US Treasury and Japan agree to amend tax treaty

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US Treasury and Japan agree to amend tax treaty. (Reuters) US Treasury and Japan agree to amend tax treaty. (Reuters)
SummaryThe amendments include a new, winner-takes-all tax arbitration process.

The United States and Japan on Thursday signed an amended tax treaty that includes a tax dispute resolution process that benefits multinational corporations.

The deal, signed by Treasury Deputy Secretary Neal Wolin and Japanese Ambassador Kenichiro Sasae, must be ratified in both countries. The treaty was originally signed in 2003.

The amendments include a new, winner-takes-all tax arbitration process popularly known as "baseball arbitration."

The process arises when two countries disagree over which should collect corporate taxes. The winning country gets the tax revenue, while the loser goes home empty-handed.

International businesses want this provision in tax treaties because it can help prevent double taxation.

The United States has such arbitration agreements in tax treaties with Canada, France, Belgium and Germany.

The updated treaty also provides for the full exchange of information between both countries' corporate tax collectors.

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