Tax Treaty Case Law around the Globe 2019

S. 371The Scope of Exchange of Information in Tax Treaties

Yuri Matsubara

S. 3721. Introduction

Since 2003 Japan has included an exchange of information clause (EoI) in her tax treaties, more precisely prescribed in a special act. The wording of the EoI clauses in the treaties essentially follows that of the OECD MC. According to official statistics issued by the Japanese National Tax Agency (NTA), the number of EoI requests has been increasing and, in general, the number of inquiries from the NTA to foreign competent authorities/agencies is greater than that of foreign competent authorities/agencies to NTA. According to these statistics Asia/Pacific is the most significant region from a Japanese perspective in relation to the application of the mutual assistance procedures.

In one case a famous Japanese entrepreneurial family faced an administrative tax investigation by the NTA resulting in EoI requests to Singapore and the Netherlands. This tax dispute became a precedent in Japan as there had not been a previous decision considering the limitations/eligibility of exchange of information requests.

The background to the tax dispute was that in 1975 Mr. Maki established his company, the Maki Enginee...