ARTICLE 21 　　　　　　　　　　　Governmental Functions 　　The provisions of the 1954 Convention with respect to governmental functions were　substantially the same as those of the new Convention. The new Convention provides an exemption from Japanese tax with respect to wages, salaries, and similar remuneration, including pensions or similar benefits, paid by (or from the public funds of) the United States, or a political subdivision or local authority thereof, to a citizen of the United States for services performed for the United States or for any of its political subdivisions or local authorities in the discharge of governmental functions, provided such individual is not a national of Japan and has not been admitted to Japan for permanent residence. An exemption from United States tax is provided with respect to such payments paid by (or out of funds to which contributions are made by) Japan, or a local authority thereof, to an individual who is a national of Japan for services performed for Japan or for any of its local authorities in the discharge of governmental functions, provided such individual is not a citizen of the United States and does not have immigrant status in the United States. In the case of Japan, this article is applicable to payments made by the National Civil Servant Mutual Aid Association and the Local Civil Servant Mutual Aid Association. Compensation paid in connection with industrial or commercial activity carried on by a government is treated the same as compensation paid by a private employer. The provisions relating to dependent personal services, and pensions, annuities and social security payments would apply in such a case. ARTICLE 22 Rules Applicable to Personal Income Articles 　　This article extends the benefits of the personal services income articles (Article 17 through 21) to reimbursed travel expenses. However, such reimbursed expenses will not be taken into account in computing the maximum amount of exemptions. Maximum amounts are specified in paragraph (2) of Article 17 (relating to income from independent personal services of a public entertainer) and in Article 20 (relating to students and trainees). If an individual qualifies for the benefits of more than one of the provisions of Article 17 through 21, he may choose the provision most favorable to him, but he may not claim the benefits of more than one article with respect to the same income in any one taxable year. 　　As noted above, if an individual qualifies for the benefits provided under Article 19 (relating to teachers and researchers) or paragraph (1) of Article 20 (relating to students and trainees), such benefits will extend only for that period of time which is reasonably and customarily required to effectuate the purpose of the visit. If an individual qualifies successively for the benefits provided under both of such provisions, such benefits will not extend, in any case, for more than a total of 5 taxable years from the date of his arrival. ARTICLE 23 Pensions, Annuities, and Social Security Payments 　　The 1954 Convention did not provide any exemption from tax by the source State for pensions, annuities, and social security payments derived from sources within one State by individuals residing in the other State. 　　The new Convention provides that pensions and annuities received by a resident of a State will be taxable only in the State of residence. However, pensions coming within the scope of Article 21 (relating to governmental functions) are taxable according to that provision. 　　The term "pensions" is defined as including periodic payments, including United States and Japanese social security payments made by reason of retirement or death in consideration for services rendered, or by way of compensation for injuries received, in connection with employment. The term "annuities" is defined as including a stated sum paid periodically at stated times during life, or during a specified number of years, under an obligation to make the payments in return for adequate and full consideration (other than services rendered). 　　The effect of this provision with respect to pensions is generally the same as that of the OECD Model Convention. The treatment of social security payments in the same manner as private pensions differs from their treatment in our recent Belgian, French, Finnish and Norwegian Conventions, under which social security payments are taxable only by the State of source. ARTICLE 24 Diplomatic and Consular Officers 　　This article preserves the existing and subsequent fiscal privileges of diplomatic and consular officials under the general rules of international law or under the provisions of special agreements. ARTICLE 25 Mutual Agreement Procedure 　　This article modernizes the mutual agreement procedures by adopting provisions similar to those in our recent treaties with Belgium, France, Finland and Norway and in the recent amendments to our Conventions with the Netherlands, the United Kingdom, and the Federal Republic of Germany. When a resident of one State considers that the action of one or both States has resulted, or will possibly result, in taxation contrary to the provisions of the Convention, such resident may present his case to the competent authority of the State of which he is a resident. This remedy is in addition to any remedy provided by the national laws of either State. 　　This article contemplates that the competent authorities of the two States will endeavor to settle by mutual agreement such cases of taxation not in accordance with the Convention as well as any other difficulties or doubts arising as to the interpretation or application of the Convention. Some particular areas on which the competent authorities may consult and reach agreement are: 　　the amount of industrial and commercial profits to be attributed to a permanent establishment, 　　the allocation of income, deductions, credits, or allowances between a resident and a related person, 　　the determination of source of particular items, and 　　the meaning of any term used in the Convention. 　　However, consultation and agreement between the competent authorities are not restricted to the particular areas described in this article. Thus, for example, the competent authorities may consult and reach agreement with respect to uniform accounting for income and deductions. While not all income tax conventions to which the United States is a party are as explicit as to the broad scope of the mutual agreement procedure, most of our conventions grant the discretion to competent authorities to apply the mutual agreement procedure to an equally broad category of items. 　　In implementing the provisions of this article, the competent authorities will communicate with each other directly and meet together for an exchange of oral opinions when advisable. 　　In cases in which the competent authorities reach agreement with respect to a particular matter, taxes will be adjusted and refunds or credits allowed in accordance with such agreement. This provision permits the issuance of a refund or credit notwithstanding procedural barriers otherwise existing under a State's law, such as the statute of limitations. This provision will apply only where agreement has been reached in whole or in part between the competent authorities and will apply in the case of any such agreement on or after the date on which the Convention entered into force (July 9, 1972) even though the agreement may concern taxable years prior thereto. 　　Revenue Procedure 70-18 [1970-2 C.B. 493] sets forth the procedure followed by the United States in implementing its obligations under this type of article. ARTICLE 26 Exchange of Information 　　This article provides for a system of administrative cooperation between the competent authorities of the two States and specifies conditions under which information may be exchanged to facilitate the administration of the Convention and to prevent fraud and the avoidance of taxes to which the Convention relates. Pursuant to paragraph (3) of Article 1, this article applies to all national taxes of the two States. 　　Information exchanged is treated as secret and may not be disclosed to any persons other than those (including a court or administrative body) concerned with the assessment, collection, enforcement, or prosecution of taxes subject to the Convention. This does not prohibit disclosure in the course of a court proceeding. In no case does this article impose an obligation on either State to disclose trade secrets or similar information or to carry out administrative measures or supply particulars where such action would be at variance with the laws or administrative practice of that State, or contrary to public policy. In general, the standard for the exchange of information is the standard used by the States in the enforcement of their own laws by administrative and judicial authorities. 　　In addition, the new Convention specifically provides (as the 1954 Convention did not) that the competent authority of each State will advise the competent authority of the other State of any addition to or amendment of tax laws which concern the imposition of taxes which are the subject of the Convention. The competent authorities may also agree on a list of information to be exchanged on a routine basis. It is further provided that the competent authorities will exchange the texts of all published material interpreting the Convention under the laws of the respective States, whether in the form of regulations, rulings, or judicial decisions. The exchange of information may be either on a routine basis or on request with reference to particular cases. ARTICLE 27 Assistance in Collection 　　This article provides for mutual assistance in the collection of taxes where required to avoid an abuse of the Convention. The provision is intended merely to insure that the benefits of the Convention will only be available with respect to persons entitled to such benefits; it does not in anyway alter the rights under other provisions of the Convention. 　　This article provides that each State will endeavor to collect for the other State such amounts as may be necessary to insure that any exemption or reduced rate of tax granted under the Convention will not be availed of by persons not entitled to those benefits. The 1954 Convention contained a similar provision. However, under a provision not explicitly contained in the 1954 Convention (but nonetheless implied), this article does not require a State, in order to collect taxes which are imposed by the other State, to undertake any administrative measures that differ from its internal regulations or practices nor does this article require a State to undertake any administrative or judicial measures which are contrary to that State's sovereignty, security, or public policy. ARTICLE 28 Entry into Force 　　This article provides for the ratification of the Convention and for the exchange of instruments of ratification as soon as possible. The exchange of instruments of ratification took place on June 9, 1972. The Convention entered into force on the thirtieth day after the day of exchange of such instruments (July 9, 1972). However, the provisions of the Convention became effective, for both States, for income derived during any taxable year beginning on or after January 1, 1973, and, in the case of the United States, as respects taxes withheld at source on dividends, interest, royalties, and similar payments to any obligation to pay such taxes arising on or after January 1,1973. 　　In the case of Japan, no distinction is made with respect to the effective date for withholding taxes on dividends, interest, royalties, and similar payments, because foreign recipients of such payments are treated under Japanese internal law as having a taxable year beginning on January 1. This rule applies if a United States resident has a permanent establishment in Japan, even if the taxable year of such resident is different, except that the permanent establishment's taxable year would control if such payments are effectively connected with it. However, there would be no withholding if such payments are effectively connected with the permanent establishment. 　　The Convention of April 16, 1954 [1955-1 C.B. 658], as well as the Protocols of May 7, 1960 [1965-1 C.B. 611], and August 14, 1962 [1965-2 C.B. 562], terminated and ceased to have effect in respect of income to which the new Convention applies under the above-mentioned rules of this article. ARTICLE 29 Termination 　　The Convention will continue in effect indefinitely, but may be terminated by either State at any time after 5 years from the date on which the Convention entered into force. A State seeking to terminate the Convention must give notice at least 6 months before the end of the calendar year through diplomatic channels. 　　If the Convention is terminated, such termination will be effective: In the case of Japan: 　　For income derived during any taxable year beginning on or after January 1 next following the year in which the notice of termination is given.In the case of the United States: 　　1. As respects taxes withheld at source on dividends, interest, royalties, and similar payments on January 1 next following the expiration of the 6-month period; and 　　2. As respects other taxes on income, for any taxable year beginning on or after January 1 next following the expiration of the 6-month period. In the case of Japan, no distinction is made with respect to the termination date for purposes of withholding taxes on dividends, interest, royalties, and similar payments, because, as discussed with regard to Article 28 (relating to entry into force), foreign recipients of such payments are treated under Japanese internal law as having a taxable year beginning on January 1.