JAPAN ESTATE AND GIFT TAX TREATY

UNITED STATES- JAPAN ESTATE, INHERITANCE, AND GIFT TAX TREATY

[Signed 4/16/54]

ARTICLE I

(1) The taxes referred to in the present convention are:

(a) In the case of the United States of America: The Federal estate
and gift taxes.

(b) In the case of Japan: The inheritance tax (including the gift
tax).

(2) The present convention shall also apply to any other tax on
estates, inheritances or gifts which has a character substantially
similar to those referred to in paragraph (1) of this Article and which
may be imposed by either contacting State after the date of signature of
the present convention.

ARTICLE II

(1) As used in the present convention:

(a) The term "United States" means the United States of America,
and when used in a geographical sense means the States, the Territories
of Alaska and Hawaii, and the District of Columbia.

(b) The term " Japan", when used in a geographical sense, means all
the territory in which the laws relating to the tax referred to in
paragraph (1)(b) of Article I are enforced.

(d) The term "competent authorities" means, in the case of the
United States, the Commissioner of Internal Revenue as authorized by the
Secretary of the Treasury; and, in the case of Japan, the Minister of
Finance or his authorized representative.

(2) In the application of the provisions of the present convention
by either contracting State any term not otherwise defined shall, unless
the context otherwise requires, have the meaning which such term has
under the laws of such State relating to the tax.

(3) For the purpose of the present convention, each contracting
State may determine in accordance with its laws whether a decedent at
the time of his death or a beneficiary of a decedent's estate at the
time of such decedent's death, or a donor at the time of the gift or a
beneficiary of a gift at the time of the gift, was domiciled therein or
a national thereof.

Article III

(1) If a decedent at the time of his death or a donor at the time
of the gift was a national of or domiciled in the United States, or if a
beneficiary of a decedent's estate at the time of such decedent's death
or a beneficiary of a gift at the time of the gift was domiciled in
Japan, the situs at the time of the transfer of any of the following
property or property rights shall, for the purpose of the imposition of
the tax and for the purpose of the credit authorized by Article V, be
determined exclusively in accordance with the following rules:

(a) Immovable property or rights therein (not including any
property for which specific provision is otherwise made in this Article)
shall be deemed to be situated at the place where the land involved is
located.

(b) Tangible movable property (including currency and any other
form of money recognized as legal tender in the place of issue and
excepting such property for which specific provision is otherwise made
in this Article) shall be deemed to be situated at the place where such
property is physically located, or, if in [transit], at the place of
destination.

(c) Debts (including bonds, promissory notes, bills of exchange,
bank deposits and insurance, except bonds or other negotiable
instruments in bearer form and such debts for which specific provision
is otherwise made in this Article) shall be deemed to be situated at the
place where the debtor resides.

(d) Shares or stock in a corporation shall be deemed to be situated
at the place under the laws of which such corporation was created or
organized.

(e) Ships and aircraft shall be deemed to be situated at the place
where they are registered.

(f) Goodwill as a trade, business or professional asset shall be
deemed to be situated at the place where the trade, business or
profession to which it pertains is carried on.

(g) Patents, trade-marks, utility models and designs shall be
deemed to be situated at the place where the trade, business or
profession to which it pertains is carried on.

(h) Copyrights, franchises, rights to artistic and scientific works
and rights or licenses to use any copyrighted material, artistic and
scientific works, patents, trade-marks, utility models or designs shall
be deemed to be situated at the place where they are exercisable.

(i) Mining or quarrying rights or mining leases shall be deemed to
be situated at the place of such mining or quarrying.

(j) Fishing rights shall be deemed to be situated in the country in
whose government's jurisdiction such rights are exercisable.

(k) Any property for which provision is not hereinbefore made shall
be deemed to be situated in accordance with the laws of the contracting
State imposing the tax solely by reason of the situs of property within
such State, but if neither of the contracting States imposes the tax
solely by reason of the situs of property therein, then any such
property shall be deemed to be situated in accordance with the laws of
each contracting State.

(2) The application of the provisions of paragraph (1) of this
Article shall be limited to the particular property, and any portion
thereof, which without such provisions would be subjected to the taxes
of both contracting States or would be so subjected except for a
specific exemption.

ARTICLE IV

Where one of the contracting States imposes the tax solely by
reason of the situs of property within such State, in the case of a
decedent who at the time of his death, or of a donor who at the time of
the gift, was a national of or domiciled in the United States, or in the
case of a beneficiary of a decedent's estate who at the time of such
decedent's death, or a beneficiary of a gift who at the time of the
gift, was domiciled in Japan, the contracting State so imposing the tax:

(a) shall allow a specific exemption which would be applicable
under its laws if the decedent donor, or beneficiary, as the case may
be, had been a national of or domiciled in such State, in an amount not
less than the proportion thereof which (A) the value of the property,
situated according to Article III in such State and subjected to the
taxes of both contracting States or which would be so subjected except
for a specific exemption, bears to (B) the value of the total property
which would be subjected to the tax of such State if such decedent,
donor, or beneficiary had been a national of or domiciled in such State;
and

(b) shall (except for the purpose of subparagraph (a) of this
paragraph and for the purpose of any other proportional allowance
otherwise provided) take no account of property situated according to
Article III outside such State in determining the amount of the tax.

ARTICLE V

(1) Where either contracting State imposes the tax by reason of the
nationality thereof or the domicile therein of a decedent or a donor or
a beneficiary of a decedent's estate or of a gift, such State shall
allow against its tax (computed without application of this Article) a
credit for the tax imposed by the other contracting State with respect
to property situated at the time of the transfer in such other State and
included for the taxes of both States (but the amount of the credit
shall not exceed that portion of the tax imposed by the crediting State
which is attributable to such property). The provisions of this
paragraph shall not apply with respect to any property referred to in
paragraph (2) of this Article.

(2) Where each contracting State imposes the tax by reasons of the
nationality thereof or the domicile therein of a decedent or a donor or
a beneficiary, with respect to any property situated at the time of the
transfer outside both contracting States (or deemed by each contracting
State to be situated in its territory, or deemed by one contracting
State to be situated in either contracting State and deemed by the other
contracting State to be situated outside both contracting States or
deemed by each contracting State to be situated in the other contracting
State), each contracting State shall allow against its tax (computed
without application of this Article) a credit for a part of the tax
imposed by the other contracting State attributable to such property.
The total of the credits authorized by this paragraph shall be equal to
the amount of the tax imposed with respect to such property by the
contracting State imposing the smaller amount of the tax with respect to
such property, and shall be divided between both contracting States in
proportion to the amount of the tax imposed by each contracting State
with respect to such property.

(3) The credit authorized by this Article, if applicable, shall be
in lieu of any credit for the same tax authorized by the laws of the
crediting State, the credit applicable for the particular tax being
either credit authorized by this Article or credit authorized by such
laws, whichever is the greater. For the purposes of this Article, the
amount of the tax of each contracting State attributable to any
designated property shall be ascertained after taking into account any
applicable diminution or credit against its tax with respect to such
property (other than any credit under paragraph (1) or (2) of this
Article), provided, however, in case another credit for the tax of any
other foreign State is allowable with respect to the same property
pursuant to any other convention between the crediting State under the
present convention and such other foreign State, or pursuant to the laws
of the crediting State, the total of such credits shall not exceed the
amount of tax of the crediting State attributable to such property
computed before allowance of such credits.

(4) Credit against the tax of one of the contracting States for the
tax of the other contracting State shall be allowed under this Article
only where both such taxes have been simultaneously imposed at the time
of a decedent's death or at the time of a gift.

(5) No credit resulting from the application of this Article shall
be allowed after more than five years from the due date of the tax
against which credit would otherwise be allowed, unless claim therefor
was filed within such five-year period. Any refund resulting from the
application of this Article shall be made without payment of interest on
the amount so refunded, unless otherwise specifically authorized by the
crediting State.

(6) Credit against the tax of one of the contracting States shall
not be finally allowed for the tax of the other contracting State until
the latter tax (reduced by credit authorized under this Article, if any)
has been paid.

ARTICLE VI

(1) The competent authorities of both contracting States shall
exchange such information available under the respective tax laws of
both contracting States as is necessary for carrying out the provisions
of the present convention or for the prevention of fraud or for the
administration of statutory provisions against tax avoidance in relation
to the tax. Any information so exchanged shall be treated as secret and
shall not be disclosed to any person other than those, including a
court, concerned with the assessment and collection of the tax or the
determination of appeals in relation thereto. No information shall be
exchanged which would disclose any trade, business, industrial or
professional secret or any trade process.

(2) Each of the contracting States may collect the tax imposed by
the other contracting State (as though such tax were the tax of the
former State) as will ensure that the credit or any other benefit
granted under the present convention by such other State shall not be
enjoyed by persons not entitled to such benefits.

ARTICLE VII

Where representative of the estate of a decedent or a beneficiary
of such estate or a donor or a beneficiary of a gift shows proof that
the action of the tax authorities of either contracting State has
resulted, or will result, in double taxation contrary to the provisions
of the present convention, such representative, donor or beneficiary
shall be entitled to present the facts to the competent authorities of
the contracting State of which the decedent was a national at the time
of his death or of which the donor or beneficiary is a national, or if
the decedent was not a national of either of the contracting States at
the time of his death or if the donor or the beneficiary is not a
national of either of the contracting States, to the competent
authorities of the contracting State in which the decedent was domiciled
or resident at the time of his death or in which the donor or
beneficiary is domiciled or resident. Should the claim be deemed worthy
of consideration, the competent authorities of such State to which the
facts are so presented shall undertake to come to an agreement with the
competent authorities of the other contracting State with a view to
equitable avoidance of the double taxation in question.

ARTICLE VIII

(1) The provisions of the present convention shall not be construed
to deny or affect in any manner the right of diplomatic and consular
officers to other or additional exemptions now enjoyed or which may
hereafter be granted to such officers.

(2) The provisions of the present convention shall not be construed
so as to increase the tax imposed be either contracting State.

(3) Should any difficulty or doubt arise as to the interpretation
or application of the present convention, or its relationship to
conventions between one of the contracting States and any other State,
the competent authorities of the contracting States may settle the
question by mutual agreement; it being understood, however, that this
provision shall not be construed to preclude the contracting States from
settling by negotiation any dispute arising under the present
convention.

(4) The competent authorities of both contracting States may
prescribe regulations necessary to interpret and carry out the
provisions of the present convention and may communicate with each other
directly for the purpose of giving effect to the provisions of the
present convention.

ARTICLE IX

(1) The present convention shall be ratified and the instruments of
ratification shall be exchanged at Tokyo as soon as possible.

(2) The present convention shall enter into force on the date of
exchange of instruments of ratification and shall be applicable to
estates or inheritances in the case of persons who die on or after the
date of such exchange and to gifts made on or after that date.

(3) Either of the contracting States may terminate the present
convention at any time after a period of five years shall have expired
from the date on which the convention enters into force, by giving to
the other contracting State notice of termination, provided that such
notice is given on or before the 30th day of June and, in such event the
present convention shall cease to be effective for the taxable years
beginning on or after the first day of January of the calendar year next
following that in which such notice is given.

IN WITNESS WHEREOF, the undersigned Plenipotentiaries have signed
the present convention.

DONE at Washington, in duplicate, in the English and Japanese
languages, each text having equal authenticity, this sixteenth day of
April, 1954.

FOR THE UNITED STATES OF AMERICA:

WALTER BEDELL SMITH

FOR JAPAN:

S. IGUCHI