Principle or Clause of 'Saving' in Tax Conventions: Introduction and Analysis of One Japanese Case

Abstract

The main purpose here is an inquiry into the applicability of tax conventions, especially in the context of the personal scope. In other words, whom are tax conventions applicable? That question means the first step of the application of tax conventions.In general tax conventions (treaties) are applied to persons who are residents of one or both of the Contracting States. However, at the same time, the principle of has something do with tax conventions. This principle is embodied in some tax conventions as a clause, i.e. a Saving Clause. The general explanation thereon is as follows; Provision in US tax treaties under which the United States reserves or 'saves' its right tax its own residents or citizens (both individuals and legal entities) with certain exceptions on their worldwide income as if the treaty were not in effect.There may some divergence between the first-mentioned premise and the general explanation in the Saving Clause. Namely, tax conventions are applied residents of the Contracting States, but the Contracting States can tax their own residents without regard tax conventions. The key resolving this divergence may reside in analyzing the principle or clause of Saving.On this topic, the author has previously published one Article. That considered whether or not the same is true for tax conventions not including a Saving Clause as for those that do. In connection with that Article, what follows are considerations of the principle or clause of through the introduction and analysis of one Japanese case on this theme. In the light of the impact the U.S. has within the international tax area, the topic here can be shared with international magnitude, including non-Japanese reader.