second member 

of the arbitration panel. The two members so 

selected shall select a third member, who shall 

serve as Chair of the arbitration panel. If the 

two initial members of the arbitration panel 

fail to select the third member in the manner 

and within the time periods agreed by the 

competent authorities of both Contracting 

States pursuant to subparagraph (i) of 

paragraph 7 of Article 25 of the Convention, 

these members shall be dismissed, and each 

competent authority of the Contracting States 

shall select a new member of the arbitration 

panel. The Chair shall not be a national or 

lawful permanent resident of either Contracting 

State. Furthermore, the members appointed shall 

not have any prior involvement with the 

specific matters at issue in the arbitration 

proceeding for which they are being considered 

as members of the arbitration panel. 

 (c) If at any time before the arbitration panel 

delivers a determination to the competent 

authorities of the Contracting States: 

 (i) the competent authorities of the 

Contracting States reach a mutual 

agreement to resolve the case pursuant to 

Article 25 of the Convention; 

 (ii) the presenter of the case withdraws the 

request for arbitration; 

 (iii) a decision concerning the case is rendered 

by a court or administrative tribunal of 

one of the Contracting States during the 

arbitration proceeding; or 

 (iv) if any concerned person or their 

authorized representatives or agents 

willfully violates the written 

nondisclosure statement required by 

subparagraph (b) of paragraph 5 of Article 

25 of the Convention, and the competent 

authorities of both Contracting States 

agree that such violation should result in 

the termination of the arbitration 

proceeding; 

 the mutual agreement procedure, including the 

arbitration proceeding, with respect to the 

case shall terminate. 

 (d) The competent authority of each of the 

Contracting States shall be permitted to submit 

a proposed resolution addressing each 

adjustment or similar issue raised in the case. 

Such proposed resolution shall be a resolution 

of the entire case, and shall reflect, without 

modification, all matters in the case 

previously agreed between the competent 

authorities of both Contracting States. Such 

proposed resolution shall be limited to a 

disposition of specific monetary amounts (for 

example, of income, profit, gain or expense) 

or, where specified, the maximum rate of tax 

charged pursuant to the Convention, for each 
16 

adjustment or similar issue in the case, based 

on the application of the Convention to the 

case. The competent authority of each of the 

Contracting States shall also be permitted to 

submit a position paper for consideration by 

the arbitration panel. 

 (e) Notwithstanding the provisions of subparagraph 

(d), in the case of an arbitration proceeding 

concerning: 

 (i) the taxation of an individual with respect 

to whom the competent authorities of the 

Contracting States have been unable to 

reach an agreement regarding the 

Contracting State of which the individual 

is a resident; 

 (ii) the taxation of the business profits of an 

enterprise with respect to which the 

competent authorities of the Contracting 

States have been unable to reach an 

agreement on whether a permanent 

establishment exists; or 

 (iii) such other issues the determination of 

which are contingent on resolution of 

similar threshold questions; 

 the competent authorities of the Contracting 

States may submit proposed resolutions 

separately addressing the relevant threshold 

questions as described in clause (i), (ii) or 

(iii) above (for example, the question of 

whether a permanent establishment exists), and 

the contingent determinations (for example, the 

determination of the amount of profit 

attributable to such permanent establishment). 

 (f) Where an arbitration proceeding concerns a case 

comprising multiple adjustments or similar 

issues each requiring a disposition of specific 

monetary amounts (for example, of income, 

profit, gains or expense) or where specified, 

the maximum rate of tax charged pursuant to the 

Convention, the proposed resolution may propose 

a separate disposition for each adjustment or 

similar issue. 

 (g) Each of the competent authorities of the 

Contracting States shall receive the proposed 

resolution and position paper submitted by the 

other competent authority, and shall be 

permitted to submit a reply submission to the 

arbitration panel. Each of the competent 

authorities of the Contracting States shall 

also receive the reply submission of the other 

competent authority. 

 (h) The presenter of the case shall be permitted to 

submit for consideration by the arbitration 

panel a paper setting forth its analysis and 

views of the case. Such submission shall not 

include any information not previously provided 

to the competent authorities during the mutual 

agreement procedure and shall be made available 

to the competent authorities of both 
17 

Contracting States. 

 (i) The arbitration panel shall deliver a 

determination in writing to the competent 

authorities of the Contracting States. The 

determination of the arbitration panel shall be 

limited to one of the proposed resolutions 

submitted by the competent authorities of the 

Contracting States for each adjustment or 

similar issue and any threshold questions, and 

shall not include a rationale or any other 

explanation of the determination. The 

determination of the arbitration panel shall 

have no precedential value with respect to the 

application of the Convention in any other 

case. 

 (j) Unless the competent authorities of both 

Contracting States agree to a longer time 

period, the presenter of the case shall have 45 

days after receiving the determination of the 

arbitration panel to notify, in writing, the 

competent authority of the Contracting State to 

whom the case was presented, of his acceptance 

of the determination. If the presenter of the 

case fails to so advise the relevant competent 

authority, the determination shall be 

considered not to be accepted. In addition, in 

the event the case is pending in litigation or 

appeal, the determination of the arbitration 

panel shall be considered not to be accepted by 

the presenter of the case if any concerned 

person who is a party to the litigation or 

appeal does not advise, within the same time 

frame described above, the relevant court or 

administrative tribunal of its intention to 

withdraw from consideration all issues resolved 

in the arbitration proceeding. Where the 

determination of the arbitration panel is not 

accepted, the case will not be eligible for any 

further consideration by the competent 

authorities. 

 (k) The fees and expenses of the members of the 

arbitration panel, as well as any costs 

incurred in connection with the proceeding by 

the Contracting States, shall be borne 

equitably by the Contracting States. 

 15. With reference to paragraph 5 of Article 27 of the 

Convention: 

 (a) For the purposes of evaluating the final 

determination of a revenue claim: 

 (i) in the case of the United States, any 

administrative or judicial rights 

available to the taxpayer in connection 

with the revenue claim that arise after 

the collection of the revenue claim; 

 (ii) in the case of Japan, the right to take 

action pursuant to Article 36 of the 

Administrative Case Litigation Act (Law 

No. 139 of 1962) of Japan; 

 shall not be taken into account. 
18 

 (b) A Contracting State may suspend assistance if 

it determines that the actions of the other 

Contracting State have resulted in an imbalance 

in the levels of assistance between the 

Contracting States contemplated in Article 27 

of the Convention. In such case, the 

Contracting States shall enter into 

consultations with a view to restoring 

comparable levels of assistance consistent with 

paragraph 16 of Article 27 of the Convention.” 

ARTICLE XV 

1. This Protocol shall be subject to ratification, and the 

instruments of ratification shall be exchanged as soon as 

possible. It shall enter into force on the date of the 

exchange of instruments of ratification. 

2. This Protocol shall have effect: 

 (a) in respect of taxes withheld at source, for amounts 

paid or credited on or after the first day of the 

third month next following the date on which the 

Protocol enters into force; 

 (b) in respect of other taxes, for taxable years 

beginning on or after the first day of January next 

following the date on which the Protocol enters into 

force; 

3. Notwithstanding the provisions of paragraph 2, the 

provisions of paragraphs 5, 6 and 7 of Article 25 of the 

Convention, as amended by Article XI of this Protocol, shall 

have effect with respect to: 

 (a) Cases that are under consideration by the competent 

authorities as of the date on which this Protocol 

enters into force. For such cases, the commencement 

date shall be the date on which this Protocol enters 

into force. 

 (b) Cases that come under consideration after the date 

on which this Protocol enters into force. 

4. Notwithstanding the provisions of paragraph 2, the 

provisions of Article 26 of the Convention, as amended by 

Article XII of this Protocol, and Article 27 of the 

Convention, as amended by Article XIII of this Protocol, shall 

have effect from the date of entry into force of this 

Protocol. 

5. Notwithstanding the entry into force of this Protocol, an 

individual who is entitled to the benefits of Article 20 of 

the Convention at the time of the entry into force of this 

Protocol shall continue to be entitled to such benefits until 

such time as the individual would have ceased to be entitled 

to such benefits if this Protocol had not entered into force. 

6. This Protocol shall remain in effect as long as the 

Convention remains in force. 

 
19 

 IN WITNESS WHEREOF the undersigned, being duly authorized 

thereto by their respective Governments, have signed this 

Protocol. 

 DONE in duplicate at Washington this 24th day of January, 

2013, in the English and Japanese languages, each text being 

equally authentic. 

FOR THE GOVERNMENT OF FOR THE GOVERNMENT OF 

THE UNITED STATES OF AMERICA: JAPAN: