After many years of discussion and negotiation, Taiwan’s Association of East Asian Relation and Japan’s Interchange Association finally signed 「THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVAION WITH RESPECT TO TAXES ON INCOME」(the “DTA”) in Tokyo on 26 November 2015. For the agreement to enter into force, both parties will notify each other in writing once their respective ratifying procedures have been completed. The DTA provides that each signatory state will not tax the profits of enterprises from the other state unless such enterprise has set up regular or permanent presence in the taxing state. As to the shipping and air freight industries, profits of enterprises engaging in international transport businesses are not taxable. At the same time, the DTA reduced the withholding tax rate from 20% to 10% on payments of dividends, interests and royalties.  With respect to income taxes imposed on wages or earnings, the residency threshold for imposing such tax is increased from 90 days to 183 days.  In addition to the above appropriate tax relief measures, the DTA makes clear that wages or earnings earned in one state is subject to tax by that state.  Also, income from the transfer of real property or shares (where over 50% of the value of such shares or beneficial interests derives directly or indirectly from real property within the territory of the taxing state) in a state’s territory is subject to tax by that state, but the payment of such tax is to be recognized as a credit by the other state to avoid double taxation.  The agreement establishes a negotiation mechanism to assist the parties to resolve disputes and to avoid taxation in violation of the agreement.  Finally, the competent authorities from each side may exchange relevant information.