Tokyo Court

rules repo-transactions not subject to withholding tax

The District Court of Tokyo gave its decision on 17 April 2007 with regard to repurchase transactions (i.e. repo-transactions) where a US subsidiary sold securities for a certain price to its Japanese parent company and repurchased the same securities from the parent company for a price exceeding the amount of the original sale. The Japanese tax authority imposed interest withholding tax on the difference between th…