OrbitaxThe Competent Authorities of the United States and Japan have signed a memorandum of understanding (MOU) defining the term "investment bank" for purposes of Art. 11 (Interest) of the 2003 income tax treaty between the two countries. The definition is relevant for determining eligibility for zero-rate withholding for interest payments under Art. 11(3)(c)(i) of the 003 Japan-US Treaty. The MOU was signed on 27 December 2005 and released by the US Internal Revenue Service (IRS) on 28 December 2005.
|Treaty Development|United States-Japan
The MOU is divided into five sections that set out the guidelines agreed to by the Competent Authorities concerning the meaning of the term "investment bank" as used in Art. 11(3)(c)(i). These sections: (i) define an investment bank as any person regularly engaged in activities specified in the MOU if 60% or more of its gross income for a 3-year period arises from such activities; (ii) prov…
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