Japan: Increase in withholding tax on securities income from 2013 approved

Further to our Taxflashes T11072, dated 8 November 2011, and T11077, dated 16 November 2011, and effective

1 January 2013

the proposal of the Japanese Government to increase the national tax on dividends and interest by 2.1% for a period of 25 years starting from 1 January 2013 was approved by the Diet on 30 November 2011.

Background

In order to secure funding for reconstruction after the earthquake of 11 March 2011, the Japanese Government Cabinet Office submitted to the Diet a bill providing, among other things, for a temporary increase in the national withholding tax rate on dividends and interest income.

Impact on customers

The national tax rate on dividend and interest income will be raised by 2.1% for 25 years starting from 1 January 2013.

Note: The J-BIEM (the tax-exemption scheme for Japanese fixed income instruments) was not within the scope of the proposal and will not be affected.

Details of the increase

Please refer to the following tables (in which N=National tax; L=Local tax):

Dividends

Interest

Note: The applicability of the special taxation treatment to dividend income (7% for foreign investors) is due to expire in December 2013 and the approval of the Diet is required for any further extension.

The above information is from the Cabinet Office of the Government of Japan. More information (not in English) is available from the Cabinet Office website (www.cao.go.jp/zei-cho/gijiroku/zeicho/2011/index.html).

Further information

For further information, please contact the Clearstream Banking¹ Tax Help Desk on:

or Clearstream Banking¹ Customer Service or your Relationship Officer.

1. Clearstream Banking refers collectively to Clearstream Banking AG, registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in the Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500 (CBF) and Clearstream Banking, société anonyme, registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Register of Commerce and Companies under number B-9248 (CBL).