[15806]
March 25, 2003
TO: INTERNATIONAL MEMBERS No. 10-03
INTERNATIONAL OPERATIONS ADVISORY COMMITTEE No. 16-03
TAX MEMBERS No. 20-03
RE: INSTITUTE LETTER TO JAPAN’S MOF AND FSA ON TAX TREATMENT OF
FOREIGN FUNDS
Attached is a letter the Institute has sent to the Ministry of Finance (MOF) and the
Financial Service Agency (FSA) in Japan regarding the tax treatment of offshore mutual funds.
We understand the MOF has been considering tax reforms that would have the result of
taxing the sale of foreign funds at a 26% rate, while imposing a temporary 10% rate on the sale
of domestic funds (the 10% rate would be replaced by a 20% rate after April 1, 2008). In
addition, the MOF is considering changing the withholding tax rules in a manner that would
also disadvantage United States-domiciled funds, because Japanese investors would no longer
receive a full credit for U.S. withholding taxes.
The Institute’s letter objects to such disparate tax treatment, discusses reasons why such
changes would disadvantage Japanese investors, and urges that similar financial instruments be
subject to the same tax treatment, and in particular the same tax rate.
David Orlin
Assistant Counsel
Attachment
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Attachment (in .pdf format)