The Government of Japan and Austria have agreed in principle to amend its dual agreement on the avoidance of taxation, in order to further develop trade and investment between the two countries.
The new agreement will allow, in accordance with the procedure of mutual agreement, to ensure the settlement of the double tax disputes.
Also, the new agreement will reduce the rate of withholding tax at the source of investment income (dividends, interest and royalties), as well as to expand cooperation between the tax authorities of the two countries by providing assistance in collection of taxes.
The Organization for Economic Cooperation and Development, in its final report, recommended that countries adopt a binding international agreement on avoidance of double taxation, to the dispute resolution mechanisms have become more efficient. Japan and Austria are among the 20 countries which have declared their commitment to the project.
Changes to the Agreement shall enter into force after the completion of the approval process in both countries.
Protocol double tax agreement tax between Japan and India came into force on 29 September.
The Protocol updates the provisions on the exchange of tax information existing contract. It also amends the list of state financial institutions or central banks eligible for exemption from income tax at source of interest payments presentation in Article 11.
The revised pact is active in Japan since 1 January 2017, and in India from April 1, 2017.
The new double tax agreement with Germany Japan also entered into force on 28 September. The new contract provides for more favorable conditions for companies engaged in trade or investment between the two territories. Agreement again provides tax exemption at source for interest and royalties.
Income from dividends will be removed if the company which receives income has a 25 percent share in dividends at least 18 months. Dividend income might otherwise qualify for a reduced rate of five per cent if the company which receives the dividends are held at least five percent of the company paying the dividends for at least six months. Otherwise, it will apply the rate of 15 percent.
For updated provisions on the exchange of tax information, which will operate from 28 October 2016, all other provisions will come into force on 1 January 2017.
Japanese and European trade and industry association addressed a joint letter to the leaders of the European Union and Japan, urging them to "make all efforts to speed up" the current negotiations on a free trade agreement.
16 September letter from the Japan Business Federation, Japan Business Council in Europe and the European Business Council in Japan seeking to enter negotiations this year.
EU and Japan at the recent G7 summit pledged to arrange a free trade agreement "as early as possible in 2016".
Currently, the EU and Japan are negotiating a free trade for more than three years, the letter stated: "While the 16 rounds of talks and negotiations were entered into the stage of maturity, a successful conclusion is not yet visible. ... We believe that the EU Japan and familiar with the views of each other, and both sides must now be crucial to the outstanding issues. "
"If in fact, the association called on leaders to do everything possible to ensure that the free trade agreement will lead to commercially meaningful market access, removal of tariff and non-tariff measures, and include an ambitious chapter on procurement."
The differences that remain between the two sides are said to include a request from Japan for the EU to reduce its import duties on cars, while the EU wants to reduce its non-tariff barriers in Japan for cars and agricultural items such as cheese, ham and wine.
The Minister of Finance in Japan, Taro Aso has said that the decision to remote previously proposed ales tax has claimed because of weak increasing of consumer spending.
Aso talked on press conference with his co-worker from South Korea, Yoo Il Ho. According to Japanese Finance Minister, Aso had said that although Although economic fundamentals of the Japanese economy are solid, private consumption is not enough power, compared with improving corporate earnings and employment. "He explained that the government decided to postpone the planned tax increase" because of this background."
The eight percent of sales tax firstly planned increase to 10 percent in October 2015 year, but then increasing was removed on April 2017 year. On the last week the Cabinet has signed propose about delaying of hiking sales tax for nearest time. The last time when the rate was hiking it was in April 2014 year from 5 to 8 percent.
The Ministry said that the Japanese government still seeks to promote fiscal consolidation, as well as the acceleration of expenditure and revenue reforms across the board and increase potential growth by further action on structural issues and the promotion of reform work."
The Government has also developed a new economic stimulus package amounting to JPY28.1 trillion (USD274.6bn), Aso said.
The International Monetary Fund (IMF) has announced to continue previously started process of increasing gradual consumption tax.
The eight percent rate of gradual consumption tax in Japan first time was planned to increase it for 10 percent in October 2015, but because of current plans, it won't working in near feature to October, 2019.
IMF in its 2016 Article IV consultation report for Japan said that the country need to repulse of previously planning rate for 2019 year and instead of to start with previously announced rate, step-by-step increase as fast as possible.
IMF said that gradual increasing of consumption tax at least for 15 percent with 0.5-1 percentage point after several time could help to balance targets of objectives of supporting growth and achieving fiscal sustainability in the long run.
In the report noticed that the structure of one rate must be save for a long time and worrying about tax impact on low-income households addressed by targeted cash transfers.
The stable budget consolidation of 1.5 percent in gross domestic product (GDP) per year to 2030 year will be enough to put the public debt-to-GDP ratio on a downward path, the Fund said.
Fitch Rating approved long-term credit rating to June 13, but outlook it in the negative light due to recent Shinzo Abe's decision to postpone an increase the consumption tax rate due to take effect in April next year.
Eight percent the rate for consumption tax rate was programme to incrase to ten percent in October 2015, but it impossible to do till October 2019. Abe also said that government provide additional actions of financial in this year for resiting continuing economic uncertainties.
In press-release credit agency approved taht the outlook revision followed the delay to the tax hike being made without "identifying any specific offsetting measures.
Increasing of consiting tax is an essential element in ficsual strategy of government consoladation, the main aim is to to bring the primary deficit of the general account of the central and local governments into balance by the fiscal year from April 2020 to March 2021 (FY20), against a 3.3 percent deficit in FY15," Fitch added.
The agency noted that expected for increasing tax rate to get approximatly 0,8 percent of of gross domestic product for deficit reduction. When announcing the delay, the Government said it remains committed to its target of primary balance by FY20, although it did not set out any further specific measures to achieve this goal."
Moody’s said that the prime minister of Japane was delay raising of consumption tax rate.
Eight percent of rate in Japane programmed special for incrising to 10 percent in October 2015.
Also Moody’s said that In a statement, Moody's commented that "the combined move is credit negative as it raises further questions over the Government's ability and willingness to meet its stated fiscal consolidation goals. By delaying the tax hike, we estimate the administration will forego additional revenues worth around one percent of gross domestic product per year. The stimulus will constitute a further unknown cost."
In Flitch Ratings also reported to have expressed some concern over the delay to the tax rate increase, as it could erode confidence in the Government's dedication to its fiscal consolidation targets.
On the other hand, in an interview with CNBC, Kim Eng Tan, Senior Director of Sovereign Ratings at S&P Global Ratings, was more understanding of Abe's decision to postpone the tax rate increase. He said it "doesn't spell the end of efforts by the Government at fiscal consolidation," as the hike will still occur when Japanese economic conditions have improved. Until then, Japan's "fiscal performance is unlikely to weaken.
The leaders of Japan, the European Union (EU), France, Germany, Italy and the UK have confirmed that the obligation to achieve a free trade agreement between the EU and Japan (FTA) "as early as possible in 2016 year."
The obligation announced in a joint statement issued on the sidelines of G7 summit in Japan. The leaders said they instructed their respective negotiators to speed up negotiations that began in March 2013.
"With our full support negotiators have to make efforts in the coming months to move forward with the process of negotiations, setting the way for an agreement that covers all types of tariffs and non-tariff measures on schedule," the statement said.
The statement also said that the talks will be held "in a constructive manner based on mutual trust" to achieve "a comprehensive, high-level and balanced agreement, which further consolidates our strong trade and economic cooperation."
Japan and Panama have agreed to conclude an agreement on the exchange of tax information.
Negotiations for this agreement were launched after the Japan-Panama summit meeting which took place on April 20 this year between Prime Minister Shinzo Abe and President of Panama Juan Carlos Varela.
The two leaders shared the view that Japan and Panama must immediately begin formal negotiations on an agreement on the exchange of tax information.
Currently it is likely that Japan will become the first country to sign an agreement on the exchange of tax information with Panama after the leak "Panama Papers" earlier this year.
The agreement will include the rules in accordance with the general standard of the automatic exchange of tax information between countries created by the Organization for Economic Cooperation and Development.