The protocol and exchange of letters amend the existing arrangements between the UK and Northern Ireland and Japan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion such that:

• dividends paid to parent companies holding between 10 and 50% of the subsidiary paying the dividend will be free of withholding tax (currently 5%);
• a zero rate of withholding tax will apply to a wider range of interest payments;
• the business profits article 7 reflects the latest OECD text;
• the taxation of capital gains on share sales is brought closer to the OECD approach;
• the mutual agreement procedure article provides for mandatory binding arbitration; and
• the protocol contains the latest exchange of information article and provides for assistance in collection.

The new arrangements will be effective from the following start dates:

In the UK

• withholding taxes, on income derived on or after 1 January 2015;
• income tax and capital gains tax, for any year of assessment beginning on or after 6 April 2015; and 
• corporation tax, for any financial year beginning on or after 1 April 2015.

In Japan

• withholding taxes, on amounts taxable on or after 1 January 2015; and
• income taxes other than withholding taxes, for any tax year beginning on or after 1 January 2015.

The protocol and exchange of letters are available at http://www.legislation.gov.uk/uksi/2014/1881/schedule/made