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Laws of Japan |
Order for Enforcement of the Act on Special
Measures Concerning Taxation (Limited to the provisions related to nonresidents and foreign
corporations)
(Cabinet Order No. 43 of March 31, 1957) Chapter II Special Provisions for the Income Tax Act
Section 1 Special Provisions on Interest Income and Dividend Income
(Special Provisions on Taxation on Interest from Book-Entry National Bonds, etc.)
Article 3 (1) The amount calculated as specified by Cabinet Order prescribed in Article 5-2, paragraph (1) and paragraph (3) of the
Act shall be the amount specified respectively in the following items for the category of cases listed in
the relevant items:
(i) Where the first day of the holding period prescribed in Article 5-2,
paragraph (1) of the Act (hereinafter referred to as the "holding period" in this Article) for book-entry national bonds
prescribed in said paragraph
(hereinafter referred to as "book-entry national bonds" in this Article) held
by a nonresident or foreign corporation falls on or before the first day of the accounting period for interest from said book-entry
national bonds: The
amount of interest for said accounting period
(ii) Where the first day of the holding period for book-entry national bonds held by a nonresident or foreign corporation falls after
the first day of the
accounting period for interest from said book-entry national bonds: The
amount calculated by multiplying the amount of interest for said accounting period by the number of days in said holding period and
then dividing the
result by the number of days in said accounting period
(iii) Where the first day of the holding period for book-entry municipal bonds
prescribed in Article 5-2, paragraph (1) of the Act (hereinafter referred to as
"book-entry municipal bonds" in this Article) held by a nonresident or foreign corporation falls on or before the first
day of the accounting period for
interest from said book-entry municipal bonds: The amount of interest for said accounting period
(iv) Where the first day of the holding period for book-entry municipal bonds
held by a nonresident or foreign corporation falls after the first day of the accounting period for interest from said book-entry
municipal bonds: The amount calculated by multiplying the amount of interest for said accounting period by the number of days in
said holding period and then dividing the
result by the number of days in said accounting period.
(2) Where a nonresident or foreign corporation that is the trustee of a qualified
foreign securities investment trust as prescribed in Article 5-2, paragraph (2)
of the Act (hereinafter referred to as a "qualified foreign securities investment trust" in this Article) seeks the application
of the provisions of Article 5-2,
paragraph (1) of the Act with respect to interest from book-entry national
bonds or book-entry municipal bonds received thereby for the trust property under said qualified foreign securities investment trust,
said nonresident or foreign corporation shall submit, for each qualified foreign securities
investment trust accepted thereby, a written application for a tax exemption on
book-entry national bonds as prescribed in Article 5-2, paragraph (1), item (i), (a) of the Act (hereinafter referred to as a "written
application for a tax
exemption on book-entry national bonds" in this Article) and a statement of the holding period of book-entry national bonds prescribed
in Article 5-2,
paragraph (1), item (i), (b) of the Act (referred to as a "statement of the holding
period of book-entry national bonds" in paragraphs (7) to (9)), or a written
application for a tax exemption on book-entry municipal bonds as prescribed in
Article 5-2, paragraph (1), item (ii), (a) of the Act (hereinafter referred to as a
"written application for a tax exemption on book-entry municipal bonds" in this
Article) and a statement of the holding period of book-entry municipal bonds
prescribed in Article 5-2, paragraph (1), item (ii), (b) of the Act (referred to as a "statement of the holding period of book-entry
municipal bonds" in paragraph (7), paragraph (8) and paragraph (11)), to the district director of the tax office
prescribed in Article 5-2, paragraph (1), item (i), (a) of the Act pursuant to the
provisions of Article 5-2, paragraph (1), item (i), (a) and (b) of the Act, or the
district director of the tax office prescribed in Article 5-2, paragraph (1), item (ii), (a) of the Act pursuant to the provisions
of Article 5-2, paragraph (1), item (ii), (a) and (b) of the Act.
(3) Where a nonresident or foreign corporation makes, for the first time, entries or records under the book-entry transfer system
(meaning entries or records
under the book-entry transfer system prescribed in Article 5-2, paragraph (5), item (vi) of the Act; hereinafter the same shall apply
in this Article) with
regard to book-entry national bonds (limited to those that bear interest;
hereinafter referred to as "interest-bearing book-entry national bonds" in this paragraph, paragraph (5) and paragraph (22))
in an account listed in the
following items, if the person specified in the relevant item for the category of
accounts listed in that item has, when said entries or records under the book-
entry transfer system were made, prepared a document that states the name of said nonresident or foreign corporation and his/her or
its address as prescribed
in Article 5-2, paragraph (1), item (i), (a) of the Act (hereinafter referred to as
"address" in this paragraph, paragraph (5) and paragraph (22)) and any other
matters specified by Ordinance of the Ministry of Finance (hereinafter referred to as a "document on special measures for book-entry
national bonds" in this
paragraph and the following paragraph) and submitted said document on
special measures for book-entry national bonds to the district director of the
tax office prescribed in Article 5-2, paragraph (1), item (i), (a) of the Act (in the case where the specified book-entry transfer
institution, etc. (meaning a
specified book-entry transfer institution, etc. as prescribed in paragraph (1) of said Article; hereinafter the same shall apply in
this Article) pertaining to the person specified in the relevant item is a specified account management
institution as prescribed in Article 5-2, paragraph (5), item (ii) of the Act
(hereinafter referred to as a "specified account management institution" in this Article), submission shall be made to said
district director of the tax office via a specified book-entry transfer institution prescribed in paragraph (5), item (i) of said
Article (hereinafter referred to as a "specified book-entry transfer
institution" in this Article); in the case where the specified book-entry transfer
institution, etc. of the person specified in the relevant items is a specified secondary account management institution as prescribed
in paragraph (5), item (iii) of said Article (hereinafter referred to as a "specified secondary
account management institution" in this Article), submission shall be made to
said district director of the tax office via [1] the specified account management institution pertaining to the entries or records
under the book-entry transfer
system regarding said interest-bearing book-entry national bonds (in the case where said specified book-entry transfer institution,
etc. pertaining to the
person specified in the relevant items makes entries or records under the book-
entry transfer system regarding the interest-bearing book-entry national bonds through any other specified secondary account management
institution,
submission shall be made via said other specified secondary account
management institution and the specified account management institution pertaining to the entries or records under the book-entry
transfer system
regarding said interest-bearing book-entry national bonds) and [2] a specified
book-entry transfer institution), said nonresident or foreign corporation shall be deemed to have submitted a written application
for a tax exemption on
book-entry national bonds pursuant to the provisions of Article 5-2, paragraph
(1), item (i), (a) of the Act with respect to said interest-bearing book-entry national bonds; provided, however, that this shall
not apply where the name and address entered in said document on special measures for book-entry
national bonds differ from the name and address of the nonresident or foreign
corporation for which confirmation has been provided pursuant to the
provisions of paragraph (9) of said Article (including the cases where it is
applied mutatis mutandis pursuant to paragraph (12) of said Article) with
respect to book-entry municipal bonds (hereinafter referred to as "confirmation
for book-entry municipal bonds" in this paragraph, the following paragraph and paragraph (22)) or for which confirmation has
been provided pursuant to
the provisions of Article 41-12, paragraph (12) of the Act with respect to short- term national bonds, etc. (meaning national bonds
listed in paragraph (9),
items (i) to (viii) of said Article that fall under the category of specified short- term government or company bonds prescribed in
said paragraph, and
principal-only book-entry national bonds and coupon-only book-entry national bonds prescribed in paragraph (12) of said Article) (including
confirmation provided pursuant to the provisions of Article 26-18, paragraph (6); hereinafter referred to as "confirmation for
short-term national bonds, etc." in this Article): (i) An account pertaining to the entries or records under the book-entry
transfer system for which confirmation for book-entry municipal bonds has
been provided: The head of the business office, etc. prescribed in Article 5-2, paragraph (1) of the Act (hereinafter referred to
as the "business office, etc."
through to paragraph (8)) of the specified book-entry transfer institution, etc.
that provided confirmation for said book-entry municipal bonds, or the head of the business office, etc. of the specified book-entry
transfer institution, etc. that has received notice pursuant to the provisions of Article 5-2, paragraph (14) of the Act from the
head of the specified overseas business office, etc.
prescribed in paragraph (5), item (v) of said Article (hereinafter referred to as the "specified overseas business office, etc."
through to paragraph (7)) of the qualified foreign intermediary prescribed in item (iv) of said paragraph (hereinafter referred to
as the "qualified foreign intermediary" in this
Article) that provided confirmation for said book-entry municipal bonds
(ii) An account pertaining to the entries or records under the book-entry
transfer system for which confirmation for short-term national bonds, etc. has been provided: The head of the business office, etc.
of the specified book-
entry transfer institution, etc. that provided confirmation for said short-term national bonds, or the head of the business office,
etc. of the specified book-
entry transfer institution, etc. that has received a document prescribed in
paragraph (14) of Article 41-12 of the Act pursuant to the provisions of said paragraph from the head of the specified overseas business
office, etc. of the
qualified foreign intermediary that provided confirmation for said short-term
national bonds
(4) In the case referred to in the preceding paragraph, the head of the business office, etc. of the specified book-entry transfer
institution, etc. who has
submitted a document on special measures for book-entry national bonds
pursuant to the provisions of said paragraph shall, without delay after the date of the submission, give notice of the submission
of the document on special measures for book-entry national bonds to the nonresident or foreign
corporation that is deemed to have submitted a written application for a tax
exemption on book-entry national bonds pursuant to the provisions of said
paragraph (in the case where confirmation for book-entry municipal bonds or confirmation for short-term national bonds, etc. with
regard to said
nonresident or foreign corporation is provided by the head of a specified
overseas business office, etc. of a qualified foreign intermediary, notice shall be given to said nonresident or foreign corporation
via the head of said specified
overseas business office, etc.).
(5) Where a nonresident or foreign corporation makes, for the first time, entries or records under the book-entry transfer system
with regard to book-entry municipal bonds in an account listed in the following items, if the person
specified in the relevant item for the category of accounts listed in that item has, when said entries or records under the book-entry
transfer system were made, prepared a document that states the name of said nonresident or foreign corporation and his/her or its
address and any other matters specified by
Ordinance of the Ministry of Finance (hereinafter referred to as a "document
on special measures for book-entry municipal bonds" in this paragraph and the following paragraph) and submitted said document
on special measures for
book-entry municipal bonds to the district director of the tax office prescribed
in Article 5-2, paragraph (1), item (ii), (a) of the Act via the person who pays the interest from said book-entry municipal bonds
(in the case where the
specified book-entry transfer institution, etc. pertaining to the person specified
in the relevant items is a specified account management institution,
submission shall be made to the district director of the tax office via a specified book-entry transfer institution and the person
who pays the interest; in the
case where the specified book-entry transfer institution, etc. pertaining to the person specified in the relevant items is a specified
secondary account
management institution, submission shall be made to said district director of
the tax office via [1] the specified account management institution pertaining to the entries or records under the book-entry transfer
system regarding said interest-bearing book-entry municipal bonds (in the case where said specified book-entry transfer institution,
etc. pertaining to the person specified in the
relevant items makes entries or records under the book-entry transfer system regarding the interest-bearing book-entry municipal bonds
through any other specified secondary account management institution, submission shall be made via said other specified secondary
account management institution and the
specified account management institution pertaining to the entries or records
under the book-entry transfer system regarding said interest-bearing book-
entry municipal bonds), [2] a specified book-entry transfer institution, and [3]
the person who pays the interest), said nonresident or foreign corporation shall be deemed to have submitted a written application
for a tax exemption on
book-entry municipal bonds pursuant to the provisions of Article 5-2,
paragraph (1), item (ii), (a) of the Act with respect to said interest-bearing
book-entry municipal bonds; provided, however, that this shall not apply where the name and address entered in said document on special
measures for book- entry municipal bonds differ from the name and address of said nonresident or
foreign corporation for which confirmation has been provided pursuant to the provisions of paragraph (9) of said Article (including
the cases where it is
applied mutatis mutandis pursuant to paragraph (12) of said Article;
hereinafter the same shall apply in this paragraph) with respect to other book- entry municipal bonds (hereinafter referred to as
"confirmation for other book- entry municipal bonds" in this paragraph, the following paragraph and
paragraph (23)), where confirmation has been provided pursuant to the provisions of paragraph (9) of said Article with respect to
interest-bearing book-entry national bonds (hereinafter referred to as "confirmation for
interest-bearing book-entry national bonds" in this paragraph, the following
paragraph and paragraph (23)) or where confirmation for short-term national bonds, etc. has been provided:
(i) An account pertaining to the entries or records under the book-entry
transfer system for which confirmation for other book-entry municipal bonds has been provided: The head of the business office, etc.
of the specified book- entry transfer institution, etc. that provided confirmation for said other
book-entry municipal bonds, or the head of the business office, etc. of the
specified book-entry transfer institution, etc. that has received notice
pursuant to the provisions of Article 5-2, paragraph (14) of the Act from the head of the specified overseas business office, etc.
of the qualified foreign
intermediary that provided confirmation for said other book-entry municipal bonds
(ii) An account pertaining to the entries or records under the book-entry
transfer system for which confirmation for interest-bearing book-entry
national bonds has been provided: The head of the business office, etc. of the specified book-entry transfer institution, etc. that
provided confirmation for said interest-bearing book-entry national bonds, or the head of the business
office, etc. of the specified book-entry transfer institution, etc. that has
received notice pursuant to the provisions of Article 5-2, paragraph (14) of the Act from the head of the specified overseas business
office, etc. of the
qualified foreign intermediary that provided confirmation for said interest- bearing book-entry national bonds
(iii) An account pertaining to the entries or records under the book-entry
transfer system for which confirmation for short-term national bonds, etc. has been provided: The head of the business office, etc.
of the specified book-
entry transfer institution, etc. that provided confirmation for said short-term national bonds, or the head of the business office,
etc. of the specified book-
entry transfer institution, etc. that has received a document prescribed in
paragraph (14) of Article 41-12 of the Act pursuant to the provisions of said paragraph from the head of the specified overseas business
office, etc. of the
qualified foreign intermediary that provided confirmation for said short-term national bonds.
(6) In the case referred to in the preceding paragraph, the head of the business
office, etc. of the specified book-entry transfer institution, etc. that has
submitted a document on special measures for book-entry municipal bonds
pursuant to the provisions of said paragraph shall, without delay after the date of the submission, give notice of the submission
of the document on special
measures for book-entry municipal bonds, to the nonresident or foreign
corporation that is deemed to have submitted a written application for a tax exemption on book-entry municipal bonds pursuant to the
provisions of said paragraph (in the case where confirmation for other book-entry municipal bonds, confirmation for interest-bearing
book-entry national bonds or
confirmation for short-term national bonds, etc. with regard to said
nonresident or foreign corporation has been provided by the head of a specified overseas business office, etc. of a qualified foreign
intermediary, notice shall be given to said nonresident or foreign corporation via the head of said specified
overseas business office, etc.).
(7) The head of a business office, etc. of a specified book-entry transfer
institution, etc. or the head of a specified overseas business office, etc. of a qualified foreign intermediary shall, where a statement
of the holding period of book-entry national bonds or statement of the holding period of book-entry municipal bonds has been submitted,
confirm whether or not the holding
period and other matters specified by Ordinance of the Ministry of Finance with regard to the book-entry national bonds or book-entry
municipal bonds entered in said statement of the holding period of book-entry national bonds or statement of the holding period of
book-entry municipal bonds are consistent
with the days on which entries or records under the book-entry transfer system
were made with regard to the book-entry national bonds or book-entry
municipal bonds and other matters specified by Ordinance of the Ministry of
Finance as entered or recorded in the books prescribed in Article 5-2,
paragraph (13) of the Act (referred to as the "books for book-entry transfer" in paragraph (9), paragraph (11) and paragraph
(24)).
(8) Where a nonresident or foreign corporation submits a statement of the
holding period of book-entry national bonds or a statement of the holding
period of book-entry municipal bonds via a qualified foreign intermediary to
the district director of the tax office set forth in Article 5-2, paragraph (1), item
(i), (b) or item (ii), (b) of the Act (including the cases where a qualified foreign intermediary submits the document set forth in
the following paragraph
pursuant to the provisions of said paragraph as applied mutatis mutandis pursuant to paragraph (10)), the head of the business office,
etc. of the
specified book-entry transfer institution, etc. that has received notice set forth in paragraph (14) of said Article pursuant to the
provisions of said paragraph shall confirm whether or not the holding period and other matters specified by Ordinance of the Ministry
of Finance with regard to the book-entry national bonds or book-entry municipal bonds entered in said statement of the holding period
of book-entry national bonds or statement of the holding period of book- entry municipal bonds or said document are consistent with
the days on which
entries or records under the book-entry transfer system were made with regard
to the book-entry national bonds or book-entry municipal bonds and other matters specified by Ordinance of the Ministry of Finance
as entered or recorded in the books prescribed in said paragraph.
(9) Where a specified book-entry transfer institution, etc. has, pursuant to the
provisions of Article 5-2, paragraph (9) of the Act (including the cases where it is applied mutatis mutandis pursuant to paragraph
(12) of said Article),
prepared and preserved a copy of a document prescribed in paragraph (9) of said Article that has been presented thereto by a nonresident
or foreign
corporation, and said nonresident or foreign corporation receives payment of interest from the book-entry national bonds for which
he/she or it has made
entries or records under the book-entry transfer system through said specified
book-entry transfer institution, etc., if said specified book-entry transfer
institution, etc. has, no later than the day preceding the day on which said nonresident or foreign corporation is to receive a payment
of such interest, prepared a document that states the holding period and any other matters
specified by Ordinance of the Ministry of Finance with regard to the book-entry national bonds held by said nonresident or foreign
corporation based on the
books for book-entry transfer that said specified book-entry transfer institution, etc. keeps, and has submitted said document to
the district director of the tax
office set forth in paragraph (1), item (i), (b) of said Article (in the case where
said specified book-entry transfer institution, etc. is a specified account
management institution, submission shall be made to the district director of
the tax office via a specified book-entry transfer institution; in the case where said specified book-entry transfer institution,
etc. is a specified secondary
account management institution, submission shall be made to the district
director of the tax office via [1] the specified account management institution pertaining to the entries or records under the book-entry
transfer system
regarding said book-entry national bonds (in the case where said specified
book-entry transfer institution, etc. makes entries or records under the book- entry transfer system regarding said book-entry national
bonds through any
other specified secondary account management institution, submission shall be
made via said other specified secondary account management institution and specified account management institution pertaining to
the entries or records under the book-entry transfer system regarding said book-entry national
bonds) and [2] a specified book-entry transfer institution), said nonresident or foreign corporation shall be deemed to have submitted
a statement of the
holding period of book-entry national bonds pursuant to the provisions of item
(i), (b) of said paragraph with respect to the interest receivable thereby.
(10) The provisions of the preceding paragraph shall apply mutatis mutandis
where a nonresident or foreign corporation receives payment of interest from the book-entry national bonds for which he/she or it
has made entries or
records under the book-entry transfer system through a qualified foreign
intermediary. In this case, in said paragraph, the term "to the district director of the tax office set forth in paragraph (1),
item (i), (b) of said Article" shall be
deemed to be replaced with "to the district director of the tax office set forth in paragraph (1), item (i), (b) of said Article
via the specified book-entry transfer
institution, etc. pertaining to the entries or records under the book-entry
transfer system regarding said book-entry national bonds"; the term "(in the case where said specified book-entry transfer
institution, etc. is a specified
account management institution, submission shall be made to the district
director of the tax office via a specified book-entry transfer institution; in the case where said specified book-entry transfer institution,
etc. is a specified secondary account management institution" shall be deemed to be replaced
with "(in the case where said specified book-entry transfer institution, etc. is a tertiary foreign account management institution
prescribed in paragraph (5),
item (vii) of said Article (hereinafter referred to as a 'tertiary foreign account management institution' in this paragraph)";
the term "the specified account management institution pertaining to the entries or records under the book-
entry transfer system regarding said book-entry national bonds (" shall be
deemed to be replaced with "the secondary foreign account management
institution prescribed in paragraph (5), item (viii) of said Article (hereinafter referred to as the 'secondary foreign account
management institution' in this paragraph) pertaining to the entries or records under the book-entry transfer system regarding
said book-entry national bonds ("; the term "any other
specified secondary account management institution" shall be deemed to be
replaced with "any other tertiary foreign account management institution"; and the term "the specified account management
institution pertaining to the
entries or records under the book-entry transfer system regarding said book-
entry national bonds) and [2] a specified book-entry transfer institution" shall be deemed to be replaced with "the secondary
foreign account management
institution pertaining to the entries or records under the book-entry transfer system regarding said book-entry national bonds) and
[2] the specified book-
entry transfer institution, etc. pertaining to the entries or records under the book-entry transfer system regarding said book-entry
national bonds."
(11) Where a specified book-entry transfer institution, etc. has, pursuant to the
provisions of Article 5-2, paragraph (9) of the Act (including the cases where it is applied mutatis mutandis pursuant to paragraph
(12) of said Article),
prepared and preserved a copy of a document prescribed in paragraph (9) of
said Article that has been presented thereto by a nonresident or foreign
corporation, and said nonresident or foreign corporation receives payment of
interest from the book-entry municipal bonds for which he/she or it has made
entries or records under the book-entry transfer system through said specified book-entry transfer institution, etc., if said specified
book-entry transfer
institution, etc. has, no later than the day preceding the day on which said
nonresident or foreign corporation is to receive payment of such interest,
prepared a document that states the holding period and any other matters
specified by Ordinance of the Ministry of Finance with regard to the book-entry municipal bonds held by said nonresident or foreign
corporation based on the
books for book-entry transfer that said specified book-entry transfer institution, etc. keeps, and submitted the document to the district
director of the tax office
set forth in paragraph (1), item (ii), (b) of said Article via the person who pays interest from said book-entry municipal bonds (in
the case where said specified book-entry transfer institution, etc. is a specified account management
institution, submission shall be made to the district director of the tax office
via a specified book-entry transfer institution and the person who pays the
interest; in the case where the specified book-entry transfer institution, etc. is a specified secondary account management institution,
submission shall be
made to the district director of the tax office via [1] the specified account
management institution pertaining to the entries or records under the book-
entry transfer system regarding said book-entry municipal bonds (in the case where said specified book-entry transfer institution,
etc. makes entries or
records under the book-entry transfer system regarding said book-entry
municipal bonds through any other specified secondary account management institution, submission shall be made via said other specified
secondary
account management institution and the specified account management
institution pertaining to the entries or records under the book-entry transfer
system regarding said book-entry municipal bonds), [2] a specified book-entry
transfer institution, and [3] the person who pays the interest), said nonresident or foreign corporation shall be deemed to have submitted
a statement of the
holding period of book-entry municipal bonds pursuant to the provisions of
item (ii), (b) of said paragraph with respect to the interest receivable thereby. (12) The provisions of the preceding paragraph shall
apply mutatis mutandis
where a nonresident or foreign corporation receives payment of interest from
the book-entry municipal bonds for which he/she or it has made entries or records under the book-entry transfer system through a qualified
foreign
intermediary. In this case, in said paragraph, the term "via the person who pays interest from said book-entry municipal bonds"
shall be deemed to be
replaced with "via the specified book-entry transfer institution, etc. pertaining to the entries or records under the book-entry
transfer system regarding said book-entry municipal bonds and the person who pays interest from said book- entry municipal bonds";
the term "(in the case where said specified book-entry transfer institution, etc. is a specified account management institution,
submission shall be made to the district director of the tax office via a specified
book-entry transfer institution and the person who pays the interest; in the case where the specified book-entry transfer institution,
etc. is a specified secondary account management institution" shall be deemed to be replaced
with "(in the case where said specified book-entry transfer institution, etc. is a tertiary foreign account management institution
prescribed in paragraph (5),
item (vii) of said Article (hereinafter referred to as a 'tertiary foreign account management institution' in this paragraph)";
the term "the specified account management institution pertaining to the entries or records under the book-
entry transfer system regarding said book-entry national bonds (" shall be
deemed to be replaced with "the secondary foreign account management
institution prescribed in paragraph (5), item (viii) of said Article (hereinafter referred to as a 'secondary foreign account
management institution' in this
paragraph) pertaining to the entries or records under the book-entry transfer system regarding said book-entry national bonds (";
the term "any other
specified secondary account management institution" shall be deemed to be
replaced with "any other tertiary foreign account management institution"; and the term "the specified account management
institution pertaining to the
entries or records under the book-entry transfer system regarding said book-
entry municipal bonds), [2] a specified book-entry transfer institution" shall be deemed to be replaced with "the secondary
foreign account management
institution pertaining to the entries or records under the book-entry transfer system regarding said book-entry municipal bonds),
[2] the specified book-
entry transfer institution pertaining to the entries or records under the book-
entry transfer system regarding said book-entry municipal bonds."
(13) The interest specified by Cabinet Order prescribed in Article 5-2, paragraph
(3) of the Act shall be the interest listed in the following items:
(i) Interest received by a nonresident listed in Article 164, paragraph (1), item (i) of the Income Tax Act, which is attributed to
business conducted by said nonresident in Japan through a fixed place of business as prescribed in
Article 164, paragraph (1), item (i) of said Act:
(ii) Interest received by a nonresident listed in Article 164, paragraph (1), item
(ii) or item (iii) of the Income Tax Act, which is attributed to business conducted by said nonresident that is as prescribed in these
items.
(14) A person who intends to obtain the approval set forth in Article 5-2,
paragraph (5), item (iv) of the Act shall attach, to a document that states the person's name and the location of the person's
head office or principal office and any other matters specified by Ordinance of the Ministry of Finance, a
document in which a specified book-entry transfer institution certifies that the
person is a foreign account management institution prescribed in paragraph (5), item (vii) of said Article and any other document
specified by Ordinance of the Ministry of Finance, and submit such documents, in the case of book-entry
national bonds, to the district director of the tax office prescribed in paragraph (1), item (i), (a) of said Article via the specified
book-entry transfer institution pertaining to said book-entry national bonds, or in the case of book-entry
municipal bonds, to the district director of the tax office prescribed in item (ii), (a) of said paragraph via the specified book-entry
transfer institution
pertaining to said book-entry municipal bonds and the person who pays interest from said book-entry municipal bonds.
(15) Where a written application set forth in the preceding paragraph has been
submitted, the district director of the tax office shall, when he/she has made a disposition to approve or dismiss the application,
give notice in writing to the person who has submitted the application to that effect.
(16) Where a written application set forth in paragraph (14) has been submitted,
if a disposition to approve or dismiss the application has not been made by the final day of the month following the month that includes
the day on which the written application was submitted, it shall be deemed that approval has been
granted as of said day.
(17) The district director of the tax office shall, when he/she makes a disposition to rescind approval pursuant to the provisions
of Article 5-2, paragraph (7) of
the Act, give notice in writing to the person who had obtained the approval, to that effect.
(18) With respect to the application of the provisions of paragraph (14) in the
case where a person who intends to obtain the approval set forth in Article 5-2, paragraph (5), item (iv) of the Act with regard to
book-entry national bonds has already obtained the approval set forth in paragraph (5), item (iv) of said
Article with regard to book-entry municipal bonds, in paragraph (14), the term
"a specified book-entry transfer institution certifies" shall be deemed to be
replaced with "the specified book-entry transfer institution pertaining to book- entry national bonds certifies"; the term
"other matters specified by Ordinance of the Ministry of Finance" shall be deemed to be replaced with "and a
document that certifies that the person has obtained the approval set forth in
item (iv) of said paragraph with regard to book-entry municipal bonds"; the
term "submit such documents, in the case of book-entry national bonds, to"
shall be deemed to be replaced with "submit such documents to"; the term "to
the district director of the tax office prescribed in paragraph (1), item (i), (a) of said Article via the specified book-entry transfer
institution pertaining to said book-entry national bonds, or in the case of book-entry municipal bonds, to the district director
of the tax office prescribed in item (ii), (a) of said paragraph
via the specified book-entry transfer institution pertaining to said book-entry
municipal bonds and the person who pays interest from said book-entry
municipal bonds" shall be deemed to be replaced with "to the district director of the tax office prescribed in paragraph
(1), item (i), (a) of said Article via the
specified book-entry transfer institution pertaining to said book-entry national bonds." In this case, where the written application
set forth in paragraph (14) has been submitted, it shall be deemed that the approval set forth in Article 5-
2, paragraph (5), item (iv) of the Act has been granted at the time of such submission.
(19) With respect to the application of the provisions of paragraph (14) in the case where a person who intends to obtain obtain the
approval set forth in Article 5-2, paragraph (5), item (iv) of the Act with regard to book-entry
municipal bonds has already obtained the approval set forth in paragraph (5),
item (iv) of said Article with regard to book-entry national bonds, in paragraph (14), the term "a specified book-entry transfer
institution certifies" shall be deemed to be replaced with "the specified book-entry transfer institution
pertaining to book-entry municipal bonds certifies"; the term "other matters specified by Ordinance of the Ministry of Finance"
shall be deemed to be
replaced with "and a document that certifies that the person has obtained the approval set forth in paragraph (5), item (iv)
of said Article with regard to
book-entry national bonds"; the term "submit such documents, in the case of
book-entry national bonds, to the district director of the tax office prescribed in paragraph (1), item (i), (a) of said Article via
the specified book-entry transfer institution pertaining to said book-entry national bonds, or in the case of book- entry municipal
bonds, to" shall be deemed to be replaced with "submit such
documents to"; the term "item (ii), (a) of said paragraph" shall be deemed to be replaced with "paragraph (1),
item (ii), (a) of said Article." In this case, where
the written application set forth in paragraph (14) has been submitted, it shall be deemed that the approval set forth in Article
5-2, paragraph (5), item (iv) of the Act has been granted at the time of such submission.
(20) With respect to the application of the provisions of paragraph (14) in the
case where a person who intends to obtain the approval set forth in Article 5-2, paragraph (5), item (iv) of the Act with regard to
book-entry municipal bonds has already obtained the approval set forth in paragraph (5), item (iv) of said
Article with regard to other book-entry municipal bonds, in paragraph (14), the
term "a document in which a specified book-entry transfer institution certifies that the person is a foreign account management
institution prescribed in
paragraph (5), item (vii) of said Article and any other document specified by
Ordinance of the Ministry of Finance" shall be deemed to be replaced with "a
document that certifies that the person has obtained the approval set forth in paragraph (5), item (iv) of said Article with regard
to other book-entry
municipal bonds"; the term "submit such documents, in the case of book-entry
national bonds, to the district director of the tax office prescribed in paragraph (1), item (i), (a) of said Article via the specified
book-entry transfer institution pertaining to said book-entry national bonds, or in the case of book-entry
municipal bonds, to" shall be deemed to be replaced with "submit such
documents to"; the term "item (ii), (a) of said paragraph" shall be deemed to be replaced with "paragraph (1),
item (ii), (a) of said Article." In this case, where
the written application set forth in paragraph (14) has been submitted, it shall be deemed that the approval set forth in Article
5-2, paragraph (5), item (iv) of the Act has been granted at the time of such submission.
(21) The document specified by Cabinet Order prescribed in Article 5-2,
paragraph (9) of the Act shall be any of the documents specified respectively in the following items for the category of persons listed
in the relevant items (in
the case where the person listed in the relevant items is the trustee of a
qualified foreign securities investment trust, any of the documents specified in the relevant items and the prospectus of said qualified
foreign securities
investment trust or any other document similar thereto):
(i) Nonresident: The nonresident's certificate of alien registration, receipt for national tax or local tax, certificate of tax
payment, or any other document specified by Ordinance of the Ministry of Finance
(ii) Foreign corporation: The foreign corporation's certificate of registered
matters, receipt for national tax or local tax, certificate of tax payment, or any other document specified by Ordinance of the Ministry
of Finance.
(22) Where a nonresident or foreign corporation makes, for the first time, entries
or records under the book-entry transfer system regarding interest-bearing
book-entry national bonds, in the account pertaining to the entries or records under the book-entry transfer system for which confirmation
for book-entry municipal bonds has been provided or in the account pertaining to the entries or records under the book-entry transfer
system for which confirmation for
short-term national bonds, etc. has been provided, or submits a written
application prescribed in Article 5-2, paragraph (10) of the Act pursuant to the provisions of paragraph (10) of said Article with
regard to interest-bearing
book-entry national bonds (hereinafter referred to as a "written application for
a change to the book-entry national bonds" in this paragraph, paragraph (24)
and paragraph (25)), in terms of said entries and records under the book-entry
transfer system or submission, the fact that the identification documents set forth Article 5-2, paragraph (9) of the Act (including
the cases where it is
applied mutatis mutandis pursuant to paragraph (12) of said Article; hereinafter the same shall apply in this paragraph) have been
presented pursuant to the provisions of paragraph (9) of said Article with regard to confirmation for book-entry municipal bonds
or that the identification
documents set forth in Article 41-12, paragraph (12) of the Act have been
presented pursuant to the provisions of paragraph (12) of said Article with
regard to confirmation for short-term national bonds, etc. (including the cases where the identification documents set forth in Article
26-18, paragraph (5) have been presented pursuant to the provisions of paragraph (5) of said
Article) shall be deemed to mean that the document specified by Cabinet Order
set forth in Article 5-2, paragraph (9) of the Act has been presented pursuant
to the provisions of paragraph (9) of said Article, and the fact that confirmation for said book-entry municipal bonds or confirmation
for said short-term
national bonds, etc. has been provided shall be deemed to mean that
confirmation has been provided pursuant to the provisions of said paragraph, respectively; provided, however, that this shall not
apply where the name and address entered in a written application for a tax exemption on book-entry
national bonds or a written application for a change to the book-entry national bonds to be submitted by said nonresident or foreign
corporation differ from
the name and address of said nonresident or foreign corporation for which confirmation for said book-entry municipal bonds or confirmation
for said short-term national bonds, etc. has been provided.
(23) The provisions of the preceding paragraph shall apply mutatis mutandis
where a nonresident or foreign corporation makes, for the first time, entries or records under the book-entry transfer system regarding
book-entry municipal
bonds in the account pertaining to the entries or records under the book-entry transfer system for which confirmation for other book-entry
municipal bonds
has been provided, the account pertaining to the entries or records under the
book-entry transfer system for which confirmation for interest-bearing book-
entry national bonds has been provided or the account pertaining to the entries or records under the book-entry transfer system for
which confirmation for
short-term national bonds, etc. has been provided, or submits a written
application prescribed in Article 5-2, paragraph (11) of the Act pursuant to the provisions of paragraph (11) of said Article with
regard to book-entry
municipal bonds (such written application shall be referred to as a "written
application for a change to the book-entry municipal bonds" in paragraph (26)). In this case, in the preceding paragraph, the
term "pursuant to the provisions
of paragraph (9) of said Article with regard to confirmation for said book-entry municipal bonds" shall be deemed to be replaced
with "pursuant to the
provisions of paragraph (9) of said Article with regard to confirmation for other book-entry municipal bonds or confirmation for interest-bearing
book-entry
national bonds"; the term "confirmation for said book-entry municipal bonds or" shall be deemed to be replaced with
"confirmation for other book-entry
municipal bonds, confirmation for said interest-bearing book-entry national bonds or"; the term "a written application for
a tax exemption on book-entry national bonds or written application for a change to the book-entry national bonds" shall be
deemed to be replaced with "a written application for a tax
exemption on book-entry municipal bonds or written application for a change to
the book-entry municipal bonds."
(24) When a person who has submitted a written application for a tax exemption on book-entry national bonds (including one who shall
be deemed to have
submitted a written application for a tax exemption on book-entry national bonds pursuant to the provisions of paragraph (3); hereinafter
the same shall apply in this paragraph, the following paragraph and paragraph (28)) has
made entries or records under the book-entry transfer system regarding book-
entry national bonds through a specified book-entry transfer institution, etc. or qualified foreign intermediary, or submitted a written
application for a change to the book-entry national bonds to a specified book-entry transfer institution,
etc. or qualified foreign intermediary, said specified book-entry transfer
institution, etc. or qualified foreign intermediary shall, on each occasion, for
each person who has submitted said written application for a tax exemption on book-entry national bonds (in the case where the person
who has submitted
said written application for a tax exemption on book-entry national bonds is
the trustee of a qualified foreign securities investment trust, for each person who has submitted said written application for a tax
exemption on book-entry national bonds and for each qualified foreign securities investment trust
accepted thereby), enter or record in the books for book-entry transfer the
matters prescribed in Article 5-2, paragraph (13) of the Act, and preserve said books for book-entry transfer pursuant to the provisions
of Ordinance of the
Ministry of Finance.
(25) When a person who has submitted a written application for a tax exemption on book-entry national bonds has made entries or records
under the book-entry transfer system regarding book-entry national bonds through a qualified
foreign intermediary, or submitted a written application for a change to the book-entry national bonds to a qualified foreign intermediary,
said qualified foreign intermediary shall, for each person who has submitted said written
application for a tax exemption on book-entry national bonds (in the case where the person who has submitted said written application
for a tax
exemption on book-entry national bonds is the trustee of a qualified foreign securities investment trust, for each person who has
submitted said written
application for a tax exemption on book-entry national bonds and for each qualified foreign securities investment trust accepted thereby),
notify the
matters prescribed in Article 5-2, paragraph (14) of the Act to the specified book-entry transfer institution, etc. prescribed in
said paragraph of said qualified foreign intermediary pertaining to said book-entry national bonds.
(26) The provisions of paragraph (24) shall apply mutatis mutandis where a
person who has submitted a written application for a tax exemption on book-
entry municipal bonds (including one who shall be deemed to have submitted a written application for a tax exemption on book-entry
municipal bonds
pursuant to the provisions of paragraph (5); hereinafter the same shall apply in this paragraph and paragraph (28)) has made entries
or records under the book-entry transfer system regarding book-entry municipal bonds through a
specified book-entry transfer institution, etc. or qualified foreign intermediary,
or submitted a written application for a change to the book-entry municipal bonds to a specified book-entry transfer institution,
etc. or qualified foreign intermediary; and the provisions of the preceding paragraph shall apply
mutatis mutandis where a person who has submitted a written application for a tax exemption on book-entry municipal bonds has made
entries or records
under the book-entry transfer system regarding book-entry municipal bonds through a qualified foreign intermediary, or submitted a
written application for a change to the book-entry municipal bonds to a qualified foreign
intermediary. In this case, in paragraph (24), the term "said written
application for a tax exemption on book-entry national bonds" shall be deemed to be replaced with "said written application
for a tax exemption on book-entry municipal bonds"; in the preceding paragraph, the term "said written
application for a tax exemption on book-entry national bonds" shall be deemed to be replaced with "said written application
for a tax exemption on book-entry municipal bonds," and the term "pertaining to said book-entry national bonds" shall
be deemed to be replaced with "pertaining to said book-entry municipal
bonds."
(27) The means specified by Cabinet Order prescribed in Article 5-2, paragraph
(14) of the Act shall be a means of using an electronic data processing system
or another means of using information and communications technology that is specified by Ordinance of the Ministry of Finance.
(28) Where a specified book-entry transfer institution, etc. has received the
notice prescribed in paragraph (25) (including the cases where it is applied mutatis mutandis pursuant to paragraph (26)), it shall,
on each occasion of receiving the notice, for each person who has submitted a written application for a tax exemption on book-entry
national bonds or written application for a tax exemption on book-entry municipal bonds (in the case where the person
who has submitted said written application for a tax exemption on book-entry
national bonds or written application for a tax exemption on book-entry
municipal bonds is the trustee of a qualified foreign securities investment trust, for each person who has submitted said written
application for a tax exemption
on book-entry national bonds or written application for a tax exemption on book-entry municipal bonds and for each qualified foreign
securities
investment trust accepted thereby), enter or record in the books prescribed in
Article 5-2, paragraph (14) of the Act the matters mentioned in said notice, and preserve said books pursuant to the provisions of
Ordinance of the Ministry of Finance.
(29) The national bonds specified by Cabinet Order prescribed in Article 5-2,
paragraph (15), item (i) of the Act shall be the book-entry national bonds
specified respectively in the following items for the category of persons listed in the relevant items:
(i) Nonresident or foreign corporation (excluding those listed in the following item): The book-entry national bonds for which the
nonresident or foreign corporation made entries or records under the book-entry transfer system
(limited to those subject to the provisions of Article 5-2, paragraph (1) of the
Act in terms of interest therefrom)
(ii) Nonresident or foreign corporation that falls under the category of a
financial institution prescribed in Article 8, paragraph (1) of the Act or the category of a financial instruments business operator,
etc. prescribed in
paragraph (2) of said Article: The book-entry national bonds for which the nonresident or foreign corporation made entries or records
under the book- entry transfer system
(30) The means specified by Cabinet Order prescribed in Article 5-2, paragraph
(15), item (iii) of the Act shall be a means of using an electronic data processing system or another means of using information and
communications technology
that is specified by Ordinance of the Ministry of Finance.
(31) A specified book-entry transfer institution, etc. pertaining to the entries or records under the book-entry transfer system regarding
the book-entry
national bonds held by a nonresident or foreign corporation shall, where it has received the notice pursuant to the provisions of
Article 5-2, paragraph (15),
item (iii) of the Act by means of a document, preserve said document pursuant
to the provisions of Ordinance of the Ministry of Finance.
(32) The specified book-entry transfer institution, etc. set forth in the preceding paragraph shall, where it has received the notice
pursuant to the provisions of Article 5-2, paragraph (15), item (iii) of the Act by the means prescribed in
paragraph (30), preserve the document or microfilm produced by outputting the matters contained in said notice using the input-output
devices of an electronic data processing system prescribed in said paragraph (limited to those specified by Ordinance of the Ministry
of Finance), pursuant to the provisions of
Ordinance of the Ministry of Finance.
(33) The national bonds specified by Cabinet Order prescribed in Article 5-2, paragraph (16), item (i) of the Act shall be the book-entry
national bonds
specified respectively in the following items for the category of persons listed in the relevant items:
(i) Nonresident or foreign corporation (excluding those listed in the following
item): The book-entry municipal bonds for which the nonresident or foreign corporation made entries or records under the book-entry
transfer system
(limited to those subject to the provisions of Article 5-2, paragraph (1) of the
Act in terms of interest therefrom)
(ii) Nonresident or foreign corporation that falls under the category of financial institutions prescribed in Article 8, paragraph
(1) of the Act or the category
of financial instruments business operator, etc. prescribed in paragraph (2)
of said Article: The book-entry municipal bonds for which the nonresident or foreign corporation made entries or records under the
book-entry transfer
system
(34) The means specified by Cabinet Order prescribed in Article 5-2, paragraph
(16), item (iii) of the Act shall be a means of using an electronic data processing system or another means of using information and
communications technology
that is specified by Ordinance of the Ministry of Finance.
(35) The provisions of paragraph (31) shall apply mutatis mutandis where said specified book-entry transfer institution, etc. has
received the notice pursuant to Article 5-2, paragraph (16), item (iii) of the Act by means of a document.
(36) The specified book-entry transfer institution, etc. set forth in paragraph (31)
as applied mutatis mutandis pursuant to the preceding paragraph shall, where it has received the notice pursuant to the provisions
of Article 5-2, paragraph
(16), item (iii) of the Act by the means prescribed in paragraph (34), preserve
the document or microfilm produced by outputting the matters contained in said notice using the input-output devices of an electronic
data processing
system prescribed in said paragraph (limited to those specified by Ordinance of
the Ministry of Finance), pursuant to the provisions of Ordinance of the
Ministry of Finance.
(Special Provisions on Taxation on Interest from Foreign Private Bonds)
Article 3-2 (1) The bonds specified by Cabinet Order, prescribed in Article 6, paragraph (1) of the Act, shall be the bonds listed
in the following items:
(i) Where the interest in whole or in part from bonds issued outside Japan by a foreign corporation listed in Article 141, item (i)
of the Corporation Tax Act
is attributed to a business which is conducted by said foreign corporation in
Japan through a fixed place of business prescribed in said item, said bonds
(ii) Where the interest in whole or in part from bonds issued outside Japan by a
foreign corporation listed in Article 141, item (ii) or item (iii) of the
Corporation Tax Act is attributed to business conducted by said foreign corporation as prescribed in these items, said bonds.
(2) The amount specified by Cabinet Order, prescribed in Article 6, paragraph (1)
of the Act, shall be an amount listed as follows:
(i) The part of the amount equivalent to the interest to be received with regard to the general foreign private bonds (meaning the
general foreign private
bonds as prescribed in Article 6, paragraph (1) of the Act; hereinafter the same shall apply in this Article) issued by a foreign
corporation listed in Article 141, item (i) of the Corporation Tax Act, which is attributed to
business conducted by said foreign corporation in Japan through a fixed place of business as prescribed in said item
(ii) The part of the amount equivalent to the interest to be received with regard to the general foreign private bonds issued by a
foreign corporation listed in
Article 141, item (ii) or item (iii) of the Corporation Tax Act, which is
attributed to business conducted by said foreign corporation as prescribed in these items
(3) The amount specified by Cabinet Order, prescribed in Article 6, paragraph (2)
of the Act, shall be an amount listed as follows:
(i) The part of the amount equivalent to the interest to be paid to a resident or a domestic corporation with regard to the general
foreign private bonds
issued by a foreign corporation listed in Article 141, item (i) of the
Corporation Tax Act, which is attributed to business conducted by said
foreign corporation in Japan through a fixed place of business as prescribed in said item
(ii) The part of the amount equivalent to the interest to be paid to a resident or a foreign corporation with regard to the general
foreign private bonds issued by a foreign corporation listed in Article 141, item (ii) or item (iii) of the
Corporation Tax Act, which is attributed to business conducted by said foreign corporation as prescribed in these items
(4) The place for paying income tax on the interest from general foreign private bonds issued by a foreign corporation that is to
be collected and paid pursuant to the provisions of Article 6, paragraph (2) of the Act shall be at the location of the principal
office of said foreign corporation in Japan.
(5) The foreign corporation specified by Cabinet Order, prescribed in Article 6, paragraph (4) of the Act, shall be a foreign corporation
listed as follows:
(i) A foreign corporation that has its head office or principal office in a state or territory where there are no taxes imposed on
corporate income
(ii) A foreign corporation whose tax imposed on the income is not more than
25% of the total income for a business year as prescribed in Article 2,
paragraph (2), item (xix) of the Act that includes the day on which it issued
general foreign private bonds pertaining to the interest for which it seeks the application of the provisions of Article 6, paragraph
(4) of the Act (referred to as the "business year in which the foreign private bonds were issued" in
paragraph (7), item (iii))
(6) The provisions of Article 25-19, paragraph (2) shall apply mutatis mutandis to the determination as to whether or not a foreign
corporation that issues
general foreign private bonds (referred to as a "foreign corporation that issues foreign private bonds" in the following
paragraph to paragraph (9)) falls under the category of a foreign corporation listed in item (ii) of the preceding
paragraph. In this case, the term "each business year" in paragraph (2), item
(i) of said Article shall be deemed to be replaced with "the business year in which the foreign private bonds were issued (meaning
the business year in which the foreign private bonds were issued as prescribed in Article 3-2,
paragraph (5), item (ii); hereinafter the same shall apply in this paragraph)," and the term "each business year" in
item (ii) of said paragraph shall be
deemed to be replaced with "the business year in which the foreign private bonds were issued."
(7) Where a foreign corporation that issues foreign private bonds meets all of the
following requirements, it shall not be included in the category of foreign corporations listed in the items of paragraph (5):
(i) Its principal business does not fall under any of the categories of the holding
of shares (including capital contributions; referred to as "shares, etc." in
paragraphs (9) to (11)) or bonds, the provision of industrial property rights or any other rights concerning technology, production
methods involving special technology, or any other equivalent rights or methods (including the right to use such rights) or copyrights
(including publication rights, neighboring
rights and any other equivalent rights), or the lending of vessels or aircraft.
(ii) It has an office, store, factory or any other fixed facility that is considered to be necessary for conducting its principal
business in the state or territory where its head office or principal office is located (referred to as the "state of the head
office" in (b) of the following item), and takes charge of managing, controlling, and operating the business on its own account.
(iii) It falls under any of the cases specified in the following items for any
principal business that falls under the category of a business set forth in
those items that it conducts in the business year in which the foreign private bonds were issued:
(a) Wholesale business, banking business, trust business, financial
instruments business, insurance business, water transportation business, or air transportation business: The cases specified as follows
for the
categories of its principal businesses listed respectively as follows:
1. Wholesale business: Where, out of the total revenue from selling
inventory assets (meaning inventory assets prescribed in Article 2,
item (xx) of the Corporation Tax Act; the same shall apply in 1.) for the business year in which the foreign private bonds were issued
(where
there are any commissions to be received for agent or intermediary services for the buying or selling of inventory assets, such revenues
shall include the amount from the transactions for which said
commissions were generated; hereinafter referred to as the "amount of
sales transactions" in 1.), the ratio of the sum of the amount of sales transactions with a person other than affiliated persons
exceeds 50 percent, or out of the sum of the acquisition costs for acquiring
inventory assets for the business year in which the foreign private
bonds were issued (where there are any commissions to be received for agent or intermediary services for the buying or selling of
inventory assets, such acquisition costs shall include the amount from the
transactions for which said commissions were generated; hereinafter
referred to as the "amount of purchase transactions" in 1.), the ratio of the sum of the amount of purchase transactions
with a person other
than affiliated persons exceeds 50 percent
2. Banking business: Where, out of the sum of the total interest received
for the business year in which the foreign private bonds were issued,
the ratio of the sum of said interest to be received from a person other than affiliated persons exceeds 50 percent, or out of the
sum of the
total interest paid for the business year in which the foreign private bonds were issued, the ratio of the sum of said interest to
be paid to a person other than affiliated persons exceeds 50 percent
3. Trust business: Where, out of the sum of the total trust charge for the
business year in which the foreign private bonds were issued, the ratio of the sum of said trust charge to be received from a person
other than affiliated persons exceeds 50 percent
4. Financial instruments business: Where, out of the sum of the total
commissions received (including profits from the buying and selling of securities) for the business year in which the foreign private
bonds
were issued, the ratio of the sum of said commissions to be received
from a person other than affiliated persons exceeds 50 percent
5. Insurance business: Where, out of the sum of the total premium income for the business year in which the foreign private bonds
were issued,
the ratio of the sum of said premium income to be received from a person other than affiliated persons (where said premium income
pertains to reinsurance, limited to premium income from insurance for
assets held by a person other than affiliated persons or damages
incurred by a person other than affiliated persons) exceeds 50 percent
6. Water transportation business or air transportation business: Where, out of the total revenue from the operation or rental of vessels
or
operation or rental of aircrafts for the business year in which the
foreign private bonds were issued, the ratio of the sum of said revenue to be received from a person other than affiliated persons
exceeds 50
percent.
(b) Business other than those listed in (a): The cases specified as follows for the respective categories of its principal businesses
listed as follows:
1. Real estate business: Where conducting a buying and selling or rental
business of real estate (including acts to let others use said real estate) (real estate shall include the rights thereon; hereinafter
the same shall apply in 1.) mainly located in the state of the head office, providing
agent or intermediary services for the buying and selling or rental
business of said real estate, and managing said real estate
2. Rental and leasing business: Where conducting a rental business for goods to be provided for use mainly in the state of the head
office
3. Business other than those listed in (a) above, and in 1. and 2.: Where conducting a business mainly in the state of the head office.
(8) Where transactions between a foreign corporation that issues foreign private bonds and said foreign corporation's affiliated
person are conducted indirectly
via a person other than said foreign corporation's affiliated person (hereinafter
referred to as a "non-affiliated person" in this paragraph), transactions
between said foreign corporation that issues foreign private bonds and said non-affiliated person shall be deemed to have been conducted
directly between said foreign corporation that issues foreign private bonds and said affiliated person, and the provisions of item
(iii), (a) of the preceding paragraph shall
apply, except in the case where there are reasonable grounds for having said
non-affiliated person intervene in such transactions.
(9) The affiliated person prescribed in paragraph (7), item (iii), (a) and the preceding paragraph shall be a person listed as follows:
(i) When there is a relationship between a foreign corporation that issues foreign private bonds and any other corporation whereby
either one of the corporations directly or indirectly holds over 50 percent of the total number or total amount of the second corporation's
issued shares or capital
contributions (excluding shares that either corporation holds in itself;
hereinafter referred to as the "issued shares, etc." in this paragraph to
paragraph (11)), said second corporation (excluding a corporation falling under the category of persons listed in the following item)
(ii) When there is a relationship whereby over 50 percent of the total number
or total amount of the issued shares, etc. of a foreign corporation that issues foreign private bonds and a second corporation are
respectively held directly
or indirectly by the same person (where said person is an individual, said individual and an individual who has a special relationship
as prescribed in Article 4, paragraph (1) of the Order for Enforcement of the Corporation Tax Act to said individual), said second
corporation.
(10) In the case referred to in item (i) of the preceding paragraph, whether or not one of the corporations directly or indirectly
holds over 50 percent of the total number or the total amount of the second corporation's issued shares, etc. shall be determined
according to the ratio obtained by adding the ownership ratio for the shares, etc. in said second corporation that are held directly
by the first
corporation (meaning the ratio of the number or the amount of said second
corporation's shares or capital contributions that are held by the first
corporation out of the total issued shares, etc. of the second corporation) and
the ownership ratio for the shares, etc. in the second corporation that are held indirectly by the first corporation.
(11) The ownership ratio for the shares, etc. that are held indirectly that is
prescribed in the preceding paragraph shall be a ratio specified in the following items for the category of cases listed in the respective
items (where this falls under both of the following cases, the sum of the ratios specified as follows):
(i) Where over 50 percent of the total number or the total amount of the issued
shares, etc. of a corporation which is a shareholder, etc. (meaning a
shareholder, etc. prescribed in Article 2, item (viii)-2 of the Income Tax Act;
the same shall apply in the following item) of the second corporation set forth in the preceding paragraph are held by the first corporation
set forth in the
preceding paragraph: The ratio of the number or the amount of shares, etc.
in the second corporation that are held by the corporation which is its
shareholder, etc. out of the total issued shares, etc. of said second corporation
(where there are two or more such corporations which are shareholders, etc., the sum of the ratios calculated for each of them)
(ii) Where a single corporation or two or more corporations are interposed
between a corporation which is a shareholder, etc. of the second corporation set forth in the preceding paragraph (excluding a corporation
which is a
shareholder, etc. set forth in the preceding item falling under the case listed in said item) and the first corporation set forth
in the preceding paragraph, and this single corporation or two or more corporations have a link with the other corporations through
the holding of issued shares, etc. (hereinafter
such interposed corporations shall be referred to as "corporations related
through capital contribution" in this item) (limited to the case where over 50 percent of the total number or the total amount
of the issued shares, etc. of
both the corporations related through capital contribution and the
corporation which is the shareholder, etc. are held by the first corporation or by a corporation related through capital contribution
(this shall be limited to
those for whom over 50 percent of the total number or the total amount of the issued shares, etc. are held by said first corporation
or by another
corporation related through capital contribution)): The ratio of the number or the amount of shares, etc. of the second corporation
that are held by said
corporation which is a shareholder, etc. out of the total issued shares, etc. of said second corporation (where there are two or more
such corporations
which are shareholders, etc., the sum of the ratios calculated for each of them).
(12) The person in charge of handling payment as specified by Cabinet Order
prescribed in Article 6, paragraph (4) of the Act shall be the person prescribed in Article 2-2, paragraph (2) who is in Japan, and
the person who provides, outside Japan, intermediary, brokerage or agent services (referred to as the
"intermediary services, etc." in paragraph (21) and paragraph (35)) for the
receipt of interest from foreign private bonds prescribed in Article 6, paragraph (1) of the Act (referred to as "foreign private
bonds" in paragraph (33)) as the person's own operations or in relation to such operations.
(13) A written application for a tax exemption pursuant to the provisions of
Article 6, paragraph (4) of the Act (referred to as a "written application for a tax exemption" in the following paragraph
to paragraph (17)) shall be
submitted, on each occasion of receiving payment of interest from general foreign private bonds, to the district director of the tax
office prescribed in
Article 6, paragraph (4) of the Act, via the person who pays the interest (in the case where said interest is paid via a person in
charge of handling payment as prescribed in paragraph (4) of said Article (hereinafter referred to as a "person in charge of
handling payment" in this Article), submission shall be made via said person in charge of handling payment and the person who
pays the
interest).
(14) A person who submits a written application for a tax exemption shall, upon submitting it, present a document that certifies that
the person falls under the category of nonresidents or foreign corporations (limited to such document that contains the name and
domicile or residence or the location of the person's
head office or principal office (hereinafter referred to as "domicile, etc." in this paragraph, the following paragraph
and paragraph (19)), each of which is
located outside Japan; the same shall apply in said paragraph), to a person
who pays interest based on said written application for a tax exemption (in the case where said interest is paid via a person in charge
of handling payment,
the document shall be presented to said person in charge of handling payment;
hereinafter the same shall apply in this paragraph and the following
paragraph), and said person who pays interest shall confirm, by the document
presented thereto, the name and domicile, etc. outside Japan as entered in said written application for a tax exemption.
(15) A person who pays interest from general foreign private bonds shall, when he/she has confirmed, by the document prescribed in
the preceding paragraph, the name and domicile etc. outside Japan as entered in the written application for a tax exemption on the
interest from said general foreign private bonds
which has been submitted thereto, enter in said written application for a tax exemption to that effect that such confirmation has
been provided as well as the name and domicile, etc. of said person who pays interest.
(16) A person who pays interest from general foreign private bonds shall, when he/she has received a written application for a tax
exemption on the interest
from said general foreign private bonds, submit said written application for a tax exemption to the district director of the tax office
prescribed in Article 6,
paragraph (4) of the Act no later than the final day of the month that includes
the day on which the person has received the written application.
(17) A person who pays interest from general foreign private bonds shall, when he/she has received a written application for a tax
exemption on the interest
from said general foreign private bonds, prepare and preserve a copy of said
written application for a tax exemption (including its equivalent), pursuant to the provisions of Ordinance of the Ministry of Finance.
(18) The interest specified by Cabinet Order prescribed in Article 6, paragraph
(4) and paragraph (10) of the Act shall be the interest listed as follows:
(i) Interest to be received by a nonresident listed in Article 164, paragraph (1), item (i) of the Income Tax Act, which is attributed
to business conducted by said nonresident in Japan through a fixed place of business as prescribed in Article 164, paragraph (1),
item (i) of said Act
(ii) Interest to be received by nonresidents listed in Article 164, paragraph (1),
item (ii) or item (iii) of the Income Tax Act, which is attributed to a business prescribed in these provisions that is conducted
by these nonresidents.
(19) A nonresident or foreign corporation who seeks the application of Article 6, paragraph (7) of the Act with respect to interest
from specified foreign private bonds prescribed in paragraph (7) of said Article (hereinafter referred to as
"specified foreign private bonds" through to paragraph (29)) shall, upon
entrusting a person in charge of handling payment with custody of said
specified foreign private bonds, pursuant to the provisions of Ordinance of the
Ministry of Finance, notify said person in charge of handling payment of
his/her or its name and domicile, etc. outside Japan, and obtain confirmation with regard to the matters contained in the notification,
by presenting a
document that certifies that he/she or it falls under the category of
nonresidents or foreign corporations or by any other method equivalent thereto. (20) Where a nonresident or foreign corporation who
seeks the application of
Article 6, paragraph (7) of the Act with respect to interest from specified foreign private bonds entrusts a person in charge of handling
payment with
custody of said specified foreign private bonds, if he/she or it has already
obtained confirmation pursuant to the provisions of the preceding paragraph when entrusting said person in charge of handling payment
with custody of
other specified foreign private bonds or the case falls under any of those specified by Ordinance of the Ministry of Finance as equivalent
thereto,
notwithstanding the provisions of said paragraph, the nonresident or foreign
corporation shall not be required to give a notification pursuant to the
provisions of said paragraph when entrusting custody of said specified foreign private bonds.
(21) The person in charge of handling custody and payment prescribed in Article
6, paragraph (7) of the Act (hereinafter referred to as the "person in charge of handling custody and payment" through to
paragraph (26)) shall, on each
occasion of receiving the delivery of interest from specified foreign private bonds, of which the person is entrusted with custody,
in the course of the
intermediary services, etc. for the receipt of such interest, no later than the
day preceding the day on which the person is to receive the delivery, give notice pursuant to the provisions of paragraph (7) of said
Article (hereinafter referred to as "notice" through to paragraph (23)) to provide the interest
recipient information prescribed in paragraph (7) of said Article (hereinafter
referred to as "interest recipient information" through to paragraph (27)) for
the interest to be delivered thereto to the person who pays the interest (in the case where the interest is delivered via any other
person in charge of handling payment with whom said person in charge of handling custody and payment
has further entrusted custody, notice shall be given to the person who pays the
interest via such other person in charge of handling payment). In this case, if
the person in charge of handling custody and payment receives the delivery of interest from said specified foreign private bonds,
for the first time, on or after the day on which 40 days have elapsed since the day on which said specified foreign private bonds
were issued, the notice of the interest recipient
information for the interest to be delivered thereto shall be given on or after
said day on which the 40-day period has expired.
(22) Where a person in charge of handling custody and payment receives the
delivery of interest from specified foreign private bonds, of which the person is entrusted with custody, on or after the day on which
the person has received
the delivery of interest pertaining to the interest recipient information of which said person gave notice to the person who pays
interest from said
specified foreign private bonds (limited to such information provided in the
notice stating to the effect that Article 6, paragraph (7), item (i) of the Act shall apply; hereinafter the same shall apply in this
paragraph), if the person in
charge of handling custody and payment has confirmed that all persons who are to receive payment of the interest (excluding interest
subject to the
provisions of Article 3-3, paragraph (3) or paragraph (6) of the Act; hereinafter the same shall apply in this paragraph) to be delivered
thereto fall under the
category of nonresidents or foreign corporations, said person in charge of
handling custody and payment may omit giving notice of the interest recipient information for the interest to be delivered thereto.
(23) The provisions of the preceding paragraph shall apply only where the person
in charge of handling custody and payment set forth in said paragraph has obtained approval in advance, pursuant to the provisions
of Ordinance of the Ministry of Finance, from the person who pays interest set forth in said
paragraph with regard to the omission of notice prescribed in said paragraph.
In this case, if said person in charge of handling custody and payment has not given, by the day preceding the day on which the person
is to receive the delivery of interest from the relevant specified foreign private bonds, notice of the interest recipient information
for the interest to be delivered thereto,
notice of the interest recipient information shall be deemed to have been given,
as of said day, by said person in charge of handling custody and payment to the person who pays interest, stating to the effect that
Article 6, paragraph (7),
item (i) of the Act shall apply.
(24) Where a person in charge of handling custody and payment is entrusted by
subcontract with custody of other specified foreign private bonds with the same issue as that of the specified foreign private bonds
of which the person is
directly entrusted with custody, when the person has received notice, as the relay point via which the notice shall be given pursuant
to the provisions of Article 6, paragraph (7) of the Act, with regard to the interest recipient
information for the interest from said other specified foreign private bonds, the
person may, pursuant to the provisions of Ordinance of the Ministry of Finance, give notice to provide the interest recipient information
for the specified
foreign private bonds of which the person is directly entrusted with custody together with the interest recipient information of which
the person has
received notice as such relay point, to the person who pays the interest (in the
case where the interest is delivered via any other person in charge of handling payment with whom said person in charge of handling
custody and payment
has further entrusted custody, notice shall be given to the person who pays the
interest via such other person in charge of handling payment). In this case,
said notice shall be deemed to be notice of the interest recipient information given pursuant to the provisions of paragraph (7) of
said Article.
(25) When a person who is entrusted by subcontract with custody of specified foreign private bonds (excluding such person who is deemed
to be a person in
charge of handling custody and payment who is entrusted with custody of other
specified foreign private bonds with the same issue as that of said specified foreign private bonds; hereinafter referred to as a
"person in charge of
handling payment based on entrustment by subcontract" in this paragraph and the following paragraph) has received notice, as
the relay point via which the notice shall be given pursuant to the provisions of Article 6, paragraph (7) of
the Act, with regard to two or more pieces of interest recipient information for the interest from said specified foreign private
bonds, the person may,
pursuant to the provisions of Ordinance of the Ministry of Finance, give notice
to provide these pieces of interest recipient information of which the person has received notice as such relay point together, to
the person who pays the interest (in the case where the interest is delivered via any other person in
charge of handling payment with whom said person in charge of handling
custody and payment has further entrusted custody, notice shall be given to
the person who pays the interest via such other person in charge of handling payment). In this case, said notice shall be deemed to
be notice of the interest recipient information given pursuant to the provisions of paragraph (7) of said Article.
(26) The provisions of paragraph (22) and paragraph (23) shall apply mutatis
mutandis in the following cases:
(i) Where the person in charge of handling custody and payment or person in charge of handling payment based on entrustment by subcontract
gives notice, as the relay point via which notice shall be given pursuant to the
provisions of Article 6, paragraph (7) of the Act, to provide the interest
recipient information for the interest from the specified foreign private bonds of which the person is entrusted with custody directly
or by subcontract, to
the other person in charge of handling payment as prescribed in paragraph
(7) of said Article
(ii) Where the person in charge of handling payment based on entrustment by subcontract gives notice pursuant to the provisions of
the preceding
paragraph to provide the interest recipient information for the interest from the specified foreign private bonds of which the person
is entrusted with
custody by subcontract, to the person who pays interest from said specified
foreign private bonds.
(27) A person who pays interest from specified foreign private bonds shall, when paying such interest, prepare a document identifying
the interest recipient
prescribed in Article 6, paragraph (7) of the Act (hereinafter referred to as an "document identifying the interest recipient"
in the following paragraph) based on the interest recipient information provided in the notice given thereto
pursuant to the provisions of paragraph (21), paragraph (24) or paragraph (25)
(including the interest recipient information of which notice shall be deemed to have been given pursuant to the provisions of paragraph
(23) (including the
cases where it is applied mutatis mutandis pursuant to the preceding paragraph)).
(28) A person who pays interest from specified foreign private bonds shall submit a document identifying the interest recipient prepared
pursuant to the
provisions of the preceding paragraph to the district director the tax office
prescribed in Article 6, paragraph (7) of the Act no later than the final day of the month following the month that includes the day
on which the interest
related to said document identifying the interest recipient has been paid.
(29) A person who pays interest from specified foreign private bonds shall enter in the books the interest recipient information provided
in the notice given
thereto pursuant to the provisions of paragraph (27), and preserve said books
pursuant to the provisions of Ordinance of the Ministry of Finance.
(30) The financial institution or financial instruments business operator specified by Cabinet Order prescribed in Article 6, paragraph
(8) of the Act shall be any
of the following:
(i) A bank, shinkin bank, Federation of Shinkin Banks, the Shoko Chukin Bank
Limited, the Norinchukin Bank, a life insurance company, and casualty insurance company
(ii) A financial instruments business operator prescribed in Article 2,
paragraph (9) of the Financial Instruments and Exchange Act (limited to one engaged in a Type I financial instruments business prescribed
in Article 28,
paragraph (1) of said Act).
(31) The provisions of paragraphs (13) to (17), and paragraphs (19) to (29) shall
apply mutatis mutandis where a domestic financial institution, etc. prescribed in Article 6, paragraph (8) of the Act is be subject
to the provisions of the main clause of paragraph (4) of said Article as well as paragraph (6) and paragraph
(7) of said Article, all of which shall apply mutatis mutandis pursuant Article 6,
paragraph (8) of the Act. In this case, in paragraph (14), the term "the name and domicile or residence or the location of the
person's head office or principal office (hereinafter referred to as "domicile, etc." in this paragraph, the
following paragraph and paragraph (19)), each of which is located outside
Japan" and the term "name and domicile, etc. outside Japan" shall be deemed to be replaced with "name and the
location of the person's head office or
principal office"; in paragraph (15) and paragraph (19), the term "name and domicile, etc. outside Japan" shall be
deemed to be replaced with "name and the location of the person's head office or principal office"; and in paragraph
(22), the term "nonresident or foreign corporation" shall be deemed to be
replaced with "nonresident or foreign corporation, or domestic financial
institution, etc. prescribed in Article 6, paragraph (8) of the Act."
(32) The state designated by Cabinet Order prescribed in Article 6, paragraph
(11) of the Act shall be Switzerland.
(33) The requirements specified by Cabinet Order prescribed in Article 6, paragraph (11) of the Act shall be the requirements listed
as follows:
(i) Redemption of the principal of the relevant foreign private bonds and
payment of interest therefrom are made in the designated state prescribed in
Article 6, paragraph (11) of the Act where said foreign private bonds were issued, using the currency of said designated state
(ii) In the underwriting contract, etc. (meaning an underwriting contract, etc.
as prescribed in Article 6, paragraph (9), item (i) of the Act) concluded by the person who issues said foreign private bonds, it
is provided that the person
who performs the underwriting, etc. prescribed in paragraph (9), item (i) of said Article (referred to as the "underwriting,
etc." in the following item) of said foreign private bonds shall not have a resident or a domestic corporation acquire or buy
said foreign private bonds by way of an offering or secondary distribution, dealings in an offering or secondary distribution, or
any other operations equivalent thereto (referred to as an "offering or secondary
distribution, etc." in the following item) under said underwriting contract, etc.
(iii) All persons who have performed the underwriting, etc. of the relevant foreign private bonds have, pursuant to the provisions
of Ordinance of the Ministry of Finance, submitted a document stating to the effect that the requirement set forth in the preceding
item has been satisfied during the
performance of the offering or secondary distribution, etc. of all of the foreign private bonds for which the underwriting, etc. has
been performed, as well as any other matters specified by Ordinance of the Ministry of Finance, to the competent district director
with jurisdiction over the location of the head office or principal office of the person who issued said foreign private bonds
(where said person who issued said foreign private bonds is a foreign
corporation, the location of the foreign corporation's principal office in Japan), via said person who issued the bonds.
(34) With respect to the application of the provisions of Article 267, paragraph (2)
of the Order for Enforcement of the Income Tax Act in the case where a
resident who has, in a given year, interest income from interest (excluding interest subject to the provisions of Article 3-3, paragraph
(1) of the Act) on general foreign private bonds, submits a final return form prescribed in Article
267, paragraph (2) of said Act, the term "written statement" in paragraph (2) of
said Article shall be deemed to be replaced with "written statement or any other document specified by Ordinance of the Ministry
of Finance."
(35) A person who pays interest from specified foreign private bonds may request
a person in charge of handling payment in Japan to give notice thereto of the
part of the amount of interest from the relevant foreign private bonds delivered by said person in charge of handling payment in the
course of intermediary
services, etc. for the receipt of such interest, which is subject to the provisions of Article 3-3, paragraph (3) or paragraph (6)
of the Act.
(36) The provisions of paragraph (12) to the preceding paragraph shall apply mutatis mutandis where the provisions of Article 6, paragraphs
(1) to (12) of
the Act as applied mutatis mutandis pursuant to paragraph (13) of said Article shall apply with respect to interest from foreign currency
denominated bonds
prescribed in said paragraph.
Section 8-4 Special Provisions on Taxation on Income from the Specified
Foreign Subsidiaries, etc. of a Resident
(Scope of Specified Foreign Subsidiaries, etc.)
Article 25-19 (1) The affiliated foreign company specified by Cabinet Order prescribed in Article 40-4, paragraph (1) of the Act
shall be any of the
following:
(i) An affiliated foreign company that has its head office or principal office in a state or territory where there are no taxes imposed
on corporate income
(meaning an affiliated foreign company prescribed in Article 40-4, paragraph
(2), item (i) of the Act; hereinafter the same shall apply in this Section) (ii) An affiliated foreign company whose tax imposed on
its income for the relevant business year (meaning a business year prescribed in Article 2,
paragraph (2), item (xix) of the Act; hereinafter the same shall apply in this
Section) is 25 percent or less of said income.
(2) Whether or not an affiliated foreign company falls under the category of an affiliated foreign company set forth in item (ii)
of the preceding paragraph shall be determined as specified as follows:
(i) The amount of income set forth in item (ii) of the preceding paragraph shall
be the amount obtained by adding the amount of income calculated pursuant to the provisions of the laws and regulations concerning
foreign corporation
taxes (meaning foreign corporation taxes prescribed in Article 69, paragraph
(1) of the Corporation Tax Act; hereinafter the same shall apply in this
paragraph) of the state or territory where said affiliated foreign company's head office or principal office is located (hereinafter
referred to as the "state of the head office" in this Section) (where there are two or more laws and
regulations concerning said foreign corporation taxes, pursuant to the
provisions of the principal ones; hereinafter referred to as the "laws and
regulations of the state of the head office" in this paragraph) with regard to said affiliated foreign company's income in
its settlement of accounts for the relevant business year and the sum of the amounts listed in (a) to (e)
pertaining to said calculated amount of income and then deducting therefrom the amount listed in (f) pertaining to said calculated
amount of income:
(a) The amount of income which is not to be included in the foreign
corporation tax base under the laws and regulations of the state of the
head office (excluding the amounts listed as follows):
1. The amount of a dividend of surplus, dividend of profit or distribution of surplus prescribed in Article 23, paragraph (1), item
(i) of the
Corporation Tax Act (hereinafter referred to as a "dividend of surplus, etc." in this Section) to be received from a corporation
located in the
state of the head office (including the amount specified in Article 40-5,
paragraph (1), item (ii) of the Act; hereinafter referred to as the
"amount of a dividend, etc." in this paragraph)
2. The amount of a dividend, etc. to be received from a corporation located in a state or territory other than the state of the head
office, which is
not to be included in the foreign corporation tax base, on the condition that the ratio of the shares, etc. (meaning shares or capital
contributions; hereinafter the same shall apply in this Section) held by the affiliated foreign company out of the total number or
total amount
of said corporation's issued shares or capital contributions (excluding
shares that said corporation holds in itself) (hereinafter referred to as the "issued shares, etc." in this Section) is
not less than the ratio
specified by the laws and regulations of said state of the head office
(b) The amount of a dividend, etc. that the affiliated foreign company is to pay and which is included in deductible expenses
(c) The amount of foreign corporation tax that the affiliated foreign company
is to pay and which is included in deductible expenses
(d) The amount equivalent to the amount of reserves similar to the casualty reserves set forth in Article 57-5, paragraph (1) or Article
57-6, paragraph (1) of the Act (referred to as "insurance reserves" in (e)) that the affiliated foreign company has set
aside, which is included in deductible expenses
and which is not to be included in deductible expenses when the provisions
of Article 57-5 or Article 57-6 of the Act apply
(e) Where the amount of insurance reserves that have been set aside by the affiliated foreign company and have been included in gross
profits (limited to insurance reserves that are set aside when the provisions of Article 57-5 or Article 57-6 of the Act apply) does
not reach the amount that should be included in gross profits when these provisions apply, the amount of said
shortfall
(f) The amount of foreign corporation tax that shall be refunded to the affiliated foreign company and which is included in gross
profits
(ii) The amount of tax set forth in item (ii) of the preceding paragraph shall be the sum of the amounts listed as follows:
(a) The amount of foreign corporation tax to be imposed on the amount of the
affiliated foreign company's income in its settlement of accounts for the relevant business year in the state of the head office
or in a state or
territory other than the state of the head office (including the amount to be deducted from the foreign corporation tax in the state
of the head office by deeming that said affiliated foreign company has paid said amount under
the laws and regulations of the state of the head office and excluding the amount of foreign corporation tax to be imposed on the
amount listed in (a),
2. of the preceding item)
(b) The amount of foreign corporation tax that has been reduced or exempted for the affiliated foreign company for the relevant business
year in the
state of the head office and which is deemed to have been paid by said
affiliated foreign company pursuant to the provisions of the tax convention prescribed in Article 1-3, paragraph (1), item (ii) in
the case where a
domestic corporation related to said affiliated foreign company is subject to
the provisions of Article 69, paragraph (8) or Article 81-15, paragraph (8) of the Corporation Tax Act
(iii) Where foreign corporation tax rates in the state of the head office increase
in accordance with the amount of income, the amount of foreign corporation tax set forth in (a) of the preceding item shall be the
amount calculated
based on the highest rates out of such tax rates
(iv) Where the amount of income set forth in item (ii) of the preceding
paragraph proves to be a loss, the amount of foreign corporation tax shall be determined based on the foreign corporation tax rate
to be applied in the
state of the head office to any income that arises from revenue from the affiliated foreign company's principal business (in the
case where said
revenue falls under the category of the amount listed in 1. or 2. of item (i), (a),
revenue other than said revenue).
(3) A nonresident who has a special relationship specified by Cabinet Order to a resident or domestic corporation prescribed in Article
40-4, paragraph (2), item (i) of the Act shall be a nonresident listed as follows:
(i) A relative of the resident
(ii) A person in a relationship with the resident where a marital relationship is de facto, though a marriage has not been registered
(iii) An employee of the resident
(iv) A person other than those listed in the preceding three items who
maintains a living by receiving money or any other assets from the resident
(v) A relative of any of the persons listed in the preceding three items who depends on such person for his/her livelihood
(vi) An officer of the domestic corporation (meaning an officer prescribed in
Article 2, item (xv) of the Corporation Tax Act; hereinafter the same shall
apply in this item and Article 25-21, paragraph (9) and paragraph (11)) and a person listed in the items of Article 72-3 of the Order
for Enforcement of the
Corporation Tax Act with a relationship to said officer.
(Calculation of Undistributed Income of Specified Foreign Subsidiaries, etc.) Article 25-20 (1) The amount of undistributed income
calculated in accordance
with the standards specified by Cabinet Order prescribed in Article 40-4, paragraph (2), item (ii) of the Act shall be the remaining
amount after
deducting the amount listed in Article 39-15, paragraph (1), item (iii) for the
income of a specified foreign subsidiary, etc. prescribed in Article 40-4, paragraph (1) of the Act (hereinafter referred to as a
"specified foreign
subsidiary, etc." in this Article and paragraphs (1) to (4) of the following
Article) in its settlement of accounts for the relevant business year from the sum of the amount listed in Article 39-15, paragraph
(1), item (i) and the
amount listed in item (ii) of said paragraph for said income (where the amount
listed in item (i) of said paragraph for said income is a loss, said amount of undistributed income shall be the remaining amount
after deducting the sum
of said amount of loss and the amount listed in item (iii) of said paragraph for
said income from the amount listed in item (ii) of said paragraph for said income).
(2) Notwithstanding the provisions of the preceding paragraph, a resident listed
in the items of Article 40-4, paragraph (1) of the Act may deem that the
amount obtained by adding the amount of income calculated pursuant to the provisions of the laws and regulations concerning corporate
income taxes in the state of the head office of a specified foreign subsidiary, etc. (meaning taxes to be imposed based on the amount
of the company's income in the state of the
head office or in a state or territory other than the state of the head office or by
local entities in such state or territory including the state of the head office
(including taxes listed in the items of Article 141, paragraph (2) of the Order for Enforcement of the Corporation Tax Act to be imposed
in such state or
territory or by local entities of such state or territory) and taxes equivalent to incidental taxes to be imposed incidentally as
prescribed in Article 2, item (xlv) of the Corporation Tax Act (excluding interest tax) and other taxes similar to
the tax equivalent to said incidental taxes; hereinafter the same shall apply in
this Section) (where there are two or more laws and regulations concerning
said corporate income taxes, pursuant to the provisions of the principal ones;
hereinafter referred to as the "laws and regulations of the state of the head
office" in this paragraph), with regard to the income of said specified foreign subsidiary, etc. in its settlement of accounts
for the relevant business year
(where the provisions of Article 66-4, paragraph (1) or Article 68-88, paragraph
(1) of the Act are applied to a transaction between said specified foreign
subsidiary, etc. and a domestic corporation listed in the items of Article 66-6, paragraph (1) of the Act that relates to said specified
foreign subsidiary, etc., the amount of income calculated pursuant to the provisions of the laws and
regulations of the state of the head office by deeming that the transaction was carried out at the arm's length price prescribed
in those provisions), and the sum of the amounts listed in Article 39-15, paragraph (2), items (i) to (xiii) for said calculated
amount of income and then deducting therefrom the sum of the amounts listed in items (xiv) to (xvi) of said paragraph for said calculated
amount of income (where the amount calculated pursuant to the provisions of
the laws and regulations of the state of the head office proves to be a loss, said amount shall be the remaining amount after deducting
the sum of said amount of loss and the amounts listed in items (xiv) to (xvi) of said paragraph for said
calculated amount from the sum of the amounts listed in items (i) to (xiii) of
said paragraph for said calculated amount) shall be the amount calculated in
accordance with the standards specified by Cabinet Order prescribed in Article
40-4, paragraph (2), item (ii) of the Act.
(3) Where there is any amount of a deductible dividend, etc. (meaning the
amount equivalent to the amount specified respectively in the following items
for the category of cases listed in the relevant items; hereinafter the same shall apply in this paragraph) for the relevant business
year of a specified foreign subsidiary, etc. related to a resident listed in the items of Article 40-4,
paragraph (1) of the Act, the amount calculated in accordance with the
standards specified by Cabinet Order prescribed in Article 40-4, paragraph (2), item (ii) of the Act shall be the remaining amount
after deducting said amount of a deductible dividend, etc. from the amount calculated pursuant to these
provisions, notwithstanding the provisions of paragraph (1) or the preceding paragraph:
(i) Where the amount of a dividend of surplus, etc. that said specified foreign subsidiary, etc. receives from any other specified
foreign subsidiary, etc.
related to said resident (hereinafter referred to as the "other specified foreign
subsidiary, etc." in this item) in the relevant business year (such amount shall include the amount specified in Article 40-5,
paragraph (1), item (ii) of the Act; hereinafter referred to as the "amount of a dividend, etc." in this
paragraph) does not exceed the amount of a dividend payable corresponding
to the capital contributions by said specified foreign subsidiary, etc. out of the total amount of dividends payable by said other
specified foreign
subsidiary, etc. in the business year including the base date for paying said dividend, etc. (hereinafter referred to as the "base
business year" in this
paragraph) and said base business year is the business year during which
the taxable retained income prescribed in Article 40-4, paragraph (1) of the Act (hereinafter referred to as the "taxable retained
income" in this Section) arises: The amount of said dividend, etc.
(ii) Where the amount of a dividend, etc. that said specified foreign subsidiary,
etc. receives from any other specified foreign subsidiary, etc. of said resident
in the relevant business year exceeds the amount of a dividend payable corresponding to the capital contributions for the base business
year pertaining to said amount of a dividend, etc.: Where the amount of a
dividend payable corresponding to the capital contributions for the relevant business year preceding the base business year of said
other specified foreign subsidiary, etc. shall be appropriated to said amount of a dividend, etc. in
reverse chronological order and said amount of a dividend, etc. has been
categorized for the relevant business year in accordance with said amount of
a dividend payable corresponding to the capital contributions for the relevant business year, the sum of the amount of a dividend,
etc. to be appropriated
with the amount of a dividend payable corresponding to the capital
contributions for the business year during which the taxable retained income arises.
(4) In the preceding paragraph and this paragraph, the meanings of the terms
listed respectively in the following items shall be as specified respectively in the relevant items:
(i) The amount of a dividend payable: The remaining amount after deducting the sum of the amounts listed as follows from the amount
of undistributed income prescribed in Article 40-4, paragraph (2), item (ii) of the Act for the relevant business year of a specified
foreign subsidiary, etc. (where there is any amount of deductible dividend, etc. prescribed in the preceding
paragraph or where the provisions of Article 66-4, paragraph (1) or Article
68-88, paragraph (1) of the Act are applied to a transaction with a domestic corporation listed in the items of Article 66-6, paragraph
(1) of the Act that is the domestic corporation of said specified foreign subsidiary, etc. and the
amount of income to be reduced pursuant to the provisions of paragraph (1)
or paragraph (2) contains any amount that shall not be paid to said domestic corporation, the amount obtained by adding together those
amounts to such amount of undistributed income) (where the amount of corporate income tax to be refunded as prescribed in (a) exceeds
the amount of corporate income
tax payable as prescribed in (a), such remaining amount shall be the amount
obtained by adding said amount of undistributed income and said excess amount and then deducting therefrom the sum of the amounts
listed in (b) and (c)):
(a) The amount of corporate income tax payable in the relevant business year
(where there is any amount of corporate income tax to be refunded in the relevant business year, the remaining amount after deducting
said amount of corporate income tax to be refunded)
(b) The amount payable due to the appropriation of surplus for the relevant
business year (excluding the amount of corporate income tax and the amount of a dividend of surplus, etc.)
(c) The amount paid as the expenses for the relevant business year (excluding the amount of corporate income tax and the amount of
a dividend of surplus, etc.) which was included in the amount of
undistributed income prescribed in Article 40-4, paragraph (2), item (ii) of the Act for the relevant business year because said amount
was not
included in deductible expenses for calculating the amount of income
pursuant to the provisions of paragraph (1) or paragraph (2) or was included in the amount of income pursuant to the provisions of
said paragraph
(ii) The amount of a dividend payable corresponding to the capital
contributions: The amount obtained by multiplying the amount of a dividend payable by a specified foreign subsidiary, etc. by the
ratio of the number or
the amount of the shares, etc. of said specified foreign subsidiary, etc. that any other specified foreign subsidiary, etc. (hereinafter
referred to as the "other specified foreign subsidiary, etc." in this item) holds out of the total issued shares, etc.
of said specified foreign subsidiary, etc. (where said
specified foreign subsidiary, etc. has issued the shares, etc. in which claims
prescribed in Article 40-4, paragraph (1) of the Act (hereinafter referred to as
"claims" in this item and paragraph (3) and paragraph (8) of the following
Article) with different contents are vested or the shares, etc. in which claims with different contents are deemed to be substantially
vested (referred to as
the "shares, etc. in which different claims are vested" in paragraph (3) of the following Article), the ratio of the amount
of a dividend of surplus, etc. that said other specified foreign subsidiary, etc. can receive based on said claims
out of the total amount of a dividend of surplus, etc.).
(5) The amount obtained as a result of an adjustment for the amount of loss prescribed in Article 40-4, paragraph (2), item (ii) of
the Act shall be the amount obtained by calculating the amount of income pursuant to the
provisions of paragraph (1), paragraph (2) or paragraph (3) with regard to the income of a specified foreign subsidiary, etc. in its
settlement of accounts for
the relevant business year (hereinafter referred to as the "amount of adjusted income" in this paragraph and paragraph (7))
and then deducting therefrom
the amount equivalent to the sum of the loss incurred in business years that
commenced within seven years preceding the first day of the relevant business year (excluding a business year that commenced before
April 1, 1978 and a
business year during which the company did not fall under the category of a
specified foreign subsidiary, etc. (including a specified foreign subsidiary, etc. prescribed in Article 66-6, paragraph (1) or Article
68-90, paragraph (1) of the Act)) (such loss shall exclude the amount deducted in the business years
preceding said relevant business year pursuant to the provisions of this
paragraph) (where said sum of the loss exceeds the amount of adjusted income
for the relevant business year, said amount of adjusted income).
(6) The loss prescribed in the preceding paragraph shall be the loss calculated where the provisions of paragraph (1), paragraph (2)
or paragraph (3) are
applied to the amount of income of a specified foreign subsidiary, etc. in its settlement of accounts for the relevant business year.
(7) When calculating the amount listed in Article 39-15, paragraph (1), item (i)
with regard to the income of a specified foreign subsidiary, etc. in its settlement of accounts for the relevant business year pursuant
to the
provisions of paragraph (1), if there is any amount to be included in deductible
expenses in the relevant business year, pursuant to the provisions of Article 33 and Articles 42 to 53 of the Corporation Tax Act
and the provisions of Article
43, Article 45-2, Article 52-2, Article 57-5, Article 57-6, Article 57-8, Articles
65-7 to 65-9 (limited to the part pertaining to item (xix) of the table in Article
65-7, paragraph (1) of the Act), Article 67-12, paragraph (2) and Article 67-13, paragraph (2) of the Act, whose provisions are to
apply under the provisions of said item, said amount shall be included in deductible expenses for calculating the amount of adjusted
income for the relevant business year, only when
detailed statements concerning the inclusion of said amount in deductible
expenses are attached to a final return form; provided, however, that when a final return form has not been submitted or a final return
form has been
submitted without detailed statements concerning the inclusion of said amount
in deductible expenses, the district director shall, when he/she finds that there was any compelling reason therefor, apply the provisions
of the main clause of
this paragraph, only when said detailed statements have been submitted.
(8) Where a resident, who was subject to the provisions of paragraph (1) for
calculating the amount of income of the specified foreign subsidiary, etc. in its settlement of accounts for the relevant business
year, seeks the application of paragraph (2) for calculating the amount of income of said specified foreign subsidiary, etc. in its
settlement of accounts for the relevant business year in years following the one to which the provisions of paragraph (1) have been
applied, or where a resident, who was subject to the provisions of paragraph (2)
for calculating the amount of income of the specified foreign subsidiary, etc. in its settlement of accounts for the relevant business
year, seeks the application of paragraph (1) for calculating the amount of income of said specified foreign subsidiary, etc. in its
settlement of accounts for the relevant business year in years following the one to which the provisions of paragraph (2) have been
applied, he/she shall receive approval from the competent district director with
jurisdiction over his/her place for tax payment, in advance.
(Calculation, etc. of the Amount of Taxable Retained Income of Specified
Foreign Subsidiaries, etc. Related to Residents)
Article 25-21 (1) The amount obtained as a result of an adjustment to the
amount of undistributed income set forth in Article 40-4, paragraph (1) of the
Act for the amount of taxes and a dividend of surplus, etc. on said
undistributed income shall be the remaining amount after deducting the sum of the amounts listed as follows from the amount of undistributed
income
prescribed in Article 40-4, paragraph (2), item (ii) for the relevant business
year of a specified foreign subsidiary, etc. (hereinafter referred to as the
"amount of undistributed income" in this paragraph) (where the amount of corporate income tax to be refunded as prescribed
in item (i) exceeds the
amount of corporate income tax payable as prescribed in said item, the amount obtained by adding the amount of undistributed income
and said excess
amount and then deducting therefrom the amount listed in item (ii)). In this
case, when the sum of the amounts listed in item (i) and item (ii) exceeds said amount of undistributed income, the amount listed
in item (i) shall be deducted first and then the amount listed in item (ii) shall be deducted:
(i) The amount of corporate income tax payable in the relevant business year
(where there is any amount of corporate income tax to be refunded in the
relevant business year, the remaining amount after deducting said amount of corporate income tax to be refunded)
(ii) The sum of the amount of a dividend of surplus, etc. by deeming the
relevant business year to be the base business year (meaning the business year including the base day for paying a dividend of surplus,
etc.; hereinafter the same shall apply in this item and the following paragraph) (such amount of a dividend of surplus, etc. shall
be limited to that for which the payment
obligation was fixed by December 31 of the year including the day on which
two months have elapsed after the day following the final day of the relevant business year; hereinafter the same shall apply in this
item) (where the
whole or a part of the amount of a dividend of surplus, etc. by deeming the
relevant business year to be the base business year has been paid to a person listed as follows, said sum shall be deemed to be zero):
(a) An affiliated foreign company of said resident (excluding a specified foreign subsidiary, etc. of said resident) whose tax burden
imposed in the state of the head office on the amount of the dividend of surplus, etc. that it receives is not more than the tax-burden
base specified by Ordinance of the Ministry of Finance as being significantly low compared with that
imposed on corporate income in Japan (hereinafter referred to as the "low
tax-burden base" in this Section)
(b) Any other specified foreign subsidiary, etc. of said resident.
(2) The amount calculated as specified by Cabinet Order prescribed in Article 40-
4, paragraph (1) of the Act shall be the amount obtained by deducting the sum of the amounts listed in paragraph (4), item (i), (b)
and (c) of the preceding
Article for the relevant business year from the amount of eligible retained income prescribed in Article 40-4, paragraph (1) of the
Act for the relevant
business year of a specified foreign subsidiary, etc. of a resident listed in the items of said paragraph (hereinafter such remaining
amount after deduction shall be referred to as the "eligible retained income for adjustment" in this
paragraph) and then multiplying said remaining amount by the ratio of the
shares, etc. for considering the claims held by said person out of the total issued shares, etc. of the specified foreign subsidiary,
etc. at the end of the relevant business year of the specified foreign subsidiary, etc. (where the
amount of a dividend of surplus, etc. by deeming the relevant business year to
be the base business year has not been deducted for calculating the amount of said eligible retained income, the amount shall be that
obtained by deducting either of the smaller amounts out of those listed in the following items from said calculated amount):
(i) The amount obtained by multiplying the amount of said dividend of surplus,
etc. by the ratio of the shares, etc. for considering the claims held by said resident out of the total issued shares, etc. of the
specified foreign subsidiary, etc. at the end of the business year pertaining to said eligible retained
income for adjustment (excluding the shares, etc. for considering the claims
indirectly held via a person listed in item (ii), (a) and (b) of the preceding paragraph of said resident)
(ii) The amount obtained by multiplying the amount of said eligible retained income for adjustment by the ratio of the shares, etc.
for considering the
claims held by said resident out of the total issued shares, etc. of the
specified foreign subsidiary, etc. at the end of the business year pertaining to said eligible retained income for adjustment (excluding
the shares, etc. for
considering the claims indirectly held via a person listed in item (ii), (a) and
(b) of the preceding paragraph of said resident).
(3) In the preceding paragraph and this paragraph, the meanings of the terms
listed respectively in the following items shall be as specified respectively in the relevant items:
(i) The shares, etc. for considering the claims held: The number or the amount adding together the number or the amount of the shares,
etc. of a foreign
corporation directly held by a resident (where said foreign corporation has issued the shares, etc. in which different claims are
vested, the number
obtained by multiplying the issued shares, etc. of said foreign corporation by
the ratio of the amount of a dividend of surplus, etc. that said resident can
receive based on said claims out of the total amount) and the shares, etc. for considering the claims indirectly held
(ii) The shares, etc. for considering the claims indirectly held: The number or
the amount of the shares, etc. obtained by multiplying the issued shares, etc.
of a foreign corporation by the ratio specified respectively in the following
items for the category of cases listed in the relevant items (where this falls under both of the following cases, the sum of the ratios
specified respectively as follows):
(a) Where a resident holds the whole or a part of the issued shares, etc. of a first foreign corporation which is a shareholder, etc.
(meaning a
shareholder, etc. prescribed in Article 2, item (xiv) of the Corporation Tax Act; hereinafter the same shall apply in this Article)
of a second foreign corporation (hereinafter such foreign corporation shall be simply referred to as "the first foreign corporation"
in (a)): The ratio obtained by
multiplying said resident's ratio of shareholding (meaning the ratio of the number or the amount of the shares, etc. held by the
shareholders, etc. out of the total issued shares, etc. of the corporation that issues said shares,
etc. (where said issuing corporation has issued shares, etc. in which
different claims are vested, the ratio of the amount of a dividend of surplus, etc. that said shareholder, etc. can receive based
on said claims out of the
total amount); hereinafter the same shall apply in this item) in the first
foreign corporation by said first foreign corporation's ratio of shareholding in the second foreign corporation (where there are
two or more such first foreign corporations, the sum of the ratios calculated for each of them)
(b) Where a single foreign corporation or two or more foreign corporations are
interposed between a first foreign corporation and a second foreign
corporation (limited to a second foreign corporation for which the whole or a part of the issued shares, etc. are held by a resident;
hereinafter referred to as the "the second foreign corporation" in this paragraph) (hereinafter
such interposed foreign corporations shall be referred to as "foreign
corporations related through capital contribution" in this paragraph) and said resident, said second foreign corporation, foreign
corporations related through capital contribution and said foreign corporation have a link
through the holding of shares, etc.: The ratio obtained by multiplying said
resident's ratio of shareholding in the second foreign corporation
sequentially by the second foreign corporation's ratio of shareholding in the foreign corporation related through capital contribution,
by the foreign
corporation related through capital contribution's ratio of shareholding in the other foreign corporation related through capital
contribution, and by the foreign corporation related through capital contribution's ratio of
shareholding in the first foreign corporation (where there are two or more
links, the sum of the ratios calculated for each of them).
(4) The amount that should be included in the necessary expenses for calculating the amount of miscellaneous income pertaining to
the taxable retained income to be included in the gross revenue pursuant to the provisions of Article 40-4,
paragraph (1) of the Act shall be the sum of the interest on liabilities incurred by a resident in acquiring the shares, etc. of a
specified foreign subsidiary, etc. (including the shares, etc. of a foreign corporation pertaining to the shares, etc. indirectly
held by said resident in the case where he/she indirectly holds the
shares, etc. pertaining to said specified foreign subsidiary, etc. (such shares, etc. indirectly held shall mean the number of shares
or the amount of capital contributions of a foreign corporation specified by Cabinet Order as those held indirectly as prescribed
in Article 40-4, paragraph (2), item (iii) of the Act)
(such shares, etc. of a specified foreign subsidiary, etc. shall be limited to those
held by said resident and shall exclude those falling under the category of the shares, etc. in said resident's specified foreign
subsidiary, etc.); hereinafter the same shall apply in this paragraph) which are to be paid for a period of the
year during which said resident held said shares, etc. of the specified foreign
subsidiary, etc. (where said sum exceeds the amount deemed to be revenue
pertaining to said miscellaneous income under the provisions of paragraph (1)
of said Article, such amount shall be that equivalent to the sum of the amounts deemed to be said revenue).
(5) The amount of interest on liabilities prescribed in the preceding paragraph
which is to be included in the necessary expenses for calculating the amount of miscellaneous income pertaining to the taxable retained
income pursuant to
the provisions of said paragraph shall not be included in the amount that
should be included in the necessary expenses for calculating the amount of business income or miscellaneous income and the amount
of interest on
liabilities prescribed in Article 24, paragraph (2) of the Income Tax Act which
shall be deducted for calculating the amount of dividend income pursuant to the provisions of said paragraph.
(6) The number of shares or the amount of capital contributions of a foreign
corporation specified by Cabinet Order as those held indirectly as prescribed in
Article 40-4, paragraph (2), item (iii) of the Act shall be the number or the amount of the shares, etc. obtained by multiplying the
issued shares, etc. of a first foreign corporation by the ratio specified respectively in the following
items for the category of cases listed in the relevant items (where this falls
under both of the following cases, the sum of the ratios specified respectively as follows):
(i) Where an individual or domestic corporation holds the whole or a part of the issued shares, etc. of a second foreign corporation
which is the shareholder,
etc. of the first foreign corporation (hereinafter referred to as a "second
foreign corporation" in this item): The ratio obtained by multiplying the ratio of shareholding (meaning the ratio of the number
or the amount of the shares, etc. held by the shareholders, etc. out of the total issued shares, etc. of the
corporation that issues said shares, etc.; hereinafter the same shall apply in
this paragraph) of said individual or domestic corporation in the second
foreign corporation by said second foreign corporation's ratio of shareholding in the first foreign corporation (where there are
two or more such second
foreign corporations, the sum of the ratios calculated for each of them)
(ii) Where a single foreign corporation or two or more foreign corporations are interposed between a first foreign corporation and
a second foreign
corporation (limited to a second foreign corporation for which the whole or a part of the issued shares, etc. are held by an individual
or domestic
corporation; hereinafter referred to as the "second foreign corporation" in
this paragraph) (hereinafter such interposed foreign corporations shall be
referred to as a "foreign corporations related through capital contribution" in this paragraph) and said individual or domestic
corporation, said second
foreign corporation, foreign corporations related through capital contribution and said first foreign corporation are linked through
the holding of shares,
etc.: The ratio obtained by multiplying the ratio of shareholding of said
individual or domestic corporation in the second foreign corporation
sequentially by said second foreign corporation's ratio of shareholding in the foreign corporation related through capital contribution,
by the capital
foreign corporation related through capital contribution's ratio of
shareholding in the other foreign corporation related through capital contribution, and by the foreign corporation related through
capital
contribution's ratio of shareholding in the first foreign corporation (where
there are two or more such links, the sum of the ratios calculated for each of them).
(7) The number of voting rights of a foreign corporation specified by Cabinet
Order as being held indirectly as prescribed in Article 40-4, paragraph (2), item
(iv) of the Act shall be the number of voting rights obtained by multiplying the total number of voting rights (meaning the voting
rights prescribed in Article
40-4, paragraph (1), item (i), (a) of the Act; hereinafter the same shall apply in this paragraph) of a first foreign corporation
by the ratios specified
respectively in the following items for the category of cases listed in the
relevant items (where this falls under both of the following cases, the sum of the ratios specified respectively as follows):
(i) Where an individual or domestic corporation holds the whole or a part of the voting rights of a second foreign corporation which
is the shareholder, etc. of the first foreign corporation (hereinafter referred to as the "second foreign
corporation" in this item): The ratio obtained by multiplying the ratio of
voting rights (meaning the ratio of the number of voting rights held by the
shareholder, etc. out of the total number; hereinafter the same shall apply in this paragraph) of said individual or domestic corporation
in the second
foreign corporation by said second foreign corporation's ratio of voting rights
in the first foreign corporation (where there are two or more such second foreign corporations, the sum of the ratios calculated for
each of them)
(ii) Where a single foreign corporation or two or more foreign corporations are interposed between the first foreign corporation and
a second foreign
corporation (limited to a second foreign corporation for which the whole or a part of the voting rights are held by an individual
or domestic corporation;
hereinafter referred to as the "second foreign corporation" in this paragraph) (hereinafter such interposed foreign corporations
shall be referred to as
"foreign corporation related through capital contribution" in this paragraph)
and said individual or domestic corporation, the second foreign corporation, foreign corporations related through capital contribution
and the first foreign corporation have a link through the holding of voting rights: The ratio
obtained by multiplying the ratio of voting rights of said individual or
domestic corporation in the second foreign corporation sequentially by said second foreign corporation's ratio of voting rights
in the foreign corporation related through capital contribution, by the foreign corporation related
through capital contribution's ratio of voting rights in any other foreign corporation related through capital contribution, and
by the foreign
corporation related through capital contribution's ratio of voting rights in the first foreign corporation (where there are two
or more links, the sum of the
ratios calculated for each of them).
(8) The amount of a dividend of surplus, etc. specified by Cabinet Order as being receivable based on the claims vested in the shares,
etc. of a foreign
corporation held indirectly as prescribed in Article 40-4, paragraph (2), item (v)
of the Act shall be the amount of a dividend of surplus, etc. obtained by
multiplying the total amount of a dividend of surplus, etc. receivable based on the claims vested in the shares, etc. of a first foreign
corporation by the ratio specified respectively in the following items for the category of cases listed in
the relevant items (where this falls under both of the following cases, the sum of the ratios specified respectively as follows):
(i) Where an individual or domestic corporation holds the whole or a part of the claims vested in the shares, etc. of a second foreign
corporation which is the
shareholder, etc. of a first foreign corporation (hereinafter referred to as the
"second foreign corporation" in this item): The ratio obtained by multiplying
the ratio of claims (meaning the ratio of the amount of a dividend of surplus, etc. receivable based on the claims vested in the shares,
etc. held by the
shareholder, etc. out of the total amount; hereinafter the same shall apply in this paragraph) of said individual or domestic corporation
in said second
foreign corporation by said second foreign corporation's ratio of claims
pertaining to the first foreign corporation (where there are two or more such second foreign corporations, the sum of the ratios calculated
for each of
them)
(ii) Where a single foreign corporation or two or more foreign corporations are interposed between a first foreign corporation and
a second foreign
corporation (limited to a second foreign corporation for which the whole or a part of the claims vested in the shares, etc. are held
by an individual or
domestic corporation; hereinafter referred to as the "second foreign
corporation" in this paragraph) (hereinafter such interposed foreign
corporations shall be referred to as "foreign corporations related through capital contribution" in this paragraph) and
said individual or domestic corporation, said second foreign corporation, foreign corporations related
through capital contribution and said first foreign corporation have a link
through the holding of claims vested in the shares, etc.: The ratio obtained by multiplying the ratio of claims of said individual
or domestic corporation in said second foreign corporation sequentially by said second foreign
corporation's ratio of claims in the foreign corporation related through
capital contribution, by the foreign corporation related through capital
contribution's ratio of claims in any other foreign corporation related through capital contribution, and by the foreign corporation
related through capital contribution's ratio of claims in the first foreign corporation (where there are
two or more links, the sum of the ratios calculated for each of them). (9) A person who has a special relationship specified by Cabinet
Order to a
resident or a domestic corporation prescribed in Article 40-4, paragraph (2), item (vi) of the Act shall be an individual or corporation
listed as follows:
(i) An individual listed as follows:
(a) A relative of the resident
(b) A person in a relationship with the resident where a marital relationship is de facto, though a marriage has not been registered
(c) An employee of the resident
(d) A person other than those listed in (a) to (c) who maintains his/her living by receiving money or any other assets from the resident
(e) A relative of any of the persons listed in (b) to (d) who depends on such person for his/her livelihood
(f) An officer of the domestic corporation and a person listed in the items of
Article 72-3 of the Order for Enforcement of the Corporation Tax Act with a relationship to said officer
(ii) A corporation listed as follows:
(a) Where a resident or a domestic corporation (including an individual who has a special relationship prescribed in the preceding
item to said resident or domestic corporation; hereinafter referred to as a "resident, etc." in this paragraph) controls
any other corporation, said other corporation
(b) Where a resident, etc. or a corporation which has a special relationship
prescribed in (a) to said resident, etc. controls any other corporation, said other corporation
(c) Where a resident, etc. or a corporation which has a special relationship prescribed in (a) and (b) to said resident, etc. controls
any other
corporation, said other corporation
(d) Where any of the two or more corporations which have a special
relationship prescribed in (a) to (c) to the same person is a resident, etc., a corporation other than the one falling under said
resident, etc. out of those which have such special relationship to the same person
(10) The provisions of Article 4, paragraph (3) of the Order for Enforcement of
the Corporation Tax Act shall apply mutatis mutandis where controlling any other corporation listed in (a) to (c) of item (ii) of
the preceding paragraph.
(11) The amount of expenses specified by Cabinet Order set forth in Article 40-4, paragraph (1) of the Act which is applied by replacing
the terms pursuant to
the provisions of paragraph (3) of said Article shall be the sum of personnel
expenses for officers and employees of a specified foreign subsidiary, etc.
engaged in the business of said specified foreign subsidiary, etc. prescribed in paragraph (3) of said Article (limited to the amount
to be included in
deductible expenses for calculating the amount of income or loss pursuant to
the provisions of paragraph (1) or paragraph (2) of the preceding Article for the relevant business year of said specified foreign
subsidiary, etc.).
(Determination, etc. of Business of Specified Foreign Subsidiaries, etc.)
Article 25-22 (1) The person specified by Cabinet Order prescribed in Article 40-
4, paragraph (4), item (i) of the Act shall be any of the following:
(i) Other consolidated corporations (meaning consolidated corporations
prescribed in Article 2, item (xii)-7-4 of the Corporation Tax Act) which have the consolidated full controlling interest prescribed
in item (xii)-7-5 of said
Article with a consolidated corporation listed in the items of Article 68-90,
paragraph (1) of the Act which pertains to a specified foreign subsidiary, etc. prescribed in Article 40-4, paragraph (4) of the Act
(hereinafter referred to as a "specified foreign subsidiary, etc." in this paragraph) that is mainly
engaged in business listed in item (i) of said paragraph
(ii) A person who holds over 50 percent of the total number or total amount of
the issued shares, etc. of a domestic corporation listed in the items of Article
66-6, paragraph (1) of the Act which pertains to a specified foreign subsidiary, etc. that is mainly engaged in business listed in
Article 40-4, paragraph (4), item (i) of the Act (excluding a person falling under any of those listed in the
items of Article 40-4, paragraph (1), items of Article 66-6, paragraph (1),
items of Article 68-90, paragraph (1) of the Act and the preceding item who is a person with a relationship to said specified foreign
subsidiary, etc.)
(iii) A person who holds over 50 percent of the total number or total amount of the issued shares, etc. of a consolidated corporation
listed in the items of
Article 68-90, paragraph (1) of the Act (where said consolidated corporation
is a consolidated subsidiary corporation prescribed in Article 2, item (xii)-7-3 of the Corporation Tax Act, a consolidated parent
corporation prescribed in item (xii)-7-2 of said Article which pertains to said consolidated corporation) which pertains to a specified
foreign subsidiary, etc. that is mainly engaged
in business listed in Article 40-4, paragraph (4), item (i) of the Act (excluding a person falling under any of those listed in the
items of Article 40-4,
paragraph (1), items of Article 66-6, paragraph (1), items of Article 68-90,
paragraph (1) of the Act and the preceding two items who is a person with a relationship to said specified foreign subsidiary, etc.)
(iv) Where a person listed in the items of Article 40-4, paragraph (1), items of
Article 66-6, paragraph (1) or items of Article 68-90, paragraph (1) of the Act with a relationship to a specified foreign subsidiary,
etc. that is mainly
engaged in business listed in Article 40-4, paragraph (4), item (i) of the Act holds the shares, etc. indirectly in said specified
foreign subsidiary, etc. (such shares, etc. shall mean the number of shares or the amount of capital
contributions of a foreign corporation specified by Cabinet Order as being
held through indirect ownership as prescribed in Article 40-4, paragraph (2), item (iii) of the Act), the second foreign corporation
prescribed in paragraph (6), item (i) of the preceding Article or the second foreign corporation and foreign corporations related
through capital contribution as prescribed in
item (ii) of said paragraph which pertain to said shares, etc. held indirectly
(v) A person who has a special relationship specified by Cabinet Order
prescribed in Article 40-4, paragraph (2), item (vi) of the Act to any of the
persons listed as follows (excluding a person falling under any of those listed in the items of Article 40-4, paragraph (1), items
of Article 66-6, paragraph (1), items of Article 68-90, paragraph (1) of the Act and the preceding items
who is a person with a relationship to a specified foreign subsidiary, etc. that
is mainly engaged in business listed in Article 40-4, paragraph (4), item (i) of the Act):
(a) A specified foreign subsidiary, etc. that is mainly engaged in business
listed in Article 40-4, paragraph (4), item (i) of the Act
(b) A person listed in the items of Article 40-4, paragraph (1), items of Article
66-6, paragraph (1) or items of Article 68-90, paragraph (1) of the Act with a relationship to a specified foreign subsidiary, etc.
that is mainly engaged in business listed in Article 40-4, paragraph (4), item (i) of the Act
(c) A person listed in the preceding items.
(2) The case specified by Cabinet Order prescribed in Article 40-4, paragraph (4), item (i) of the Act shall be any of the cases specified
respectively in the
following items, in accordance with the category of the principal business to be conducted for the relevant business year of a specified
foreign subsidiary, etc.
prescribed in said paragraph:
(i) Wholesale business: Where, out of the total revenue from selling inventory assets (meaning inventory assets prescribed in Article
2, item (xx) of the
Corporation Tax Act; hereinafter the same shall apply in this item) for the
relevant business year (where there are any commissions to be received for agent or intermediary services for the buying or selling
inventory assets for
the relevant business year, such revenues shall include the amount from the
transactions for which said commissions were generated; hereinafter referred to as the "amount of sales transactions" in
this item), the ratio of the sum of
the amount of sales transactions with a person other than affiliated persons
(meaning those listed in the items of Article 40-4, paragraph (1), items of
Article 66-6, paragraph (1), items of Article 68-90, paragraph (1) of the Act and the items of the preceding paragraph who are affiliated
persons of said specified foreign subsidiary, etc.; hereinafter the same shall apply in this
paragraph and the following paragraph) exceeds 50 percent, or out of the sum of the acquisition costs for acquiring inventory assets
for the relevant business year (where there are any commissions to be received for agent or intermediary services for the buying
or selling inventory assets for the
relevant business year, such acquisition costs shall include the amount from
the transactions for which said commissions were generated; hereinafter
referred to as the "amount of purchase transactions" in this item), the ratio of the sum of the amount of purchase transactions
with a person other than affiliated persons exceeds 50 percent
(ii) Banking business: Where, out of the sum of the total interest received for the relevant business year, the ratio of the sum of
said interest to be received from a person other than affiliated persons exceeds 50 percent, or out of the
sum of the total interest paid for the relevant business year, the ratio of the sum of said interest to be paid to a person other
than affiliated persons
exceeds 50 percent
(iii) Trust business: Where, out of the sum of the total trust charge for the relevant business year, the ratio of the sum of said
trust charge to be
received from a person other than affiliated persons exceeds 50 percent
(iv) Financial instruments business: Where, out of the sum of the total commissions received (including profits from the buying and
selling
securities) for the relevant business year, the ratio of the sum of said commissions to be received from a person other than affiliated
persons exceeds 50 percent
(v) Insurance business: Where, out of the sum of the total premium income for
the relevant business year, the ratio of the sum of said premium income to be
received from a person other than affiliated persons (where said premium
income pertains to reinsurance, limited to premium income from insurance for assets held by a person other than affiliated persons
or damages incurred by a person other than affiliated persons) exceeds 50 percent
(vi) Water transportation business or air transportation business: Where, out of the total revenue from the operation or rental of
vessels or operation or rental of aircraft for the relevant business year, the ratio of the sum of said revenues to be received from
a person other than affiliated persons exceeds
50 percent.
(3) Where transactions prescribed in the preceding paragraph between a
specified foreign subsidiary, etc. and an affiliated person of a specified foreign subsidiary, etc. are conducted indirectly via a
person other than the affiliated persons of said specified foreign subsidiary, etc. (hereinafter referred to as a
"non-affiliated person" in this paragraph), transactions between said specified foreign subsidiary, etc. and said non-affiliated
person shall be deemed to have
been conducted directly between said specified foreign subsidiary, etc. and said affiliated person and the provisions of the items
of the preceding paragraph shall apply, except in the case where there are reasonable grounds for having
said non-affiliated person intervene in such transactions.
(4) The water areas specified by Cabinet Order prescribed in Article 40-4,
paragraph (4), item (ii) of the Act shall be the inland waters and territorial seas and exclusive economic zones or water areas equivalent
to continental shelves of a state or territory prescribed in said item.
(5) The case specified by Cabinet Order prescribed in Article 40-4, paragraph (4),
item (ii) of the Act shall be any of the cases specified respectively in the
following items, in accordance with the category of the principal business to be conducted for the relevant business year of a specified
foreign subsidiary, etc.
prescribed in said paragraph:
(i) Real estate business: Where conducting a buying and selling or rental
business of real estate (including acts to let others use said real estate) (real estate shall include the rights thereon; hereinafter
the same shall apply in
this item) mainly located in the state of the head office, providing agent or intermediary services for the buying and selling or
rental business of said real estate, and managing said real estate
(ii) Rental and leasing business: Where conducting a rental business for goods to be provided for use mainly in the state of the head
office
(iii) Business other than those listed in paragraph (2) and the preceding two items: Where conducting a business mainly in the state
of the head office.
(Calculation, etc. of Taxed Amount of Dividend, etc. of Specified Foreign
Subsidiaries, etc.)
Article 25-23 (1) The affiliated foreign company prescribed in Article 40-5,
paragraph (1) of the Act which is specified by Cabinet Order shall be one of the affiliated foreign companys which hold the taxed
amount of a dividend, etc. before deduction for a specified foreign subsidiary, etc. prescribed in said
paragraph (hereinafter referred to as a "specified foreign subsidiary, etc." in
this Article and paragraph (2) of the following Article) (such affiliated foreign company shall exclude those falling under the category
of a specified foreign
subsidiary, etc. of a resident set forth in said paragraph).
(2) The amount calculated as specified by Cabinet Order prescribed in Article 40-
5, paragraph (1) of the Act shall be the amount specified respectively in the following items for the category of cases listed in
the relevant items:
(i) Where an event listed in Article 40-5, paragraph (1), item (i) of the Act has
occurred with regard to a specified foreign subsidiary, etc. of a resident
prescribed in Article 40-5, paragraph (1) of the Act (excluding the case where said event occurred in a year preceding the year including
the day on which
two months have elapsed after the day following the final day of the business year including the base date for paying a dividend of
surplus, etc. specified in Article 40-5, paragraph (1), item (i) of the Act of said specified foreign
subsidiary, etc. (hereinafter such business year shall be referred to as the
"base business year" in this item and the following paragraph and such year including the day on which two months have elapsed
after the day following the final day of the base business year shall be referred to as the "applicable business year"
in the following paragraph)) and when said amount of
dividend of surplus, etc. exceeds the amount of a dividend of surplus, etc. to
be deducted for calculating the amount of eligible retained income prescribed in Article 40-4, paragraph (1) of the Act for said base
business year of said specified foreign subsidiary, etc.: The amount obtained by multiplying said excess amount by the ratio of the
shares, etc. for considering the claims held by said person of said specified foreign subsidiary, etc. prescribed in Article
25-21, paragraph (3), item (i) out of the total issued shares, etc. of said
specified foreign subsidiary, etc. at the end of the base business year (where a dividend of surplus, etc. has been paid to an affiliated
foreign company of said resident (excluding a specified foreign subsidiary, etc. of said resident;
hereinafter the same shall apply in this item and the following item) whose
tax burden imposed in the state of the head office on the amount of the dividend of surplus, etc. that it receives as specified in
Article 40-5,
paragraph (1), item (i) of the Act is below the low tax-burden base or to any other specified foreign subsidiary, etc. of said resident,
such shares, etc. for
considering the claims held shall exclude the shares, etc. for considering the
claims indirectly held (meaning the shares, etc. for considering the claims indirectly held prescribed in Article 25-21, paragraph
(3), item (ii); the same
shall apply in the following item and paragraph (4)) via said affiliated foreign company and said other specified foreign subsidiary,
etc.) (where
there is any amount to be deducted, with regard to the amount of a dividend of surplus, etc. specified in Article 40-5, paragraph
(1), item (i) of the Act, for calculating the amount of taxable retained income, pursuant to the
provisions of Article 25-21, paragraph (2), for said base business year of said
specified foreign subsidiary, etc., the remaining amount after deducting said amount to be deducted from said calculated amount)
(ii) Where an event listed in Article 40-5, paragraph (1), item (ii) has occurred
with regard to a specified foreign subsidiary, etc. of a resident prescribed in
Article 40-5, paragraph (1) of the Act: The amount obtained by multiplying the amount prescribed in said item by the ratio of the
shares, etc. for
considering the claims held by said person of said specified foreign
subsidiary, etc. prescribed in Article 25-21, paragraph (3), item (i) out of the total issued shares, etc. of said specified foreign
subsidiary, etc. at the time when said event occurred (where the money or any other assets have been delivered to an affiliated foreign
company of said resident whose tax burden imposed in the state of the head office on the amount of the money that it
receives as prescribed in Article 40-5, paragraph (1), item (ii) of the Act is
below the low tax-burden base or to any other specified foreign subsidiary, etc. of said resident, such shares, etc. for considering
the claims held shall exclude the shares, etc. for considering the claims indirectly held via said
affiliated foreign company or said other specified foreign subsidiary, etc.)
(iii) Where an event listed in Article 40-5, paragraph (1), item (iii) has occurred with regard to an affiliated foreign company prescribed
in Article 40-5,
paragraph (1) of the Act that is the affiliated foreign company of a resident prescribed in said paragraph: The amount specified in
said item with the
taxed amount of a dividend, etc. before deduction as the upper limit.
(3) With respect to the application of the provisions of item (i) of the preceding paragraph in the case where payment has been made
for s of surplus, etc.
whose base dates for payment are included in the base business year, with
regard to a specified foreign subsidiary, etc. of a resident prescribed in Article
40-5, paragraph (1) of the Act (where payment was made for said two or more dividends of surplus, etc. in a year preceding the applicable
business year
pertaining to the base business year for said dividends of surplus, etc. (hereinafter such paid dividend of surplus, etc. shall be
referred to as a
"specified dividend of surplus, etc." in this paragraph), excluding said two or more dividends of surplus) (including the
cases where payment has been made for a specified dividend of surplus, etc. and payment has not been made for a dividend of surplus,
etc. whose base date for payment is included in said base business year up to the day on which six months have elapsed after the
final
day of the base business year for said specified dividend of surplus, etc.), the amount specified in item (i) of the preceding paragraph
shall be the amount
obtained by multiplying the excess amount when the amount listed in item (i) exceeds the amount listed in item (ii) by the ratio prescribed
in item (i) of said paragraph and then deducting therefrom the amounts listed in item (iii) and
item (iv):
(i) The sum of a dividend of surplus, etc. (limited to that whose base date for payment is included in said base business year) that
said specified foreign subsidiary, etc. has paid by December 31 of the year including the day on which an event listed in Article
40-5, paragraph (1), item (i) of the Act
occurred (where no dividend of surplus, etc. other than a specified dividend of surplus, etc. was paid, the year including the day
on which six months have elapsed after the final day of the base business year for said specified dividend of surplus, etc.)
(ii) The sum of the amounts to be deducted for calculating the amount of
eligible retained income prescribed in Article 40-4, paragraph (1) of the Act for said base business year of said specified foreign
subsidiary, etc., with
regard to the sum of the dividends of surplus, etc. set forth in the preceding
item
(iii) The sum of the amounts to be deducted for calculating the amount of
taxable retained income under the provisions of Article 25-21, paragraph (2)
for said base business year of said specified foreign subsidiary, etc., with regard to the sum of the dividends of surplus, etc. set
forth in item (i)
(iv) The sum of the amounts deducted for calculating the amount of dividend
income or miscellaneous income for a year preceding the relevant year
including the day on which an event listed in Article 40-5, paragraph (1), item (i) of the Act occurred with regard to said resident,
pursuant to the
provisions of said paragraph, with regard to the sum of the dividends of surplus, etc. set forth in item (i)
(4) The taxed amount of a dividend, etc. before deduction prescribed in paragraph
(1) and paragraph (2) shall be, out of the amount of a dividend of surplus, etc. which an affiliated foreign company of a resident
prescribed in Article 40-5,
paragraph (1) of the Act received from a specified foreign subsidiary, etc. of
said resident during the period of two years or less preceding the day on which an event listed in item (iii) of said paragraph occurred
(such amount of a
dividend of surplus, etc. shall include the amount specified in item (ii) of said
paragraph) and which shall not be deducted for calculating the amount of
taxable retained income under the provisions of Article 25-21, paragraph (2)
pertaining to said specified foreign subsidiary, etc. (including the amount
which shall not be included in the taxed amount of a dividend, etc. prescribed in Article 40-5, paragraph (1) of the Act that was
calculated for said specified
foreign subsidiary, etc. pursuant to the provisions of paragraph (2) or the preceding paragraph), the part which corresponds to the
shares, etc. for
considering the claims of said specified foreign subsidiary, etc. indirectly held
by said resident via said affiliated foreign company (such part shall exclude the amount already appropriated for the application
of the provisions of Article 40-
5, paragraph (1) of the Act).
(5) Deduction of the amount equivalent to the taxed amount of a dividend, etc. under the provisions of Article 40-5, paragraph (1)
of the Act (meaning the
taxed amount of a dividend, etc. prescribed in said paragraph; hereinafter the
same shall apply in this Article) shall be made as specified as follows:
(i) The amount equivalent to the taxed amount of a dividend, etc. shall be
deducted first for calculating the amount of miscellaneous income pertaining the taxable retained income to be included in gross revenue
for the year
pursuant to the provisions of Article 40-4, paragraph (1) of the Act
(ii) The amount equivalent to the taxed amount of a dividend, etc. that still
remains after making a deduction pursuant to the provisions of the preceding item shall be deducted for calculating the amount of
dividend income from a dividend, etc. (meaning a dividend, etc. prescribed in Article 40-5, paragraph
(1) of the Act; hereinafter the same shall apply in this Article) to be received
from a specified foreign subsidiary, etc. or an affiliated foreign company prescribed in said paragraph for the year.
(6) The deduction of the amount equivalent to the remaining amount of a
dividend, etc. after deduction under the provisions of Article 40-5, paragraph
(2) of the Act (meaning the remaining amount of a dividend, etc. after
deduction prescribed in said paragraph; hereinafter the same shall apply in this paragraph) shall be made as specified as follows:
(i) Where the remaining amount of a dividend, etc. after deduction to be
deducted pertains to the taxed amount of a dividend, etc. that still remains after making a deduction pursuant to the provisions of
Article 40-5,
paragraph (1) of the Act in the two years or more during the three years
preceding the relevant year, the remaining amount of a dividend, etc. after deduction that pertains to said taxed amount of a dividend,
etc. that still
remains after making the deduction shall be deducted, starting from that for
the oldest year in chronological order
(ii) Deduction of the remaining amount of a dividend, etc. after deduction that pertains to the taxed amount of a dividend, etc. that
still remains after
making the deduction pursuant to the provisions of Article 40-5, paragraph
(1) of the Act in a year during the three years preceding the relevant year shall be made as specified as follows:
(a) Said remaining amount of a dividend, etc. after deduction shall be deducted first for calculating the amount of miscellaneous
income
pertaining the taxable retained income to be included in gross revenue for the year pursuant to the provisions of Article 40-4, paragraph
(1) of the Act (where a deduction under the provisions of item (i) of the preceding
paragraph is made, for calculating the amount after said deduction) (b) Said remaining amount of a dividend, etc. after deduction
that still
remains after making a deduction pursuant to the provisions of (a) shall be
deducted for calculating the amount of dividend income from a dividend,
etc. to be received from a specified foreign subsidiary, etc. or an affiliated
foreign company prescribed in Article 40-5, paragraph (2) of the Act for the year (where a deduction under the provisions of item
(ii) of the preceding
paragraph is made, for calculating the amount after said deduction).
(Determination, etc. of Affiliated Foreign Companies)
Article 25-24 (1) In the case referred to in Article 40-4, paragraph (1) of the Act, whether or not a foreign corporation falls under
the category of an affiliated foreign company shall be determined according to its status at the end of its
relevant business year, and whether or not the person falls under the category of a resident listed in the items of said paragraph
shall be determined
according to his/her status at the end of the relevant business year of such residents' an affiliated foreign company.
(2) With respect to the application of the provisions of Article 222 of the Order for
Enforcement of the Income Tax Act when calculating the maximum amount of deduction prescribed in Article 95, paragraph (1) of the
Income Tax Act for a resident subject to the provisions of Article 40-4, paragraph (1) of the Act or
Article 40-5, paragraph (1) or paragraph (2) of the Act, the amount of
miscellaneous income pertaining to the taxable retained income to be included
in the gross revenue pursuant to the provisions of Article 40-4, paragraph (1) of the Act shall be included in the domestic source
income prescribed in Article
222, paragraph (3) of said Order, and the amount of dividend income from a dividend, etc. prescribed in Article 40-5, paragraph (1)
to be received from a
specified foreign subsidiary, etc. or an affiliated foreign company subject to the provisions of Article 40-5, paragraph (1) or paragraph
(2) of the Act shall be the amount of said dividend income calculated without applying these provisions.
(3) The provisions of Article 14-10, paragraphs (1) to (5) and paragraphs (7) to
(11) of the Order for Enforcement of the Corporation Tax Act shall apply
mutatis mutandis where the provisions of Article 40-4, paragraph (7) of the Act shall apply under the provisions of Article 40-4 (excluding
paragraph (3),
paragraph (4) and paragraph (6)) to Article 40-6 of the Act and Articles 25-19 to 25-21 (excluding paragraph (11)), Article 25-23
and this Article.
(4) With regard to a trust corporation or a beneficiary of a trust subject to
corporation taxation prescribed in Article 4-7 of the Corporation Tax Act, in
addition to what is specified in the preceding paragraph, other necessary
matters concerning the application of the provisions of Article 40-4 (excluding paragraph (3), paragraph (4) and paragraph (6)) to
Article 40-6 of the Act, or
Articles 25-19 to 25-21 (excluding paragraph (11)), Article 25-23 or this Article shall be specified by Ordinance of the Ministry
of Finance.
(Scope, etc. of Specially-Related Shareholders, etc.)
Article 25-30 (1) An individual with a special relationship specified by Cabinet
Order prescribed in Article 40-10, paragraph (1) of the Act to a person who falls under the category of specified shareholder, etc.
shall be any of the following:
(i) An individual who has a special relationship prescribed in Article 4,
paragraph (1) of the Order for Enforcement of the Corporation Tax Act to a person who falls under the category of a specified shareholder,
etc. (meaning a specified shareholder, etc. prescribed in Article 40-10, paragraph (2), item
(i) of the Act; hereinafter the same shall apply in this paragraph and the
following paragraph)
(ii) An officer (meaning an officer prescribed in Article 2, item (xv) of the
Corporation Tax Act; hereinafter the same shall apply in this Section) of a corporation that falls under the category of a specified
shareholder, etc. and a person listed in the items of Article 72-3 of the Order for Enforcement of
the Corporation Tax Act in relation to said officer (referred to as a "specially-
related person" in the following item)
(iii) The officer of a specially-related domestic corporation (meaning a
specially-related domestic corporation prescribed in Article 40-10, paragraph (2), item (ii) of the Act; hereinafter the same shall
apply in this Section) and a specially-related person of said officer
(2) A corporation with a special relationship specified by Cabinet Order
prescribed in Article 40-10, paragraph (1) of the Act to a person who falls under the category of specified shareholder, etc. shall
be any of the following:
(i) Where a specified shareholder, etc. (including an individual who has a
special relationship to said specified shareholder, etc. as prescribed in item (i) or item (ii) of the preceding paragraph) or an
individual who has a special relationship to a specially-related domestic corporation as prescribed in item (iii) of said paragraph
(hereinafter referred to as a "person determined to be
a shareholder, etc." in this paragraph) controls any other corporation, said other corporation
(ii) Where a person determined to be a shareholder, etc. and a corporation
which has a special relationship thereto as prescribed in the preceding item control any other corporation, said other corporation
(iii) Where a person determined to be a shareholder, etc. and a corporation
which has a special relationship thereto as prescribed in the preceding two
items control any other corporation, said other corporation.
(3) The provisions of Article 4, paragraph (3) and paragraph (4) of the Order for
Enforcement of the Corporation Tax Act shall apply mutatis mutandis where the provisions of the preceding paragraph shall apply.
(4) A relationship specified by Cabinet Order prescribed in Article 40-10,
paragraph (1) of the Act shall be the relevant relationship in the case where a specially-related shareholder, etc. prescribed in
said paragraph (hereinafter
referred to as a "specially-related shareholder, etc." in this Section) and a
specially-related domestic corporation have a relationship where the ratio of the shares, etc. indirectly held by the specially-related
shareholder, etc.
pertaining to the specially-related domestic corporation (meaning the ratio specified respectively in the following items for the
category of cases listed in
the relevant items (where this falls both of the following cases, the sum of the ratios specified respectively as follows)) is 80
percent or more:
(i) Where out of the total number or total amount of shares or capital
contributions issued by a foreign corporation (excluding that falling under the category of a specially-related shareholder, etc.;
hereinafter the same shall apply in this item) which is a shareholder, etc. (meaning a shareholder, etc. prescribed in Article 2,
paragraph (1), item (viii)-2 of the Income Tax Act; hereinafter the same shall apply in this Section) of a specially-related
domestic corporation (such issued shares or capital contributions shall
exclude those that said foreign corporation holds in itself and the total
number or total amount of such issued shares or capital contributions shall be referred to as the "issued shares, etc."
in this Section), a specially-related shareholder, etc. holds 80 percent or more of the number or the amount of such shares, etc.
(meaning shares or capital contributions; hereinafter the same shall apply in this Section): The ratio of the number or the amount
of
the shares, etc. of the specially-related domestic corporation held by said
foreign corporation which is a shareholder, etc. out of the total issued shares, etc. of said specially-related domestic corporation
(where there are two or more such foreign corporations which are shareholders, etc., the sum of the
ratios calculated for each of them)
(ii) Where a single corporation or two or more corporations are interposed between a corporation which is a shareholder, etc. of a
specially-related
domestic corporation (excluding a foreign corporation which is a shareholder, etc. set forth in the preceding item falling under the
case listed in said item and a corporation falling under the category of a specially-related
shareholder, etc.) and a specially-related shareholder, etc. and have a link
with them through the holding of shares, etc. (where said corporation which is a shareholder, etc. is a domestic corporation and said
interposed
corporations are all domestic corporations, excluding said domestic
corporations and any corporation falling under the category of a specially- related shareholder, etc.; hereinafter referred to as
"corporations related
through capital contribution" in this item) (limited to the case where 80 percent or more of the number or the amount of the
issued shares, etc. in both the corporation related through capital contribution and in the
corporation which is a shareholder, etc. are held by the specially-related
shareholder, etc. or by a corporation related through capital contribution
(such specially-related shareholder, etc. or foreign corporation related
through capital contribution shall be limited to those for which 80 percent or more of the number or the amount of the issued shares,
etc. are held by a
specially-related shareholder, etc. or by another corporation related through capital contribution)): The ratio of the number or the
amount of the shares, etc. of the specially-related domestic corporation held by the corporation
which is the shareholder, etc. out of the total issued shares, etc. of said specially-related domestic corporation (where there are
two or more such
corporations which are shareholders, etc., the sum of the ratios calculated for each of them).
(5) A foreign corporation specified by Cabinet Order prescribed in Article 40-10,
paragraph (1) of the Act shall be any of the following:
(i) A foreign corporation falling under the category of a foreign corporation
which is a shareholder, etc. prescribed in item (i) of the preceding paragraph, where the ratio of the shares, etc. held indirectly
as prescribed in said
paragraph is 80 percent or more
(ii) A foreign corporation falling under the category of a foreign corporation
which is a shareholder, etc. prescribed in item (ii) of the preceding paragraph where the ratio of the shares, etc. held indirectly
as prescribed in the
preceding paragraph is 80 percent or more and a foreign corporation falling
under the category of a corporation related through capital contribution prescribed in said item
(iii) A foreign corporation for which over 50 percent of the number or the
amount of the issued shares, etc. are held directly or indirectly by a foreign corporation listed in the preceding two items (excluding
a foreign corporation falling under the category of a foreign corporation listed in the preceding two items and a foreign corporation
falling under the category of a specially-
related shareholder, etc.).
(6) In item (iii) of the preceding paragraph, whether or not a foreign corporation directly or indirectly holds over 50 percent of
the issued shares, etc. shall be determined based on the sum of the ratio of the shares, etc. held directly by a
first foreign corporation as listed in item (i) and item (ii) of said paragraph in a
second foreign corporation (excluding a foreign corporation falling under the
category of a foreign corporation listed in item (i) or item (ii) of said paragraph
and a foreign corporation falling under the category of a specially-related
shareholder, etc.; hereinafter the same shall apply in this paragraph) (such
ratio of the shares, etc. held directly shall mean the ratio of the number or the amount of the shares, etc. of a second foreign corporation
held by said first
foreign corporation as listed in item (i) and item (ii) of the preceding paragraph out of the total issued shares, etc. of said second
foreign corporation) and the
ratio of the shares, etc. held indirectly by said first foreign corporation listed in item (i) and item (ii) of said paragraph in
said second foreign corporation (such
ratio of the shares, etc. held indirectly shall mean the ratios specified
respectively in the following items for the category of cases listed in the
relevant items (where this falls under both of the following cases, the sum of the ratios specified respectively as follows)):
(i) Where a first foreign corporation as listed in item (i) and item (ii) of the
preceding paragraph holds over 50 percent of the number or the amount of
the issued shares, etc. of a foreign corporation which is the shareholder, etc.
of a second foreign corporation: The ratio of the number or the amount of the shares, etc. of said second foreign corporation that
are held by the foreign
corporation which is its shareholder, etc. out of the total issued shares, etc. of
said second foreign corporation (where there are two or more such foreign
corporations which are shareholders, etc., the sum of the ratios calculated for each of them)
(ii) Where a single foreign corporation or two or more foreign corporations are
interposed between a foreign corporation which is the shareholder, etc. of the second foreign corporation (excluding a foreign corporation
which is a
shareholder, etc. set forth in the preceding item falling under the case listed in said item) and the first foreign corporation listed
in item (i) and item (ii)
of the preceding paragraph and have a link with them through the holding of
shares, etc. (hereinafter referred to as a "foreign corporations related
through capital contribution" in this item) (limited to the case where over 50 percent of the number or the amount of the issued
shares, etc. in both the
foreign corporation related through capital contribution and in the foreign corporation which is the shareholder, etc. are held by
the first foreign
corporation listed in item (i) and item (ii) of said paragraph or by a foreign
corporation related through capital contribution (such first foreign
corporation or foreign corporation related through capital contribution shall be limited to those for which over 50 percent of the
number or the amount of
the issued shares, etc. are held by a first foreign corporation listed in item (i)
and item (ii) of said paragraph or by another corporation related through
capital contribution)): The ratio of the number or the amount of the shares, etc. of said second foreign corporation that are held
by the foreign
corporation which is its shareholder, etc. out of the total issued shares, etc. of
said second foreign corporation (where there are two or more such foreign
corporations which are shareholders, etc., the sum of the ratios calculated for each of them).
(7) An affiliated foreign corporation specified by Cabinet Order prescribed in
Article 40-10, paragraph (1) of the Act shall be any of the following:
(i) An affiliated foreign corporation (meaning an affiliated foreign corporation prescribed in Article 40-10, paragraph (1) of the
Act; hereinafter the same shall apply in this Section) which has its head office or principal office in a
state or territory where there are no taxes imposed on corporate income
(ii) An affiliated foreign corporation where the tax imposed on its income for
the relevant business year (meaning a business year prescribed in Article 2, paragraph (2), item (xix) of the Act; hereinafter the
same shall apply in this Section) is 25 percent or less of said income.
(8) The provisions of Article 25-19, paragraph (2) shall apply mutatis mutandis to the determination as to whether or not an affiliated
foreign corporation falls
under the category of an affiliated foreign corporation set forth in item (ii) of the preceding paragraph.
(9) An individual who has a special relationship to a shareholder, etc. specified
by Cabinet Order prescribed in Article 40-10, paragraph (2), item (i) of the Act shall be an individual who has a special relationship
prescribed in Article 4,
paragraph (1) of the Order for Enforcement of the Corporation Tax Act to a
shareholder, etc. of a domestic corporation.
(10) A corporation which has a special relationship to a shareholder, etc.
specified by Cabinet Order prescribed in Article 40-10, paragraph (2), item (i)
of the Act shall be any of the following:
(i) Where one of the shareholders, etc. of a domestic corporation (where said domestic corporation holds shares, etc. in itself, excluding
said domestic
corporation; hereinafter referred to as a "person determined to be a
shareholder, etc." in this paragraph) (regarding a person determined to be a shareholder, etc. who is an individual, said person
determined to be a
shareholder, etc. and an individual who has a special relationship thereto as prescribed in the preceding paragraph; hereinafter the
same shall apply in
this paragraph) controls any other corporation, said other corporation
(ii) Where one of the persons determined to be a shareholder, etc. and a
corporation which has a special relationship thereto as prescribed in the preceding item control any other corporation, said other
corporation
(iii) Where one of the persons determined to be a shareholder, etc. and a corporation which has a special relationship thereto as
prescribed in the
preceding two items control any other corporation, said other corporation.
(11) The provisions of Article 4, paragraph (3) and paragraph (4) of the Order for
Enforcement of the Corporation Tax Act shall apply mutatis mutandis where
the provisions of the preceding paragraph shall apply.
(12) A domestic corporation specified by Cabinet Order prescribed in Article 40-
10, paragraph (2), item (ii) of the Act shall be a domestic corporation which has received the transfer of almost all the assets and
liabilities of a specified
domestic corporation prescribed in said item immediately prior to a merger, split, transfer of business or for other reasons (hereinafter
referred to as
"specified reasons" in this paragraph) due to said specified reasons.
(Calculation of Undistributed Income of Specified Foreign Corporations)
Article 25-31 (1) The amount of undistributed income calculated in accordance with the standards specified by Cabinet Order prescribed
in Article 40-10,
paragraph (2), item (iii) of the Act shall be the amount calculated, pursuant to
the provisions of Article 25-20, paragraph (1) or paragraph (2), or paragraph
(3) of said Article, with regard to the income of a specified foreign corporation
prescribed in Article 40-10, paragraph (1) of the Act (hereinafter referred to as a "specified foreign corporation" in this
Article and paragraph (1) and
paragraph (2) of the following Article) in its settlement of accounts for the relevant business year.
(2) The amount obtained as a result of an adjustment for the amount of a loss prescribed in Article 40-10, paragraph (2), item (iii)
of the Act shall be the amount obtained by calculating the amount of income pursuant to the
provisions of the preceding paragraph with regard to the income of a specified
foreign corporation in its settlement of accounts for the relevant business year (hereinafter referred to as the "amount of adjusted
income" in this paragraph) and then deducting therefrom the amount equivalent to the sum of the loss
incurred in business years that commenced within seven years preceding the first day of the relevant business year (excluding a business
year that
commenced before October 1, 2007 and a business year during which the
corporation did not fall under the category of a specified foreign corporation
(including a specified foreign corporation prescribed in Article 66-9-6,
paragraph (1) or Article 68-93-6, paragraph (1) of the Act)) (such loss shall exclude the amount deducted in business years preceding
said relevant business year pursuant to the provisions of this paragraph) (where said sum of the loss exceeds the amount of adjusted
income for the relevant business year, said amount of adjusted income).
(3) A loss prescribed in the preceding paragraph shall be a loss calculated with
regard to the amount of income of a specified foreign corporation in its
settlement of accounts for the relevant business year, where the calculation has been made pursuant to the provisions of paragraph
(1).
(4) The provisions of Article 25-20, paragraph (7) and paragraph (8) shall apply mutatis mutandis where the amount of income of a
specified foreign
corporation in its settlement of accounts for the relevant business year is
calculated pursuant to the provisions of paragraph (1) or paragraph (2) of said
Article.
(Calculation, etc. of the Amount of Taxable Retained Income of Specified
Foreign Corporations)
Article 25-32 (1) The amount obtained as a result of an adjustment to the
amount of undistributed income set forth in Article 40-10, paragraph (1) of the
Act for the amount of taxes and a dividend of surplus, etc. on said
undistributed income shall be the amount calculated with regard to the amount of undistributed income prescribed in Article 40-10,
paragraph (2), item (iii) of the Act for the relevant business year of a specified foreign
corporation, pursuant to the provisions of Article 25-21, paragraph (1).
(2) The amount calculated as specified by Cabinet Order prescribed in Article 40-
10, paragraph (1) of the Act shall be the amount calculated with regard to the eligible retained income (meaning the eligible retained
income prescribed in said paragraph; hereinafter the same shall apply in this Section) for the
relevant business year of a specified foreign corporation of a resident who is a
specially-related shareholder, etc., pursuant to the provisions of Article 25-21, paragraph (2) and paragraph (3).
(3) The provisions of Article 25-21, paragraph (4) and paragraph (5) shall apply
mutatis mutandis to the case of calculating the amount to be included in the necessary expenses for calculating the amount of miscellaneous
income
pertaining to taxable retained income prescribed in Article 40-10, paragraph
(1) of the Act which should be included in gross revenue pursuant to the provisions of said paragraph.
(4) The provisions of Article 25-21, paragraph (6) shall apply mutatis mutandis to
the number of shares or the amount of capital contributions of a foreign
corporation specified by Cabinet Order as being held indirectly as prescribed in
Article 40-10, paragraph (2), item (iv) of the Act. In this case, the term "an
individual" in Article 25-21, paragraph (6) shall be deemed to be replaced with
"a resident."
(5) The amount of expenses specified by Cabinet Order set forth in Article 40-10, paragraph (1) of the Act which is applied by replacing
the terms pursuant to
the provisions of paragraph (3) of said Article shall be the amount calculated with regard to the sum of personnel expenses for officers
and employees of a specified foreign corporation engaged in the business of said specified foreign corporation prescribed in paragraph
(3) of said Article, pursuant to the
provisions of Article 25-21, paragraph (11).
(Determination, etc. of Business of Specified Foreign Corporations)
Article 25-33 (1) The person specified by Cabinet Order prescribed in Article 40-
10, paragraph (4), item (i) of the Act shall be any of the following:
(i) Other consolidated corporations (meaning consolidated corporations
prescribed in Article 2, item (xii)-7-4 of the Corporation Tax Act; hereinafter the same shall apply in this item and item (iii))
which have the consolidated full controlling interest prescribed in Article 2, item (xii)-7-5 of the
Corporation Tax Act with a consolidated corporation falling under the
category of a specially-related shareholder, etc. which pertains to a specified foreign corporation prescribed in Article 40-10, paragraph
(4) of the Act
(hereinafter referred to as a "specified foreign corporation" in this paragraph)
that is mainly engaged in business listed in item (i) of said paragraph
(hereinafter such specified foreign corporation shall be referred to as a
"specified foreign corporation" in this paragraph) (such other consolidated corporations shall exclude those falling under
the category of specially-
related shareholders, etc. pertaining to said specified foreign corporation)
(ii) A person who holds over 50 percent of the number or the amount of the total issued shares, etc. of a corporation falling under
the category of a specially-related shareholder, etc. pertaining to a specified foreign
corporation that is mainly engaged in business listed in Article 40-10,
paragraph (4), item (i) of the Act (excluding a person falling under the
category of a specially-related shareholder, etc. pertaining to said specified foreign corporation and a person falling under the
category of persons listed in the preceding item)
(iii) A person who holds over 50 percent of the number or the amount of the
total issued shares, etc. of a consolidated corporation falling under the category of a specially-related shareholder, etc. (where
said consolidated
corporation is a consolidated subsidiary corporation prescribed in Article 2,
item (xii)-7-3 of the Corporation Tax Act, a consolidated parent corporation prescribed in item (xii)-7-2 of said Article that is
the consolidated parent corporation of said consolidated corporation) of a specified foreign
corporation that is mainly engaged in business listed in Article 40-10,
paragraph (4), item (i) of the Act (excluding a person falling under the
category of a specially-related shareholder, etc. of said specified foreign
corporation and a person falling under the category of persons listed in the preceding two items)
(iv) An affiliated foreign corporation of the specially-related shareholder, etc. of
a specified foreign corporation that is mainly engaged in business listed in
Article 40-10, paragraph (4), item (i) of the Act
(v) A corporation which is a shareholder, etc. prescribed in Article 25-30,
paragraph (4), item (ii) or corporations related through capital contribution which are interposed between a specially-related domestic
corporation and
the specially-related shareholder, etc. of a specified foreign corporation that is mainly engaged in business listed in Article 40-10,
paragraph (4), item (i) of the Act (excluding a person falling under the category of persons listed in item (i) or the preceding
item)
(vi) A person who has a special relationship specified by Cabinet Order
prescribed in Article 40-10, paragraph (1) of the Act to the persons listed as follows (excluding a person who falls under the category
of the specially- related domestic corporation of a specified foreign corporation that is mainly engaged in business listed in Article
40-10, paragraph (4), item (i) of the Act, a person who falls under the category of a specially-related shareholder, etc.
and a person who falls under the categories of persons listed in the preceding items):
(a) A specified foreign corporation that is mainly engaged in business listed in Article 40-10, paragraph (4), item (i) of the Act
(b) A specially-related domestic corporation of a specified foreign corporation
that is that is mainly engaged in business listed in Article 40-10, paragraph (4), item (i) of the Act
(c) An individual or corporation that falls under the category of the specially-
related shareholder, etc. of a specified foreign corporation that is mainly engaged in business listed in Article 40-10, paragraph
(4), item (i) of the Act
(d) Those listed in the preceding items.
(2) The provisions of Article 25-22, paragraph (2) and paragraph (3) shall apply mutatis mutandis to the case specified by Cabinet
Order prescribed in Article
40-10, paragraph (4), item (i) of the Act. In this case, the term "those listed in the items of Article 40-4, paragraph (1),
items of Article 66-6, paragraph (1),
items of Article 68-90, paragraph (1) of the Act and the items of the preceding
paragraph" in Article 25-22, paragraph (2), item (i) shall be deemed to be
replaced with "a specially-related domestic corporation prescribed in Article
40-10, paragraph (2), item (ii) of the Act, specially-related shareholder, etc. prescribed in paragraph (1) of said Article and those
listed in the items of
Article 25-33, paragraph (1)."
(3) The provisions of Article 25-22, paragraph (5) shall apply mutatis mutandis to the case specified by Cabinet Order prescribed
in Article 40-10, paragraph (4), item (ii) of the Act.
(Calculation, etc. of Taxed Amount of Dividend, etc. of Specified Foreign
Corporations)
Article 25-34 (1) The affiliated foreign corporation prescribed in Article 40-11,
paragraph (1) of the Act which is specified by Cabinet Order shall be one of the affiliated foreign corporations which hold the taxed
amount of a dividend, etc.
before deduction pertaining to a specified foreign corporation prescribed in
Article 40-11, paragraph (1) of the Act (hereinafter referred to as a "specified foreign corporation" in this paragraph
and the following paragraph) (such
taxed amount of a dividend, etc. before deduction shall mean the taxed amount of a dividend, etc. before deduction prescribed in Article
25-23, paragraphs (2) to (4) obtained by calculating the amount prescribed in items of Article 40-11,
paragraph (1) of the Act, pursuant to the provisions of Article 25-23,
paragraphs (2) to (4), where an event listed in the items of Article 40-11, paragraph (1) of the Act has occurred with regard to the
specified foreign corporation of a resident who is a specially-related shareholder, etc. or an
affiliated foreign corporation of said resident, pursuant to the provisions of the following paragraph) (such affiliated foreign corporation
shall exclude those
falling under the category of the specified foreign corporation of a resident set forth in Article 40-11, paragraph (1) of the Act).
(2) The amount calculated as specified by Cabinet Order prescribed in Article 40-
11, paragraph (1) of the Act shall be the amount obtained by calculating the amount specified in the items of said paragraph, where
an event listed in the items of said paragraph has occurred with regard to the specified foreign
corporation of a resident who is a specially-related shareholder, etc. or the
affiliated foreign corporation of said resident as prescribed in said paragraph, pursuant to the provisions of Article 25-23, paragraphs
(2) to (4).
(3) The provisions of Article 25-23, paragraph (5) and paragraph (6) shall apply mutatis mutandis to a deduction under the provisions
of Article 40-11,
paragraph (1) of the Act of the amount equivalent to the taxed amount of a
dividend, etc. prescribed in said paragraph and a deduction under paragraph
(2) of said Article of the remaining amount of dividend, etc. after deduction prescribed in said paragraph.
(Determination, etc. of Specified Relationship)
Article 25-35 (1) Where the provisions of Article 40-10, paragraph (1) of the Act
shall apply, whether or not a domestic corporation falls under the category of a specified domestic corporation prescribed in Article
40-10, paragraph (2), item
(i) of the Act shall be determined according to its status immediately before an
event causing a specified relationship prescribed in paragraph (1) of said
Article occurred, and whether or not said specified relationship actually exists afterwards between a specially-related shareholder,
etc. and a specially-related domestic corporation and whether or not a foreign corporation falls under the category of an affiliated
foreign corporation shall be determined according to
its status at the end of the relevant business year of said specially-related
domestic corporation.
(2) Where a foreign corporation has been determined as falling under the
category of an affiliated foreign corporation at the end of the relevant business year of a specially-related domestic corporation,
pursuant to the provisions of preceding paragraph, the provisions of Article 40-10 of the Act shall apply to
the eligible retained income for the relevant business year including the day on which said affiliated foreign corporation (limited
to that falling under the
category of a specified foreign corporation prescribed in Article 40-10,
paragraph (1) of the Act) was determined as falling under such category.
(3) The provisions of Article 25-24, paragraph (2) shall apply mutatis mutandis to the application of the provisions of Article 222
of the Order for Enforcement of
the Income Tax Act in the case of calculating the maximum amount of
deduction prescribed in Article 95, paragraph (1) of the Income Tax Act for a resident subject to the provisions of Article 40-10,
paragraph (1) of the Act or Article 40-11, paragraph (1) or paragraph (2) of the Act.
(4) The provisions of Article 14-10, paragraphs (1) to (5) and paragraphs (7) to
(11) of the Order for Enforcement of the Corporation Tax Act shall apply
mutatis mutandis where the provisions of Article 40-10, paragraph (8) of the
Act shall apply under the provisions of Article 40-10 (excluding paragraph (3), paragraph (4) and paragraph (6)) to Article 40-12
of the Act, Articles 25-30 to
25-32 (excluding paragraph (5)), Article 25-34 and this Article.
(5) With regard to a trust corporation or the beneficiary of a trust subject to corporation taxation prescribed in Article 4-7 of
the Corporation Tax Act, in addition to what is specified in the preceding paragraph, other necessary
matters concerning the application of the provisions of Article 40-10 (excluding paragraph (3), paragraph (4) and paragraph (6)) to
Article 40-12 of the Act,
Articles 25-30 to 25-32 (excluding paragraph (5)), Article 25-34 or this Article shall be specified by Ordinance of the Ministry of
Finance.
Section 10 Other Special Provisions
(Payment, etc. of Income Tax on Profit from Redemption)
Article 26-10 (1) The issuer of discount bonds shall, when he/she pays income
tax collected pursuant to the provisions of Article 41-12, paragraph (3) of the
Act, attach a financial statement specified by Ordinance of the Ministry of
Finance to a payment statement prescribed in Article 34, paragraph (1) of the
Act on General Rules for National Taxes at the time of the payment.
(2) The place for paying income tax to be collected and paid pursuant to the
provisions of Article 41-12, paragraph (3) of the Act shall be at the location of the head office or principal office of an issuer
of discount bonds (where said discount bonds are national bonds (excluding those listed in Article 41-12,
paragraph (7), item (i) of the Act), at the location of the head office of the Bank
of Japan, and where said discount bonds are issued by a foreign corporation, at
the location of said foreign corporation's principal office in Japan).
(3) The amount deemed to be income tax to be collected when receiving the
redemption prescribed in Article 41-12, paragraph (4) of the Act pursuant to
the provisions of said paragraph shall be the amount of income tax that shall be collected from a person who receives said redemption,
with regard to
discount bonds that he/she holds at the time of said redemption, at the time of
issuance of the discount bonds pursuant to the provisions of paragraph (3) of said Article.
(Credit of the Amount of Income Tax on Profit from Redemption against
Corporation Tax)
Article 26-11 (1) The amount of income tax to be credited against corporation tax out of the amount deemed to be income tax to be
collected when receiving the redemption prescribed in Article 41-12, paragraph (4) of the Act pursuant to
the provisions of said paragraph shall be the amount calculated, pursuant to
the provisions of Article 140-2 of the Order for Enforcement of the Corporation
Tax Act, with regard to the amount of said income tax (where the amount of
said income tax is not clear, with regard to the amount obtained by deducting the issue price for the discount bonds (where said discount
bonds are national bonds listed in Article 41-12, paragraph (9), items (i) to (viii) of the Act which are those falling under the
category of short-term government or company
bonds prescribed in said paragraph or other national bonds specified by
Ordinance of the Ministry of Finance (hereinafter referred to as "short-term national bonds, etc." in this paragraph) and
are discount bonds other than
those whose issue price is not clear, such issue price shall be the issue price on the final issue date for said discount bonds, and
where said discount bonds are said short-term national bonds, etc., such issue price shall be the price
specified by Ordinance of the Ministry of Finance as equivalent to said issue
price for said discount bonds; such issue price shall be referred to as the "issue price, etc. on the final issue date"
in Article 26-13, paragraph (1), item (i) and
paragraph (5), item (ii)) from the face value of said discount bonds and then multiplying the remaining amount after deduction (where
said discount bonds are issued outside Japan by a foreign corporation, the amount specified by
Cabinet Order, prescribed in Article 41-12, paragraph (3) of the Act) by the
rate of income tax on profit from redemption for said discount bonds collected at the time of issuance pursuant to the provisions
of paragraph (3) of said
Article, and where the discount bonds have been redeemed by bringing the redemption date forward or retired by purchase prior to the
redemption date, with regard to the remaining amount after deducting the amount to be
refunded that was calculated pursuant to the provisions of paragraph (1) of the
following Article from the amount of the income tax). In this case, the term
"interest" in Article 140-2, paragraph (1), item (i) of the Order for Enforcement of the Corporation Tax Act shall be deemed
to be replaced with "profit from
redemption (meaning profit from redemption as prescribed in Article 41-12,
paragraph (7) (Separate Taxation, etc. on Profit from Redemption, etc.) of the
Act on Special Measures Concerning Taxation; the same shall apply in the following paragraph and paragraph (3))"; the term "out
of the number of
months" in paragraph (2) of said Article shall be deemed to be replaced with
"out of the number of months (the number of days, where said dividend of
interest, etc. is profit from redemption for short-term government or company
bonds (meaning short-term government or company bonds prescribed in Article
41-12, paragraph (9) of the Act on Special Measures Concerning Taxation; the same shall apply in the following paragraph); hereinafter
the same shall apply in this paragraph);" and the term "the amount of income prescribed in
paragraph (1), item (i)" in paragraph (3) of said Article shall be deemed to be replaced with "the amount of income (excluding
the amount of income tax on
profit from redemption of short-term government or company bonds) prescribed in paragraph (1), item (i)."
(2) The amount of income tax collected pursuant to the provisions of Article 41-12,
paragraph (3) of the Act, where a corporation acquired discount bonds at the time of issue, shall be included in the acquisition costs
of said discount bonds; the amount deemed to be income tax to be collected when receiving the
redemption pursuant to the provisions of paragraph (4) of said Article shall not
be included in deductible expenses for calculating the amount of income for a business year including the time of receiving the redemption
(where the
business year is a consolidated business year prescribed in Article 15-2 of the
Corporation Tax Act, for calculating the amount of consolidated income
prescribed in Article 2, item (xviii)-4 of said Act for said consolidated business year; hereinafter the same shall apply in this
paragraph); and the amount of
income tax to be credited against corporation tax pursuant to the provisions of
Article 68 (including the cases where it is applied mutatis mutandis pursuant
to Article 144 of said Act) or Article 81-14 of said Act shall be included in gross profits for calculating the amount of income that
is to be credited for that
business year.
(Refund of Income Tax in the Case of Advanced Redemption, etc.)
Article 26-12 (1) The amount of income tax to be refunded pursuant to the provisions of Article 41-12, paragraph (5) of the Act shall
be the amount
obtained by deducting the redemption price (where retirement by purchase is performed, the purchase price; hereinafter the same shall
apply in this
paragraph) from the face value of the discount bonds and then multiplying the remaining amount after deduction (where said discount
bonds are issued
outside Japan by a foreign corporation, the amount listed as follows) by the
rate of income tax on profit from redemption for said discount bonds collected
at the time of issue, pursuant to the provisions of paragraph (3) of said Article. (i) The amount obtained by deducting the redemption
price from the face value
of the discount bonds issued outside Japan by a foreign corporation listed in
Article 141, item (i) of the Corporation Tax Act and then multiplying the
remaining amount after deduction by the rate of the amount listed in (b) out of the amount listed in (a):
(a) Discount on company bonds premium for said discount bonds
(b) The part of the amount listed in (a) that is attributed to a business conducted by said foreign corporation in Japan through a
fixed place of business as prescribed in Article 141, item (i) of the Corporation Tax Act.
(ii) The amount obtained by deducting the redemption price from the face value
of the discount bonds issued outside Japan by a foreign corporation listed in
Article 141, item (ii) or item (iii) of the Corporation Tax Act and then
multiplying the remaining amount after deduction by the rate of the amount listed in (b) out of the amount listed in (a):
(a) Discount on company bonds premium for said discount bonds
(b) The part of the amount listed in (a) that is attributed to businesses
conducted by these foreign corporations as prescribed in Article 141, item
(ii) or item (iii) of the Corporation Tax Act.
(2) A refund under the provisions of Article 41-12, paragraph (5) of the Act shall be made at the time of redemption prescribed in
said paragraph. In this case,
said amount to be refunded shall be deducted from the amount payable
pursuant to the provisions of paragraph (3) of said Article or Article 181 or
Article 212 of the Income Tax Act.
(Refund of Income Tax for Non-taxable Corporations, etc.)
Article 26-13 (1) The amount of income tax to be refunded pursuant to the
provisions of Article 41-12, paragraph (6) of the Act with regard to discount
bonds set forth in said paragraph shall be the amount specified respectively in the following items for the category of cases listed
in the relevant items:
(i) Where redemption is made after the redemption date: Out of the income tax
collected on said discount bonds pursuant to the provisions of Article 41-12, paragraph (3) of the Act (where the amount of said income
tax is not clear,
the amount obtained by deducting the issue price, etc. on the final issue date
for said discount bonds from the face value of said discount bonds and then multiplying the remaining amount after deduction (where
said discount
bonds are issued outside Japan by a foreign corporation, the amount
specified by Cabinet Order, prescribed in said paragraph) by the rate of income tax on profit from redemption for said discount bonds
collected at the
time of issuance pursuant to the provisions of said paragraph; hereinafter the same shall apply in this Article), the amount corresponding
to the period during which a domestic corporation or trustee prescribed in Article 41-12,
paragraph (6) of the Act (hereinafter referred to as a "non-taxable corporation, etc." in this Article) held said discount
bonds
(ii) Where redemption is made by bringing the redemption date forward or
retirement by purchase is performed prior to the redemption date: Out of the remaining amount after deducting the amount to be refunded
pursuant to
the provisions of Article 41-12, paragraph (5) of the Act from the income tax
collected on said discount bonds pursuant to the provisions of paragraph (3) of said Article, the amount corresponding to the period
during which a non- taxable corporation, etc. held said discount bonds.
(2) The amount corresponding to the period during which a non-taxable
corporation, etc. held said discount bonds as prescribed in items of the
preceding paragraph shall be the amount obtained by multiplying the amount of income tax or remaining amount prescribed in said items
by the ratio of the number of months (where said discount bonds are short-term government or company bonds prescribed in Article
41-12, paragraph (9) of the Act, the
number of days; hereinafter the same shall apply in this paragraph and
paragraph (5), item (iii)) up to the redemption date during which said non-
taxable corporation, etc. held said discount bonds out of the number of months from the issue date (where the date is not clear, the
final issue date for said
discount bonds) to the redemption date (including a date for retirement by purchase; hereinafter the same shall apply in this Article)
of said discount bonds.
(3) The number of months set forth in the preceding paragraph shall be
calculated by calendar month, and when there are any fractions less than one month, those fractions shall be deemed to be one month
for counting the period during which a non-taxable corporation, etc. held said discount bonds and shall be rounded off for calculating
the period from the issue date to the redemption
date of said discount bonds, and when the ratio set forth in said paragraph
exceeds one, the ratio shall be deemed to be one.
(4) A refund pursuant to the provisions of Article 41-12, paragraph (6) of the Act
shall be made at the time of paying the profit from redemption as prescribed in said paragraph upon request from a non-taxable corporation,
etc. In this case,
the provisions of the second sentence of Article 26-12, paragraph (2) shall apply
mutatis mutandis.
(5) A non-taxable corporation, etc. intending to receive a refund pursuant to the provisions of Article 41-12, paragraph (6) of the
Act shall submit a written
request for a refund containing the following matters, along with a document certifying the date of acquisition of the discount bonds,
to the issuer of said
discount bonds by the day on which he/she receives the payment of the profit from redemption as prescribed in said paragraph for said
discount bonds set
forth in said paragraph:
(i) The name of the requester and the location of the requester's head office or principal office
(ii) The sum of the face value and the sum of the issue price of the discount
bonds for which the requester intends to receive redemption (where said
issue price is not clear, the issue price, etc. on the final issue date for said discount bonds) and the amount of income tax on said
discount bonds
collected pursuant to the provisions of Article 41-12, paragraph (3) of the Act
(iii) The date of acquisition of the discount bonds for which the requester intends to receive redemption and the number of months
up to the
redemption date out of the period during which the requester held said discount bonds
(iv) The amount by which the requester intends to be refunded pursuant to the
provisions of Article 41-12, paragraph (6) of the Act out of the amount of income tax listed in item (ii)
(v) Other matters for reference.
(Treatment where an Issuer of Discount Bonds Could not Deduct the Amount to Refund from the Amount Payable)
Article 26-14 (1) Where the provisions of Article 26-12, paragraph (2) or
paragraph (4) of the preceding Article shall apply, when there is any amount
that an issuer prescribed in Article 41-12, paragraph (5) or paragraph (6) of the
Act (hereinafter referred to as an "issuer" in this Article) cannot deduct as
prescribed in the second sentence of Article 26-12, paragraph (2) (including the cases where it is applied mutatis mutandis pursuant
to paragraph (4) of the
preceding Article) in the month following the month including the day on which he/she shall make a refund pursuant to the provisions
of Article 41-12,
paragraph (5) or paragraph (6) of the Act, the competent district director with
jurisdiction over the place for tax payment prescribed in Article 26-10, paragraph (2) for income tax pertaining to the profit from
redemption for
discount bonds prescribed in Article 41-12, paragraph (5) or paragraph (6) of
the Act shall refund said amount that cannot be deducted to said issuer. (2) An issuer who seeks the application of the provisions
of the preceding
paragraph shall submit a document that states that fact to the competent
district director set forth in the preceding paragraph, along with a detailed statement containing the amount that he/she shall refund
pursuant to the
provisions of Article 41-12, paragraph (5) or paragraph (6) of the Act, the
amount that he/she cannot deduct as prescribed in the preceding paragraph
out of said amount, which of the provisions of paragraph (5) or paragraph (6) of
said Article said refund is based on, and other necessary matters.
(3) Where the interest on a refund prescribed in Article 58, paragraph (1) of the
Act on General Rules for National Taxes is to be calculated with regard to a
refund under the provisions of paragraph (1), the period set forth in Article 58, paragraph (1) of said Act to be used as the basis
for the calculation shall be the period from the day on which one month has elapsed from the next day of
submitting the documents set forth in the preceding paragraph up to the day
on which the payment for the refund is determined or the day on which an
appropriation is made for the refund (where there has been any day suitable
for an appropriation before such day, up to the day which proved to be suitable).
(Scope of Discount Bonds Pertaining to Separate Taxation, etc. on Profit from
Redemption)
Article 26-15 (1) The government or company bonds specified by Cabinet Order
prescribed in Article 41-12, paragraph (7) of the Act shall be the government or company bonds listed as follows which are issued
by means of a discount:
(i) National bonds and municipal bonds
(ii) Company bonds issued by a domestic corporation (including bonds issued by a domestic corporation other than a company under special
Acts)
(iii) Bonds issued by a foreign corporation (for bonds issued outside Japan, limited to those listed as follows):
(a) Where the whole or a part of discount on company bonds premium for the company bonds issued outside Japan by a foreign corporation
listed in
Article 141, item (i) of the Corporation Tax Act is attributed to a business
conducted by said foreign corporation in Japan through a fixed place of business prescribed in said item, said company bonds
(b) Where the whole or a part of discount on company bonds premium for the
company bonds issued outside Japan by a foreign corporation listed in
Article 141, item (ii) or item (iii) of the Corporation Tax Act is attributed to a business conducted by said foreign corporation
as prescribed in these
items, said company bonds
(2) The bonds specified by Cabinet Order prescribed in Article 41-12, paragraph (7), item (ii) of the Act shall be the bonds issued
by the Japan Housing Finance Agency, the Okinawa Development Finance Corporation, or the Urban
Renaissance Agency pursuant to the provisions of Article 8 of the
Supplementary Provisions of the Japan Housing Finance Agency Act, Article
27, paragraph (4) of the Okinawa Development Finance Corporation Act (Act No. 31 of 1972) or Article 15, paragraph (1) of the Supplementary
Provisions of the Urban Renaissance Agency Act.
(Application of the Income Tax Act, etc. to Profit from Redemption to be
Received by Nonresident)
Article 26-15-2 Profit from redemption of government or company bonds listed in paragraph (1), item (iii) of the preceding Article
(excluding specified short-term government or company bonds prescribed in Article 41-12, paragraph (9) of the Act) that is to be
received by a nonresident shall be deemed to be income
arising from the utilization or holding of assets located in Japan prescribed in
Article 161, item (i) of the Income Tax Act, and the provisions of said Act and
other income tax-related laws and regulations (excluding provisions concerning withholding income tax prescribed in Article 2, paragraph
(1), item (xlv) of the
Income Tax Act) shall apply.
(Income, etc. from Transfer of Discount Bonds Deemed to Be Non-Taxable)
Article 26-15-3 The provisions of Article 37-16, paragraph (1) of the Act shall not apply to income arising from the transfer of
the following government or
company bonds, issued by means of a discount, that was carried out by a
resident or a nonresident who maintains a permanent establishment in Japan: (i) Where the whole of the discount on company bonds premium
for the
company bonds issued outside Japan by a foreign corporation listed in Article
141, item (i) of the Corporation Tax Act is attributed to business conducted by said foreign corporation in Japan through a fixed
place of business as
prescribed in said item, said company bonds
(ii) Where the whole of the discount on company bonds premium for the
company bonds issued outside Japan by a foreign corporation listed in Article
141, item (ii) or item (iii) of the Corporation Tax Act is attributed to business conducted by said foreign corporation as prescribed
in these items, said
company bonds.
(Scope of Specified Entries or Records under the Book-entry Transfer System) Article 26-16 The entries or records under the book-entry
transfer system
specified by Cabinet Order prescribed in Article 41-12, paragraph (9) of the Act
shall be the entries or records under the book-entry transfer system specified respectively in the following items for the category
of short-term government or company bonds listed in the relevant items:
(i) Short-term government or company bonds (meaning short-term government
or company bonds prescribed in Article 41-12, paragraph (9) of the Act; the same shall apply in the following item) listed in items
(i) to (viii) of said
paragraph: Entries or records under the book-entry transfer system
(meaning entries or records under the book-entry transfer system prescribed in Article 41-12, paragraph (9) of the Act; hereinafter
the same shall apply
through to Article 26-20) where entries or records under the book-entry transfer system are not made in an account established by
a foreign
intermediary (meaning a foreign intermediary prescribed in Article 41-12,
paragraph (12) of the Act; hereinafter the same shall apply through to Article
26-20) other than a qualified foreign intermediary prescribed in Article 5-2, paragraph (5), item (iv) of the Act
(ii) Short-term government or company bonds other than short-term
government or company bonds listed in the preceding item: Entries or
records under the book-entry transfer system where entries or records under the book-entry transfer system are not made in an account
established by a
foreign intermediary.
(Income from Transfer of Specified Short-term Government or Company Bonds
Not Excluded from Taxation)
Article 26-17 The income specified by Cabinet Order prescribed in Article 41-12, paragraph (10) of the Act shall be the income from
a transfer of specified short- term government or company bonds prescribed in said paragraph that was
carried out by a resident or a nonresident who maintains a permanent
establishment in Japan.
(Submission, etc. of a Written Notice by a Person Who Makes Entries or Records under the Book-entry Transfer System for Specified
Book-entry National Bonds, etc.)
Article 26-18 (1) The person specified by Cabinet Order prescribed in Article 41-
12, paragraph (12) of the Act shall be the national government or any of the following:
(i) A corporation listed in appended table 1 of the Corporation Tax Act
(ii) A corporation established under special Acts (limited to a corporation whose name was determined under said special Acts and
where it is
determined thereunder that letters used in said name shall not be used for any other persons' names)
(iii) A specified book-entry transfer institution, etc. prescribed in Article 41-12,
paragraph (12) of the Act (hereinafter referred to as a "specified book-entry
transfer institution, etc." in this Article and Article 26-20, paragraph (2)) and a foreign intermediary
(iv) A foreign government, foreign local public entity, foreign central bank, and an international organization that Japan has joined.
(2) The documents specified by Cabinet Order prescribed in Article 41-12,
paragraph (12) of the Act shall be the documents listed respectively in the following items for the category of persons listed in
the relevant items:
(i) An individual: A copy of the certificate of residence, certificate of items
entered in the certificate of residence, health insurance card, driver's license and certificate of alien registration of said
individual and other documents
specified by Ordinance of the Ministry of Finance
(ii) A corporation (including an association or foundation without juridical
personality prescribed in Article 2, item (viii) of the Corporation Tax Act;
hereinafter the same shall apply in this item): A certificate of registered
matters concerning registration for establishment, receipt of national or local tax and certificate of tax payment of said corporation
and other documents specified by Ordinance of the Ministry of Finance.
(3) The identification documents prescribed in Article 41-12, paragraph (12) of the Act (hereinafter referred to as the "identification
documents" through to Article 26-20) shall be presented pursuant to the provisions of Article 41-12, paragraph (12) of the Act
when submitting a written notice set forth in said paragraph.
(4) When a person who had submitted a written notice set forth in Article 41-12,
paragraph (12) of the Act has changed the person's name or address (or any other place specified by Ordinance of the Ministry
of Finance in the case where the person does not have an address in Japan; hereinafter the same shall apply through to Article 26-20),
the person shall promptly submit a document that
states the person's name and address after the change to the head of the
business office, etc. (meaning a business office, etc. prescribed in Article 41-12, paragraph (12) of the Act; hereinafter the same
shall apply in this Article) of
the specified book-entry transfer institution, etc. to which the person had
submitted the written notice (where the person had submitted said written notice, pursuant to the provisions of said paragraph, via
a foreign intermediary to the head of the business office, etc. of the specified book-entry transfer
institution, etc. where he/she makes entries or records under the book-entry
transfer system for the specified book-entry national bonds, etc. (meaning specified book-entry national bonds, etc. prescribed in
said paragraph;
hereinafter the same shall apply through to Article 26-20), the person shall
promptly submit such document via said foreign intermediary to the head of the business office, etc. of said specified book-entry
transfer institution, etc.,
according to the provisions of the first sentence of Article 41-12, paragraph (12)
of the Act). The same shall apply where the person has changed the name or address again after submitting said document.
(5) A person who submits the document prescribed in the preceding paragraph shall, when submitting said document, present the identification
documents to the head of the business office, etc. of the specified book-entry transfer
institution, etc. to which he/she submits said document (excluding the case
where he/she submits said document via a foreign intermediary; the same shall apply in the following paragraph) or to the head of
the overseas business office, etc. (meaning the overseas business office, etc. prescribed in Article 41-12,
paragraph (12) of the Act) of the foreign intermediary set forth in said
paragraph via which he/she had submitted a written notice prescribed in the preceding paragraph as prescribed in Article 41-12, paragraph
(12) of the Act (referred to as the "head of the overseas business office, etc. of the foreign
intermediary" in the following paragraph and paragraph (8)).
(6) The head of the business office, etc. of the specified book-entry transfer
institution, etc. or the head of the overseas business office, etc. of the foreign intermediary shall, when a written notice prescribed
in Article 41-12,
paragraph (12) of the Act or the document prescribed in paragraph (4) has been submitted, confirm whether or not the name and address
entered in said
written notice or the document are consistent with the name and address
entered in the identification documents which were presented pursuant to the provisions of Article 41-12, paragraph (12) of the Act
or the preceding
paragraph at the time of the submission of said written notice or the document. (7) The foreign intermediary set forth in the preceding
paragraph that has
provided confirmation pursuant to the provisions of said paragraph shall
submit the documents prescribed in Article 41-12, paragraph (14) of the Act for each person who makes entries or records under the
book-entry transfer
system set forth in paragraph (12) of said Article to the head of the business
office, etc. of the specified book-entry transfer institution, etc. where the
foreign intermediary makes entries or records under the book-entry transfer system for specified book-entry national bonds, etc. pertaining
to said
confirmation (where said foreign intermediary is a tertiary foreign account management institution (meaning a tertiary foreign account
management
institution prescribed in said paragraph), to the head of the business office, etc.
of the specified book-entry transfer institution, etc. where the tertiary foreign account management institution prescribed in paragraph
(14) of said Article pertaining to said specified book-entry national bonds, etc. makes entries or records under the book-entry transfer
system for said specified book-entry
national bonds, etc. via said tertiary foreign account management institution). (8) The head of the business office, etc. of the specified
book-entry transfer
institution, etc. or the head of the overseas business office, etc. of the foreign intermediary shall, when having provided confirmation
pursuant to the
provisions of paragraph (6), clearly record that he/she has provided said
confirmation in the books concerning said confirmation (including the books or documents equivalent thereto), pursuant to the provisions
of Ordinance of the Ministry of Finance, and preserve said books; and the head of the business
office, etc. of the specified book-entry transfer institution, etc. who has received
the submission of a written notice prescribed in Article 41-12, paragraph (12)
of the Act, the document prescribed in paragraph (4) or the documents
prescribed in the preceding paragraph shall preserve such written notice and documents, pursuant to the provisions of Ordinance of
the Ministry of Finance.
(9) Where a nonresident or foreign corporation (excluding those listed in
paragraph (1), item (i), item (iii), or item (iv); hereinafter the same shall apply in this paragraph) makes entries or records under
the book-entry transfer
system for short-term national bonds, etc. (meaning national bonds listed in
Article 41-12, paragraph (9), items (i) to (viii) of the Act which fall under the
category of specified short-term government or company bonds and principal- only book-entry national bonds and coupon-only book-entry
national bonds prescribed in paragraph (12) of said Article) for the first time on or after April
1, 1999 in the account pertaining to entries or records under the book-entry
transfer system that has gone through the confirmation pursuant to the
provisions of Article 5-2, paragraph (9) of the Act (including the cases where it is applied mutatis mutandis pursuant to paragraph
(12) of said Article;
hereinafter the same shall apply in this paragraph) (hereinafter such
confirmation shall be referred to as "confirmation pertaining to book-entry
national bonds, etc." in this paragraph), with regard to said entries or records under the book-entry transfer system, it shall
be deemed that the submission of a written notice set forth in Article 41-12, paragraph (12) of the Act under
the provisions of said paragraph (including the submission of the document set
forth in paragraph (4) under the provisions of said paragraph) has been made by the submission of a written application for a tax
exemption on book-entry
national bonds set forth in Article 5-2, paragraph (1), item (i), (a) of the Act
under the provisions of (a) of said item (including the submission of a written application set forth in paragraph (10) of said Article
under the provisions of said paragraph) or the submission of a written application for a tax exemption on book-entry municipal bonds
set forth in Article 5-2, paragraph (1), item (ii), (a) of the Act under the provisions of (a) of said item (including the submission
of a written application set forth in paragraph (11) of said Article under the
provisions of said paragraph) for said confirmation pertaining to book-entry
national bonds, etc., that the presentation of the identification documents
under the provisions of Article 41-12, paragraph (12) of the Act (including the provisions of paragraph (5)) has been made by the
presentation of the
documents specified by Cabinet Order set forth in Article 5-2, paragraph (9) of
the Act under the provisions of said paragraph for said confirmation pertaining to book-entry national bonds, etc., and that the confirmation
under the
provisions of paragraph (6) (including the submission of the documents set forth in paragraph (7) under the provisions of said paragraph)
has been
provided by said confirmation pertaining to book-entry national bonds, etc.;
provided, however, that this shall not apply when the name and address to be
entered in a written notice set forth in Article 41-12, paragraph (12) of the Act or the document set forth in paragraph (4) differ
from the name and address of said nonresident or foreign corporation for which said confirmation pertaining
to book-entry national bonds, etc. has been provided.
(10) The form of a written notice set forth in Article 41-12, paragraph (12) of the
Act shall be specified by Ordinance of the Ministry of Finance.
(11) The documents specified by Cabinet Order prescribed in Article 41-12,
paragraph (14) of the Act shall be a document certifying that the confirmation prescribed in said paragraph has been provided, the
identification documents and a copy of said identification documents.
(Entries or Records in the Books by a Foreign Intermediary)
Article 26-18-2 (1) When persons intending to make entries or records under the book-entry transfer system prescribed in Article
41-12, paragraph (15) of the
Act (hereinafter referred to as "customers" in this Article) have made entries or
records under the book-entry transfer system for specified book-entry national bonds, etc. via a foreign intermediary, said foreign
intermediary shall enter or record the matters prescribed in said paragraph in the books prescribed in said paragraph, for each of
said customers each time, and preserve said books
pursuant to the provisions of Ordinance of the Ministry of Finance.
(2) When customers have made entries or records under the book-entry transfer
system for specified book-entry national bonds, etc. via a foreign intermediary, said foreign intermediary shall provide information
about the matters
prescribed in Article 41-12, paragraph (16) of the Act for each of said customers
to the specified book-entry transfer institution, etc. prescribed in said
paragraph of said foreign intermediary pertaining to said specified book-entry national bonds, etc. by way of a document or any other
means prescribed in the following paragraph.
(3) The means specified by Cabinet Order prescribed in Article 41-12, paragraph
(16) of the Act shall be a means of using an electronic data processing system
or another means of using information and communications technology that is specified by Ordinance of the Ministry of Finance.
(4) The specified book-entry transfer institution, etc. prescribed in paragraph (2)
shall, when having received a notification set forth in said paragraph, enter or record said matters notified, for each of the customers
each time, in the books
prescribed in Article 41-12, paragraph (16) of the Act and preserve said books
pursuant to the provisions of Ordinance of the Ministry of Finance.
(Notification, etc. of a Recipient of a Consideration for the Transfer of Specified
Book-Entry National Bonds, etc.)
Article 26-19 (1) Those specified by Cabinet Order prescribed in Article 41-12,
paragraph (17) of the Act shall be the national government and those listed in
Article 26-18, paragraph (1), item (i), item (ii) and item (iv) (referred to as
"public corporations, etc." in paragraph (1) of the following Article).
(2) A notification under the provisions of Article 41-12, paragraph (17) of the Act shall be made each time, on receipt of the payment
of a consideration for the
transfer of specified book-entry national bonds, etc. prescribed in said paragraph.
(3) The identification documents shall be presented pursuant to the provisions of Article 41-12, paragraph (17) of the Act when making
a notification set forth in the same paragraph.
(4) Necessary matters concerning the scope of the identification documents that a person intending to make a notification under the
provisions of Article 41-12,
paragraph (17) of the Act shall present pursuant to the provisions of said paragraph shall be specified by Ordinance of the Ministry
of Finance.
(5) A payer prescribed in Article 41-12, paragraph (17) of the Act (referred to as a
"payer" in the following paragraph) shall, when having received a notification under the provisions of paragraph (17) of
said Article, confirm whether or not the name and address notified are consistent with the name and address
entered in the identification documents that were presented to him/her at the
time of said notification pursuant to the provisions of said paragraph.
(6) A payer shall, when having provided confirmation under the provisions of the preceding paragraph, clearly record that he/she has
provided said confirmation in the books concerning said confirmation (including the books or documents equivalent thereto), pursuant
to the provisions of Ordinance of the Ministry of Finance, and preserve said books.
(Submission, etc. of a Written Notice by a Recipient of Redemption Money, etc. of Specified Book-Entry National Bonds, etc.)
Article 26-20 (1) Those specified by Cabinet Order prescribed in Article 41-12, paragraph (18) of the Act shall be public corporations,
etc.
(2) Where a specified book-entry transfer institution, etc. and a foreign intermediary receive redemption money (meaning redemption
money
prescribed in Article 41-12, paragraph (18) of the Act; hereinafter the same
shall apply in this Article) or payment of interest (meaning interest prescribed in Article 41-12, paragraph (18) of the Act; hereinafter
the same shall apply in this Article) pertaining to specified book-entry national bonds, etc., due to the
redemption (meaning the redemption prescribed in Article 41-12, paragraph
(18) of the Act; the same shall apply in paragraph (7)) or payment of interest, a written notice set forth in Article 41-12, paragraph
(18) of the Act under the
provisions of said paragraph shall not be required to be submitted for the receipt of said redemption or payment of interest.
(3) The identification documents shall be presented pursuant to the provisions of
Article 41-12, paragraph (18) of the Act when submitting a written notice set forth in said paragraph.
(4) Necessary matters concerning the scope of the identification documents that a person intending to submit a written notice under
the provisions of Article 41-
12, paragraph (18) of the Act shall present pursuant to the provisions of said paragraph shall be specified by Ordinance of the Ministry
of Finance.
(5) A person in charge of handling payment of redemption money or interest pertaining to specified book-entry national bonds, etc.
shall, when a written notice prescribed in Article 41-12, paragraph (18) of the Act has been
submitted, confirm whether or not the name and address entered in said written notice are consistent with the name and address entered
in the
identification documents that were presented to him/her at the time of the submission of said written notice pursuant to the provisions
of said paragraph.
(6) A person in charge of handling payment of redemption money or interest
pertaining to specified book-entry national bonds, etc. shall, when having provided confirmation under the provisions of the preceding
paragraph, clearly record that he/she has provided said confirmation in the books concerning said confirmation (including the books
or documents equivalent thereto), pursuant to the provisions of Ordinance of the Ministry of Finance, and preserve said
books and the written notice prescribed in Article 41-12, paragraph (18) of the
Act.
(7) Where a person who receives a payment prescribed in Article 41-12,
paragraph (18) of the Act receives redemption money or payment of interest pertaining to specified book-entry national bonds, etc.,
due to the redemption or payment of interest, pertaining to confirmation provided pursuant to the
provisions of Article 26-18, paragraph (6) (hereinafter referred to as
"confirmation pertaining to entries or records under the book-entry transfer system" in this paragraph), with regard to
the receipt of said redemption money or payment of interest, it shall be deemed that the submission of a
written notice set forth in Article 41-12, paragraph (18) of the Act under the
provisions of said paragraph has been made by the submission of a written
notice set forth in Article 41-12, paragraph (12) of the Act under the provisions of said paragraph (including the submission of the
document set forth in
Article 26-18, paragraph (4) under the provisions of said paragraph) for said confirmation pertaining to entries or records under
the book-entry transfer
system, that the presentation of the identification documents under the
provisions of Article 41-12, paragraph (18) of the Act has been made by the
presentation of the identification documents under the provisions of Article 41-
12, paragraph (12) of the Act (including the provisions of Article 26-18,
paragraph (5)) for said confirmation pertaining to entries or records under the book-entry transfer system, and that the confirmation
under the provisions of Article 41-12, paragraph (18) of the Act (including the submission of the
documents set forth in paragraph (14) of said Article under the provisions of
said paragraph which is applied mutatis mutandis pursuant to paragraph (19) of said Article) has been provided by said confirmation
pertaining to entries or records under the book-entry transfer system; provided, however, that this shall not apply when the name
and address to be entered in a written notice set forth in Article 41-12, paragraph (18) of the Act differ from the name and
address of the person for which said confirmation pertaining to entries or
records under the book-entry transfer system has been provided.
(8) The form of a written notice set forth in Article 41-12, paragraph (18) of the
Act shall be specified by Ordinance of the Ministry of Finance.
(Submission of Payment Records for a Consideration for the Transfer or
Redemption Money of Specified Book-Entry National Bonds, etc.)
Article 26-21 (1) Those specified by Cabinet Order prescribed in Article 41-12,
paragraph (21) of the Act shall be the national government and those listed in the items of Article 26-18, paragraph (1).
(2) A payer prescribed in Article 41-12, paragraph (21) of the Act who intends to obtain the approval set forth in said paragraph
shall submit a written
application containing his/her name and location, intention to obtain said
approval, and any other matters specified by Ordinance of the Ministry of
Finance to the competent district director prescribed in said paragraph.
(3) Where a written application set forth in the preceding paragraph has been submitted, when the competent district director set
forth in said paragraph has granted approval or has decided not to grant approval, he/she shall notify to
that effect to the applicant in writing.
(4) A person in charge of handling payment of redemption money or interest
pertaining to specified book-entry national bonds, etc. prescribed in Article 41-
12, paragraph (22) of the Act who intends to obtain the approval set forth in
said paragraph shall submit a written application containing his/her name and location, intention to obtain said approval, and any
other matters specified by Ordinance of the Ministry of Finance to the competent district director
prescribed in said paragraph.
(5) Where a written application set forth in the preceding paragraph has been submitted, when the competent district director set
forth in said paragraph has granted approval or has decided not to grant approval, he/she shall notify to
that effect to the applicant in writing.
(6) A person who pays a consideration for the transfer of specified book-entry national bonds, etc. or who is in charge of handling
payment of redemption money or interest pertaining to specified book-entry national bonds, etc.
prescribed in Article 41-12, paragraph (23) of the Act, who intends to obtain
the approval set forth in said paragraph, shall submit a written application
containing his/her name and location, the type of optical disk prescribed in said
paragraph which he/she intends to submit, and any other matters specified by
Ordinance of the Ministry of Finance to the competent district director with jurisdiction over said location.
(7) Where a written application set forth in the preceding paragraph has been submitted, when the competent district director set
forth in said paragraph has granted approval or has decided not to grant approval, he/she shall notify to
that effect to the applicant in writing.
(8) The form of a payment record for a consideration for the transfer of specified book-entry national bonds, etc. prescribed in Article
41-12, paragraph (21) of
the Act or a payment record for redemption money, etc. of specified book-entry national bonds, etc. prescribed in paragraph (22) of
said Article shall be
specified by Ordinance of the Ministry of Finance.
(Bond Issue Discounts for Foreign Private Bonds to Which the Special
Provisions on Tax Exemption Do Not Apply)
Article 26-22 Bond issue discounts specified by Cabinet Order prescribed in
Article 41-13 of the Act shall be the bond issue discounts listed as follows:
(i) Bond issue discounts to be received by a nonresident listed in Article 164, paragraph (1), item (i) of the Income Tax Act which
are attributed to a business conducted by said nonresident in Japan at any fixed place
prescribed in said item
(ii) Bond issue discounts to be received by a nonresident listed in Article 164, paragraph (1), item (ii) or item (iii) of the Income
Tax Act which are
attributed to a business conducted by said nonresident prescribed in these
items.
(Special Provisions on Withholding at Source for Remuneration, etc. Paid by a Tax-Exempt Entertainment Corporation, etc. to Entertainers,
etc. for Their Provision of Services)
Article 27 (1) With respect to the place for tax payment of income tax to be
collected, pursuant to the provisions of Article 42, paragraph (1) of the Act, for the payment of the remuneration paid by a tax-exempt
entertainment
corporation, etc. prescribed in Article 42, paragraph (1) of the Act (referred to
as a "tax-exempt entertainment corporation, etc." in paragraph (3)) to
entertainers, etc. for their provision of services, the term "shall be the place prescribed in said items" in Article 55
of the Order for Enforcement of the
Income Tax Act shall be deemed to be replaced with "shall be the place
prescribed in said items (with respect to the remuneration paid by a tax-
exempt entertainment corporation, etc. prescribed in Article 42, paragraph (1) (Special Provisions on Withholding at Source for Remuneration,
etc. Paid by a Tax-Exempt Entertainment Corporation, etc. to Entertainers, etc. for Their
Provision of Services) of the Act on Special Measures Concerning Taxation (hereinafter referred to as a "tax-exempt entertainment
corporation, etc." in this Article), outside Japan, to entertainers, etc. listed in the items of said
paragraph for their provision of services out of consideration for the provision of the services of entertainers, etc. prescribed
in said paragraph (hereinafter referred to as the "consideration for the provision of the services of
entertainers, etc." in this Article), the location of an office, business office or
any other place equivalent thereto located in Japan of a person who pays the consideration for the provision of the services of entertainers,
etc. of said
entertainers, etc. to said tax-exempt entertainment corporation, etc. (where
such person falls under the category of a tax-exempt entertainment corporation, etc., a person who pays the consideration for the
provision of the services of
entertainers, etc. to said person) (where there are two or more locations, the principal location))."
(2) With respect to the application of the provisions of Article 264 of the Order for
Enforcement of the Income Tax Act where the provisions of Article 42,
paragraph (1) of the Act is applied, the term "Article 212, paragraph (1)
(Withholding Liability for Income of Nonresidents or Corporations) of the Act" in said Article shall be deemed to be replaced
with "Article 212, paragraph (1) (Withholding Liability for Income of Nonresidents or Corporations) of the Act
or Article 42, paragraph (1) (Special Provisions on Withholding at Source for
Remuneration, etc. Paid by a Tax-Exempt Entertainment Corporation, etc. to
Entertainers, etc. for Their Provision of Services) of the Act on Special
Measures Concerning Taxation."
(3) Where a tax-exempt entertainment corporation, etc. seeks the application of the provisions of Article 179 and Article 213, paragraph
(1) of the Income Tax Act whose terms were replaced under the provisions of Article 42, paragraph
(3) of the Act with respect to the consideration listed in Article 161, item (ii) of
the Income Tax Act, which they shall receive for the provision of the services of entertainers, etc. prescribed in Article 42, paragraph
(1) of the Act, said tax-
exempt entertainment corporation, etc. shall, when receiving payment of said consideration, submit a document that states the matters
specified by
Ordinance of the Ministry of Finance, via a person who pays said consideration,
to the competent district director with jurisdiction over the place for tax
payment of the income tax to be collected and paid for said consideration by said payer pursuant to the provisions of Article 212
of the Income Tax Act.
(Special Provisions on Taxation on Interest Received by a Foreign Financial
Institution, etc. from Bond Transactions with Repurchase/Resale
Agreements)
Article 27-2 (1) The bond transaction with a repurchase or resale agreement
specified by Cabinet Order prescribed in Article 42-2, paragraph (1) of the Act shall be a bond transaction where the bonds are transferred
or purchased
under an agreement to repurchase or resell at the agreed prices on the agreed date (or where it is agreed that the date and prices
shall be determined after the commencement of the transaction instead of determining the date and
prices in advance, at said prices on said date agreed after the commencement
of the transaction) and are repurchased or resold based on said agreement. (2) The requirements specified by Cabinet Order prescribed
in Article 42-2,
paragraph (1) of the Act shall be as follows (where a specified financial
institution, etc. prescribed in said paragraph (hereinafter referred to as a
"specified financial institution, etc." in this Article) is the Bank of Japan, the requirements listed in item (i) and item
(iii)):
(i) In the transaction prescribed in the preceding paragraph, the period
between the date of the transfer or purchase of the bonds and the date of the repurchase or resale of said bonds shall not exceed
six months
(ii) With respect to the transaction prescribed in the preceding paragraph, an
agreement has been made on collective clearing prescribed in Article 3 of the Act on Collective Clearing of Specified Financial Transactions
Conducted by Financial Institutions, etc. (Act No. 108 of 1998)
(iii) The value of the bonds pertaining to the transaction prescribed in the preceding paragraph on the day on which the agreement
was made with regard to said transaction shall be not less than the value agreed for said transaction.
(3) The interest specified by Cabinet Order prescribed in Article 42-2, paragraph
(1) of the Act shall be the interest to be received by a foreign financial
institution, etc. prescribed in said paragraph on which no income tax shall be imposed pursuant to the provisions of Article 7 of
the Act.
(4) The bonds specified by Cabinet Order prescribed in Article 42-2, paragraph
(1), item (iii) of the Act shall be any of the bonds listed as follows:
(i) Bonds issued or guaranteed by a foreign corporation listed as follows:
(a) A foreign corporation 50 percent or more of whose capital contributions or obligations were made by a foreign government
(b) A foreign corporation established based on the provisions of the special
laws and regulations in a foreign state whose business is conducted under the management of the government of said foreign state
(ii) Bonds issued or guaranteed by an international organization established
based on an international agreement between governments
(iii) Bonds issued by a corporation which was established based on the laws and regulations of a member state of the OECD other than
Japan and which is engaged in a banking business in said state based on the laws and
regulations of said state.
(5) Whether or not a foreign corporation listed in Article 42-2, paragraph (4),
item (i), (a) of the Act out of foreign financial institutions, etc. (meaning foreign financial institutions, etc. prescribed in said
item; hereinafter the same shall apply in this Article) falls under the category of a foreign corporation listed in
the items of Article 42-2, paragraph (2) of the Act shall be determined
according to its status at the end of the business year immediately prior to the business year including the day on which said foreign
financial institution, etc. intends to submit a written application for a tax exemption (meaning a written application for a tax
exemption as prescribed in Article 42-2, paragraph (5) of
the Act; hereinafter the same shall apply in this Article) and the day preceding
the day on which said foreign financial institution, etc. is to receive payment of specified interest (meaning specified interest
prescribed in Article 42-2,
paragraph (1) of the Act; hereinafter the same shall apply in this Article) after submitting said written application for a tax exemption.
(6) A foreign financial institution, etc. which seeks the application of the
provisions of Article 42-2, paragraph (1) of the Act shall, when it intends to
receive payment of specified interest from a specified financial institution, etc. for the first time, submit a written application
for a tax exemption to the
district director prescribed in Article 42-2, paragraph (5) of the Act, via an office, business office, or any other establishment
equivalent thereto
(hereinafter referred to as "offices, etc." in this paragraph and paragraph (10))
of said specified financial institution, etc. in charge of handling payment of said specified interest (where payment of said specified
interest is handled at two or more offices, etc. held by said specified financial institution, etc., via
respective offices at the time when payment is handled for the first time
respectively) by the day preceding the day on which said foreign financial institution, etc. is to receive said specified interest.
(7) A foreign financial institution, etc. which seeks the application of the
provisions of Article 42-2, paragraph (1) of the Act shall, when it has not been entered or recorded separately in the books prescribed
in Article 42-2,
paragraph (10) of the Act of a specified financial institution, etc. which pays specified interest to said foreign financial institution,
etc., submit a written
application for a tax exemption to the district director prescribed in Article 42-
2, paragraph (5) of the Act pursuant to the provisions of said paragraph.
(8) Where a foreign financial institution, etc. which had previously received the application of the provisions of Article 42-2, paragraph
(1) of the Act has
become unable to receive the application of said provisions based on the provisions of paragraph (2) of said Article and subsequently
seeks the
application of the provisions of Article 42-2, paragraph (1) of the Act again,
said foreign financial institution, etc. shall submit a written application for a
tax exemption to the district director prescribed in Article 42-2, paragraph (5)
of the Act, by the day preceding the day on which it is to receive the specified interest, in respect of which it seeks the application
of the provisions of said
paragraph.
(9) The documents specified by Cabinet Order prescribed in Article 42-2,
paragraph (7) of the Act shall be any of the foreign corporation's certificate of registered matters of the corporation, receipt
for national tax or local tax,
certificate of tax payment or any other document specified by Ordinance of the
Ministry of Finance.
(10) A specified financial institution, etc. shall, when it has received a written application for a tax exemption or a written application
prescribed in Article
42-2, paragraph (8) of the Act at its offices, etc., submit such written
applications to the district director prescribed in Article 42-2, paragraph (5) of
the Act, by the final day of the month following the month involving the date of the receipt, and create copies of such written applications
(including those
equivalent thereto) and preserve them pursuant to the provisions of Ordinance
of the Ministry of Finance.
(11) In the case referred to in Article 42-2, paragraph (8) of the Act, when a
written application prescribed in said paragraph has been submitted to the district director prescribed in said paragraph, it shall
be deemed that the submission has been made at the time when the person who pays specified
interest set forth in said paragraph received the written application.
(12) A specified financial institution, etc. shall, when the contract for a bond transaction with a repurchase/resale agreement prescribed
in Article 42-2,
paragraph (1) of the Act has been concluded with a foreign financial institution,
etc. which had submitted a written application for a tax exemption, or when a written application prescribed in paragraph (8) of said
Article has been
submitted by a person who had submitted said written application for a tax
exemption, enter or record the matters prescribed in paragraph (10) of said
Article in the books for each person each time, and preserve said books pursuant to the provisions of Ordinance of the Ministry of
Finance.
Chapter III Special Provisions for the Corporation Tax Act
Section 8-2 Special Provisions, etc. on Taxation on Transactions with
Foreign Affiliated Persons
(Application Procedures, etc. for a Grace Period for Tax Payment Under Special
Provisions on Taxation on Transactions with Foreign Affiliated Persons)
Article 39-12-2 (1) The amount calculated as specified by Cabinet Order as the amount of corporation tax and additional tax for said
corporation tax
prescribed in Article 66-4-2, paragraph (1) of the Act shall be the sum of the amounts listed as follows:
(i) The amount obtained by deducting the amount of corporation tax payable where the calculation has been made by deeming that the
reassessment or
determination for the objection prescribed in Article 66-4-2, paragraph (1) of the Act (meaning the reassessment or determination
listed in Article 66-4,
paragraph (16), item (i) of the Act; hereinafter the same shall apply in this item and paragraph (3), item (ii)) does not cover the
part pertaining to the corporation tax prescribed in Article 66-4-2, paragraph (1) of the Act
(referred to as the "amount of corporation tax not under a grace period" in
the following item) from the amount of corporation tax payable based on said reassessment or determination (referred to as the "amount
of corporation tax based on the reassessment or determination" in the following item)
(ii) The amount obtained by deducting the amount of additional tax (meaning
the additional tax prescribed in Article 69 of the Act on General Rules for
National Taxes; hereinafter the same shall apply in this item) to be imposed based on the amount of corporation tax not under a grace
period from the amount of additional tax to be imposed based on the amount of corporation
tax based on the reassessment or determination.
(2) The case where there is no agreement prescribed in Article 66-4-2, paragraph
(1) of the Act or any other case specified by Cabinet Order shall be the case listed respectively in the following items and the date
specified by Cabinet Order prescribed in said paragraph shall be the date on which the
Commissioner of the National Tax Agency notified the fact that the case falls
under any of those listed in the relevant items:
(i) Where the Commissioner of the National Tax Agency finds that an
agreement set forth in Article 66-4-2, paragraph (1) of the Act (referred to an
"agreement" in the following item and item (iii)) cannot be reached even if the consultation prescribed in said paragraph
(hereinafter referred to as a "mutual consultation" in this paragraph) is continued (excluding the case
listed in the items of Article 66-4-2, paragraph (5) of the Act), when he/she has made a request for the termination of said mutual
consultation to the competent authority of the other contracting state pertaining to said mutual consultation (meaning a contracting
state other than Japan of a tax
convention prescribed in Article 1-3, paragraph (1), item (ii); the same shall
apply in the following item) and has obtained consent from said competent authority
(ii) Where the competent authority of the other contracting state pertaining to
a mutual consultation finds that an agreement cannot be reached even if said mutual consultation were continued, when the Commissioner
of the National Tax Agency has received a request for the termination of said mutual
consultation from said competent authority and has given his/her consent
(iii) Where an agreement has been reached on the amount of corporation tax
prescribed in Article 66-4-2, paragraph (1) of the Act, when said agreement is not to change said amount of corporation tax.
(3) A person intending to receive a grace period for tax payment under the
provisions of Article 66-4-2, paragraph (1) of the Act shall submit a written application containing the matters listed as follows
along with a document certifying that he/she has filed an objection set forth in said paragraph and other documents specified by
Ordinance of the Ministry of Finance to the
district director, etc. prescribed in Article 46, paragraph (1) of the Act on
General Rules for National Taxes:
(i) The name and place for tax payment of a corporation intending to receive said grace period for tax payment (where the place for
tax payment and the location of the head office or principal office are different, the corporation's name, place for tax payment
and location of the head office or principal
office)
(ii) The business year, due date and the amount of payable corporation tax based on the reassessment or determination
(iii) The amount for which the corporation intends to receive a grace period for tax payment out of the amount set forth in the preceding
item
(iv) Where said amount for which the corporation intends to receive a grace period for tax payment exceeds 500,000 yen, the type,
amount, value and
location of the security listed in the items of Article 50 of the Act on General
Rules for National Taxes which it intends to provide at the time of filing the
application (when the security is a guarantee by a guarantor, the guarantor's name and the location, address or domicile of his/her
head office or principal
office) and any other matters for reference concerning the security (where there is any special circumstance whereby the corporation
cannot provide security, said circumstance).
(4) With respect to the application of the provisions of Article 23, paragraph (1) of
the Order for Enforcement of the Act on General Rules for National Taxes
(Cabinet Order No. 135 of 1962), regarding the corporation tax for which a grace period for tax payment has been received pursuant
to the provisions of
Article 66-4-2, paragraph (1) of the Act, the term "or national tax" in Article 23, paragraph (1) of said Order shall be
deemed to be replaced with "(including a
grace period for tax payment under the provisions of Article 66-4-2, paragraph (1) (Grace Period for Tax Payment under the Special
Provisions on Taxation on Transactions with Foreign Affiliated Persons) of the Act on Special Measures Concerning Taxation) or national
tax."
Section 8-3 Special Provisions on Taxation on Interest on Liabilities, etc.
Payable to a Foreign Controlling Shareholder, etc.
(Special Provisions on Taxation on Interest on Liabilities, etc. Payable to a
Foreign Controlling Shareholder, etc.)
Article 39-13 (1) The amount calculated as specified by Cabinet Order as the amount equivalent to the excess part prescribed in Article
66-5, paragraph (1) of the Act shall be the amount specified respectively in the following items for the category of cases listed
in the relevant items:
(i) Where the remaining amount after deducting the amount listed in (b) from
the amount listed in (a) is equivalent to or less than the amount listed in (c): The amount obtained by calculating the amount of
expenses listed in the
items of paragraph (15) which said domestic corporation pays for the
relevant business year to said domestic corporation's foreign controlling shareholder, etc. (meaning a foreign controlling shareholder,
etc. as
prescribed in Article 66-5, paragraph (4), item (i) of the Act; hereinafter the same shall apply in this Article) and fund provider,
etc. (meaning a fund
provider, etc. as prescribed in item (ii) of said paragraph; hereinafter the
same shall apply in this Article) (such expenses shall be limited to what is to be paid, in the case prescribed in item (ii) or item
(iii) of paragraph (13),
when the interest on liabilities pertaining to the funds set forth in those
items is included in the taxable income (meaning the taxable income
prescribed in Article 66-5, paragraph (4), item (ix) of the Act; the same shall apply in (b)) of the person who is to receive payment
of said interest; such amount of expenses shall be referred to as the "amount of the guarantee
charge, etc. related to taxable income" in the following item) and then
multiplying said amount of expenses by the ratio obtained by dividing the remaining amount after deducting the amount listed in (c)
from the amount listed in (a) (such remaining amount shall be referred to as the "amount
exceeding the average balance of liabilities" in the following item and the
following paragraph) by the amount listed in (b):
(a) The average balance of liabilities (meaning the average balance of
liabilities prescribed in Article 66-5, paragraph (4), item (v) of the Act;
hereinafter the same shall apply in this Article) regarding the liabilities owed, for the relevant business year of said domestic
corporation, to said foreign controlling shareholder, etc. and fund provider, etc. (meaning the liabilities owed to a foreign controlling
shareholder, etc. and a fund
provider, etc. prescribed in item (iv) of said paragraph; hereinafter the same shall apply in this Article)
(b) The average balance of liabilities regarding the liabilities specified by
Cabinet Order prescribed in Article 66-5, paragraph (4), item (iv) of the Act owed to a fund provider, etc. (limited to the liabilities
regarding those
whose interest is included in the taxable income of a person who is to receive payment of said interest)
(c) The amount obtained by multiplying the equity interest held by a foreign
controlling shareholder, etc. for the relevant business year of said domestic corporation (meaning the equity interest held by a foreign
controlling
shareholder, etc. prescribed in Article 66-5, paragraph (4), item (vi) of the
Act; the same shall apply in paragraph (4) and paragraph (7)) by three
(where said domestic corporation receives the application of the provisions of paragraph (3) of said Article, by the multiple number
prescribed in said paragraph; the same shall apply in the following paragraph)
(ii) Where the remaining amount after deducting the amount listed in (b) from
the amount listed in (a) of the preceding item exceeds the amount listed in
(c): The sum of the amounts listed as follows:
(a) The amount obtained by deducting the amount of the guarantee charge,
etc. related to taxable income from the amount of interest on liabilities, etc. (meaning the interest on liabilities, etc. prescribed
in Article 66-5,
paragraph (4), item (iii) of the Act; hereinafter the same shall apply in this
Article) that said domestic corporation pays for the relevant business year to said foreign controlling shareholder, etc. and fund
provider, etc. and
then multiplying the remaining amount after deduction by the ratio
obtained by dividing the remaining amount after deducting the amount listed in (b) of the preceding item from the amount exceeding
the average balance of liabilities by the remaining amount after deducting the amount listed in (b) of said item from the amount
listed in (a) of said item
(b) The amount of guarantee charge, etc. related to taxable income.
(2) With respect to the application of the provisions of the preceding paragraph where the remaining amount after deducting the amount
obtained by
multiplying the amount of equity capital (meaning the amount of equity capital prescribed in Article 66-5, paragraph (4), item (vii)
of the Act; hereinafter the
same shall apply in this Article) for the relevant business year of said domestic corporation by three from the average balance of
liabilities regarding the total
liabilities prescribed in Article 66-5, paragraph (1) of the Act for the relevant
business year of said domestic corporation is less than the amount exceeding
the average balance of liabilities for the relevant business year of said domestic corporation, in item (i) of the preceding paragraph,
the term "the remaining
amount after deducting the amount listed in (b) from the amount listed in (a) is equivalent to or less than the amount listed in (c)"
shall be deemed to be
replaced with "the remaining amount after deducting the amount obtained by
multiplying the amount of equity capital prescribed in Article 66-5, paragraph
(4), item (vii) of the Act for the relevant business year of said domestic
corporation by three from the average balance of liabilities regarding the total liabilities prescribed in Article 66-5, paragraph
(1) of the Act for the relevant business year of said domestic corporation (hereinafter such remaining amount
shall be referred to as "the amount exceeding the average balance of the total
liabilities" in this paragraph) is equivalent to or less than the amount listed in (b);" the term "Article 66-5, paragraph
(4), item (i) of the Act" shall be deemed to be replaced with "paragraph (4), item (i) of said Article;" and the term
"remaining amount after deducting the amount listed in (c) from the amount listed in (a) (such remaining amount shall be referred
to as the "amount
exceeding the average balance of liabilities" in the following item and the following paragraph)" shall be deemed to be
replaced with "the amount
exceeding the average balance of the total liabilities;" and in item (ii) of said
paragraph, the term "the remaining amount after deducting the amount listed in (b) from the amount listed in (a) of the preceding
item exceeds the amount
listed in (c)" shall be deemed to be replaced with "the amount exceeding the
average balance of the total liabilities exceeds the amount listed in (b) of the preceding item;" and the term "the amount
exceeding the average balance of
liabilities" shall be deemed to be replaced with "the amount exceeding the
average balance of the total liabilities."
(3) Where the provisions of Article 66-5, paragraph (1) of the Act shall apply, the amount of interest on liabilities, etc. to be
paid to said foreign controlling
shareholder, etc. and fund provider, etc. for the relevant business year shall be based on the amount posted as an expense for the
relevant business year.
(4) With respect to the application of the provisions of Article 66-5, paragraph (1)
of the Act where there are two or more foreign controlling shareholders, etc. of said domestic corporation, the average balance of
liabilities regarding the
liabilities owed to foreign controlling shareholders, etc. and fund providers, etc.,
equity interest held by foreign controlling shareholders, etc. and the amount of interest on liabilities, etc. to be paid to foreign
controlling shareholders, etc. and fund providers, etc. shall be based on the sum of the average balance of
liabilities regarding the liabilities owed to foreign controlling shareholders, etc.
and fund providers, etc., equity interest held by foreign controlling
shareholders, etc. and the amount of interest on liabilities, etc. to be paid to foreign controlling shareholders, etc. and fund providers,
etc., respectively.
(5) The average balance of liabilities pertaining to a specified bond transaction with a repurchase/resale agreement, etc. which is
calculated as specified by
Cabinet Order and is to be deducted from the average balance of liabilities regarding the liabilities owed to a foreign controlling
shareholder, etc. and a
fund provider, etc. prescribed in Article 66-5, paragraph (2) of the Act shall be
the average balance of liabilities regarding the liabilities owed to a domestic
corporation's foreign controlling shareholder, etc. and fund provider, etc. which
pertain to a specified bond transaction with a repurchase/resale agreement, etc. (meaning a specified bond transaction with a repurchase/resale
agreement, etc.
prescribed in Article 66-5, paragraph (4), item (viii) of the Act; the same shall
apply in the following paragraph and paragraph (8)) (where said average balance of liabilities exceeds the average balance of assets
regarding assets
pertaining to a specified bond transaction with a repurchase/resale agreement, etc. (the average balance of assets shall mean the
amount calculated by a reasonable method as the average balance of said assets' book value for the
relevant business year; the same shall apply in the following paragraph), such
calculated average balance of liabilities shall be said average balance of assets;
such average balance of assets shall be referred to as the "average balance of liabilities after adjustment" in paragraph
(8)).
(6) The average balance of liabilities pertaining to a specified bond transaction with a repurchase/resale agreement, etc. which is
calculated as specified by
Cabinet Order and is to be deducted from the average balance of liabilities
regarding the total liabilities for the relevant business year prescribed in
Article 66-5, paragraph (2) of the Act shall be the average balance of liabilities regarding the total liabilities for the relevant
business year (limited to those
which are to be the cause of payment of interest on liabilities, etc.; the same shall apply in paragraph (10)) which pertain to a
specified bond transaction with a repurchase/resale agreement, etc. (where said average balance of
liabilities exceeds the average balance of assets regarding assets pertaining to
a specified bond transaction with a repurchase/resale agreement, etc., such
calculated average balance of liabilities shall be said average balance of assets). (7) The multiple number applicable to the equity
interest held by a foreign
controlling shareholder, etc. which is calculated as specified by Cabinet Order prescribed in Article 66-5, paragraph (2) of the Act
shall be the multiple
number obtained by calculating the average balance of liabilities by deducting the average balance of liabilities pertaining to a
specified bond transaction
with a repurchase/resale agreement, etc. calculated as specified by Cabinet
Order prescribed in said paragraph from the average balance of liabilities regarding the liabilities owed to a foreign controlling
shareholder, etc. and a fund provider, etc. prescribed in said paragraph and then dividing the
calculated average balance of liabilities by the equity interest held by the
domestic corporation's foreign controlling shareholder, etc.; and the multiple number applicable to the amount of equity capital
which is calculated as
specified by Cabinet Order prescribed in said paragraph shall be the multiple number obtained by calculating the average balance of
liabilities by deducting the average balance of liabilities pertaining to a specified bond transaction
with a repurchase/resale agreement, etc. calculated as specified by Cabinet
Order prescribed in said paragraph from the average balance of liabilities
regarding the total liabilities for the relevant business year prescribed in said
paragraph and then dividing the calculated average balance of liabilities by the amount of equity capital of said domestic corporation.
(8) The amount of interest on liabilities, etc. pertaining to a specified bond
transaction with a repurchase/resale agreement, etc. which is calculated as specified by Cabinet Order and is to be deducted from
the amount of interest on liabilities, etc. to be paid to a foreign controlling shareholder, etc. and a
fund provider, etc. prescribed in Article 66-5, paragraph (2) of the Act shall be
the amount obtained by multiplying the amount of interest on liabilities, etc. to be paid to the domestic corporation's foreign
controlling shareholder, etc. and
fund provider, etc. which pertain to a specified bond transaction with a
repurchase/resale agreement, etc. by the ratio obtained by dividing the average balance of liabilities after adjustment by the average
balance of liabilities
regarding liabilities pertaining to said specified bond transaction with a repurchase/resale agreement, etc.
(9) With respect to the application of the provisions of paragraphs (1) to (4) in the case where the provisions of Article 66-5, paragraph
(2) of the Act is applied,
the term "and then multiplying said amount of expenses by the ratio" in
paragraph (1), item (i) shall be deemed to be replaced with ", then deducting
the amount obtained by multiplying the part of said amount of expenses that pertains to a specified bond transaction with a repurchase/resale
agreement,
etc. (meaning a specified bond transaction with a repurchase/resale agreement, etc. prescribed in Article 66-5, paragraph (4), item
(viii) of the Act; hereinafter
the same shall apply in this item) by the ratio obtained by dividing the average
balance of liabilities after adjustment (meaning the average balance of
liabilities after adjustment prescribed in paragraph (5); hereinafter the same shall apply in this item) regarding the liabilities
for said amount by the
average balance of liabilities (meaning the average balance of liabilities
prescribed in paragraph (4), item (v) of said Article; hereinafter the same shall
apply in this Article) regarding the liabilities for said amount which pertains to a specified bond transaction with a repurchase/resale
agreement, etc., and then multiplying the remaining amount after deduction by the ratio;" the term "The
average balance of liabilities (meaning the average balance of liabilities
prescribed in Article 66-5, paragraph (4), item (v) of the Act; hereinafter the same shall apply in this Article)" in (a) of
paragraph (1), item (i) shall be
deemed to be replaced with "The remaining amount after deducting the
average balance of liabilities after adjustment from the average balance of
liabilities;" the term "The average balance of liabilities" in (b) of said item shall be deemed to be replaced with
"The remaining amount after deducting the
average balance of liabilities after adjustment regarding said liabilities from
the average balance of liabilities;" the term "three" in (c) of said item shall be
deemed to be replaced with "two;" the term "The amount obtained by deducting the amount of the guarantee charge, etc.
related to taxable income" in (a) of
paragraph (1), item (ii) shall be deemed to be replaced with "The amount
obtained by deducting the sum of the amount of interest on liabilities, etc.
pertaining to a specified bond transaction with a repurchase/resale agreement, etc. prescribed in paragraph (2) of said Article and
the amount of the
guarantee charge, etc. related to taxable income;" the term "where the remaining amount after deducting the amount"
in paragraph (2) shall be
deemed to be replaced with "where the remaining amount after deducting the
sum of the average balance of liabilities regarding the average balance of liabilities which pertain to a specified bond transaction
with a
repurchase/resale agreement, etc. prescribed in paragraph (6) and the amount;"
and the term "by three" in said paragraph shall be deemed to be replaced with
"by two."
(10) The percentage specified by Cabinet Order prescribed in Article 66-5,
paragraph (3) of the Act shall be the percentage of the amount of the total
liabilities of any other domestic corporation whose business size set forth in paragraph (3) of said Article and other details are
similar to those of a domestic corporation which seeks the application of the provisions of said
paragraph (hereinafter referred to as an "applicable corporation" in this
paragraph) on the final day of any of said other domestic corporation's relevant business years or consolidated business years
that ended within three years
until the final day of the applicable corporation's relevant business year (where said applicable corporation receives the application
of the provisions of
paragraph (2) of said Article, the percentage of the remaining amount of the total liabilities after deducting the amount specified
by Ordinance of the
Ministry of Finance) against the sum of the amounts of stated capital,
statutory reserve, and surplus on the same day. In this case, where there are any fractions after two decimal places, they shall be
rounded up.
(11) The special relationship specified by Cabinet Order prescribed in Article 66-
5, paragraph (4), item (i) of the Act shall be a relationship listed as follows:
(i) A relationship whereby out of the total number or total amount of the issued shares or capital contributions of a domestic corporation
(excluding shares
that said corporation holds in itself or capital contributions held thereby)
(hereinafter referred to as the "issued shares, etc." in this Article), 50 percent or more of the shares or capital contributions
(hereinafter referred to as the
"shares, etc." in this Article) are held directly or indirectly by a foreign controlling shareholder, etc.
(ii) Where 50 percent or more of the respective issued shares, etc. of a domestic
corporation and a foreign corporation are held directly or indirectly by the same person (where said person is an individual, including
an individual who has a special relationship prescribed in Article 4, paragraph (1) of the Order
for Enforcement of the Corporation Tax Act to said individual), the
relationship between said domestic corporation and said foreign corporation
(excluding relationships falling under the category of relationships listed in the preceding item)
(iii) A relationship whereby the existence of the fact listed as follows or any other facts equivalent thereto between said domestic
corporation and a
nonresident (meaning a nonresident prescribed in Article 2, paragraph (1), item (i)-2 of the Act; the same shall apply in paragraph
(28)) or a foreign corporation (hereinafter such nonresident or foreign corporation shall be
referred to as a "nonresident, etc." in this item) enables said nonresident, etc. to determine substantially the whole or
a part of said domestic corporation's
business policies (excluding relationships falling under the category of relationships listed in the preceding two items):
(a) The fact that said domestic corporation depends on transactions with said
nonresident, etc. for a considerable part of its business activities
(b) The fact that said domestic corporation has borrowed a considerable part
of the funds necessary for its business activities from said nonresident, etc. or has procured a considerable part of the funds necessary
for its business
activities by obtaining guarantees from said nonresident, etc.
(c) The fact that 50 percent or more of the officers or officers with the
representative authority of said domestic corporation are persons who are officers, or persons with status as officers and employees
of said foreign corporation or who were formerly said foreign corporation's officers or
employees.
(12) The provisions of paragraph (2) and paragraph (3) of Article 39-12 shall
apply mutatis mutandis to the determination as to whether or not 50 percent or more of the issued shares, etc. set forth in item (i)
and item (ii) of the
preceding paragraph are held directly or indirectly.
(13) A person who provides a domestic corporation with funds and a person specified by Cabinet Order as being related to such provision
of funds as
prescribed in Article 66-5, paragraph (4), item (ii) of the Act shall be any of the following:
(i) Where it is found that a foreign controlling shareholder, etc. of a domestic corporation has provided said domestic corporation
with funds via a third
party: Said third party
(ii) Where it is found that a foreign controlling shareholder, etc. of a domestic corporation has offered guarantees for said domestic
corporation's liabilities to a third party and thereby said third party has provided said domestic
corporation with funds: Said third party
(iii) Where it is found that bonds that the foreign controlling shareholder, etc. of a domestic corporation has lent to said domestic
corporation (including
bonds lent by a third party to said domestic corporation based on guarantees for said domestic corporation's liabilities offered
by said foreign controlling
shareholder, etc.) have been provided to any other third party as security and have been transferred in a bond transaction with a
repurchase/resale
agreement (meaning a bond transaction with a repurchase/resale agreement prescribed in Article 42-2, paragraph (1) of the Act; the
same shall apply in
paragraph (27)) or lent in a cash-secured bond lending transaction (meaning a cash-secured bond lending transaction prescribed in
Article 66-5,
paragraph (4), item (viii) of the Act; the same shall apply in paragraph (27))
and thereby said other third party has provided said domestic corporation with funds: Said third party and other third party.
(14) The moneys specified by Cabinet Order as being equivalent to interest on
liabilities prescribed in Article 66-5, paragraph (4), item (iii) of the Act shall be the discount on bills, the amount of the shortage
prescribed in Article 136-2,
paragraph (1) of the Order for Enforcement of the Corporation Tax Act and any other moneys whose economic characteristics are equivalent
to those of interest.
(15) The expenses specified by Cabinet Order prescribed in Article 66-5,
paragraph (4), item (iii) of the Act shall be the expenses listed as follows:
(i) In the case prescribed in paragraph (13), item (ii), the guarantee charge for
liabilities set forth in said item which a domestic corporation set forth in said item pays to its foreign controlling shareholder,
etc.
(ii) In the case prescribed in paragraph (13), item (iii), the charge for bonds set forth in said item or guarantee charge for liabilities
set forth in said item
which a domestic corporation set forth in said item pays to its foreign
controlling shareholder, etc. or the charge for bonds set forth in said item
which said domestic corporation pays to a third party set forth in said item. (16) Any other expenses specified by Cabinet Order prescribed
in Article 66-5,
paragraph (4), item (iii) of the Act shall be interest on liabilities, etc. to be paid to a public corporation prescribed in Article
2, item (v) of the Corporation Tax
Act or a corporation in the public interest, etc. prescribed in item (vi) of said
Article.
(17) The liabilities specified by Cabinet Order prescribed in Article 66-5,
paragraph (4), item (iv) of the Act shall be the liabilities set forth in the items of paragraph (13) in the cases prescribed in the
relevant items.
(18) The amount calculated as specified by Cabinet Order as the average amount
of liabilities prescribed in Article 66-5, paragraph (4), item (v) of the Act shall be the amount calculated by a reasonable method
as the average balance of the book value of the liabilities for the relevant business year.
(19) The amount calculated as specified by Cabinet Order as the interest on a
domestic corporation's net assets held by a foreign controlling shareholder, etc. as prescribed in Article 66-5, paragraph (4),
item (vi) of the Act shall be the amount obtained by multiplying the amount of equity capital for the relevant
business year of said domestic corporation by the ratio of the shares, etc.
regarding said domestic corporation held directly or indirectly by a foreign
controlling shareholder, etc. on the final day of the relevant business year out of said domestic corporation's issued shares,
etc.
(20) The shares, etc. held directly or indirectly as prescribed in the preceding paragraph shall be the total number or the sum of
a first domestic
corporation's shares, etc. that are held directly by its foreign controlling
shareholder, etc. and its shares, etc. that are held indirectly by said foreign controlling shareholder, etc. (meaning the shares,
etc. calculated by
multiplying said domestic corporation's issued shares, etc. by the ratio
specified respectively in the following items for the category of cases listed in
the relevant items (where this falls under both of the following cases, the sum of the ratios specified respectively as follows)):
(i) Where the whole or a part of the issued shares, etc. of a second domestic corporation which is the shareholder, etc. (meaning
a shareholder, etc.
prescribed in Article 2, item (xiv) of the Corporation Tax Act; hereinafter the
same shall apply in this item and paragraph (24)) of the first domestic corporation are held by a foreign controlling shareholder,
etc.: The ratio
obtained by multiplying said foreign controlling shareholder, etc.'s ratio of
shareholding (meaning the ratio of the shares, etc. held by the shareholder, etc. out of the total issued shares, etc.; hereinafter
the same shall apply in
this paragraph and paragraph (24)) in the second domestic corporation by
said second domestic corporation's ratio of shareholding in the first domestic corporation (where there are two or more such second
domestic corporations, the sum of the ratios calculated for each of them)
(ii) Where a single domestic corporation or two or more domestic corporations
are interposed between the first domestic corporation and the second domestic corporation, the whole or a part of whose issued shares,
etc. are
held by its foreign controlling shareholder, etc. (hereinafter such interposed domestic corporations shall be referred to as "domestic
corporations related
through capital contribution" in this paragraph) and said foreign controlling
shareholder, etc., said second domestic corporation, the domestic
corporations related through capital contribution and said first domestic corporation have a link through the holding of shares, etc.:
The ratio
obtained by multiplying said foreign controlling shareholder, etc.'s ratio of shareholding in the second domestic corporation
sequentially by said second domestic corporation's ratio of shareholding in the domestic corporation
related through capital contribution, by the domestic corporation related
through capital contribution's ratio of shareholding in any other domestic corporation related through capital contribution, and
by the domestic
corporation related through capital contribution's ratio of shareholding in the first domestic corporation (where there are two
or more links, the sum of the
ratios calculated for each of them).
(21) Where a domestic corporation and its foreign controlling shareholder, etc. have a relationship listed in paragraph (11), item
(ii), when the same person prescribed in said item is a resident or any other domestic corporation
prescribed in Article 2, paragraph (1), item (i)-2 of the Act, the provisions of
the preceding two paragraphs shall apply by deeming said same person to be a foreign controlling shareholder, etc. related to said
domestic corporation.
(22) The amount calculated as specified by Cabinet Order as the amount of net assets prescribed in Article 66-5, paragraph (4), item
(vii) of the Act shall be
the remaining amount after deducting the amount listed in item (ii) from the amount listed in item (i) (where said remaining amount
is less than the
amount of stated capital, etc. prescribed in Article 2, item (xvi) of the
Corporation Tax Act on the final day of the relevant business year of said domestic corporation (where said amount of stated capital,
etc. is less than the amount of stated capital or capital contributions, said amount of stated capital or capital contributions;
hereinafter referred to as the "amount of stated
capital, etc." in this paragraph and paragraph (24)), such calculated amount shall be said amount of stated capital, etc.):
(i) The amount calculated by a reasonable method as the average balance of the book value of the total assets for the relevant business
year of said domestic corporation (such book value shall mean the remaining amount after
deducting the amount set aside as reserve funds by the appropriation of
surplus and the amount set aside as reserves for special depreciation
pursuant to the provisions of Article 52-3 or Article 68-41 of the Act (limited to the amount set aside as reserve funds by the appropriation
of surplus) in
lieu of reducing the book value of fixed assets by accounting for the amount as a loss)
(ii) The amount calculated by a reasonable method as the average balance of the book value of the total liabilities for the relevant
business year of said domestic corporation.
(23) The book value set forth in paragraph (5) and paragraph (18) and the
preceding paragraph shall be based on the amount of assets or liabilities that said domestic corporation entered in its accounting
books.
(24) Where a second domestic corporation which is a shareholder, etc. of a first domestic corporation or where domestic corporations
related through capital contribution (meaning a single domestic corporation or two or more domestic corporations which have a link
with the first domestic corporation and the second domestic corporation through the holding of shares, etc.; the same shall apply
in the following paragraph) are interposed between said first domestic corporation and the foreign controlling shareholder, etc.
thereof, when the
amount obtained by multiplying the amount of stated capital, etc. on the final
day of the relevant business year of said first domestic corporation by the ratio of the second domestic corporation's or the
domestic corporation related
through capital contribution's shareholding in the first domestic corporation
exceeds the amount of stated capital, etc. of said second domestic corporation or domestic corporation related through capital contribution
on the same day (for a corporation falling under the category of a corporation subject to
corporation tax on consolidated income prescribed in Article 2, item (xvi) of the
Corporation Tax Act, when such amount exceeds the amount of consolidated
individual stated capital, etc. prescribed in Article 39-113, paragraph (20)), the amount of equity capital pertaining to the first
domestic corporation shall be
the remaining amount after deducting from said amount of equity capital, either of the smaller amount of said excess amount or the
amount of liabilities owed by the second domestic corporation or the domestic corporation related
through capital contribution to the foreign controlling shareholder, etc. and the fund provider, etc. of the first domestic corporation
on the same day (refereed
to as the "deductible amount" in the following paragraph).
(25) In the case prescribed in the preceding paragraph, when deeming a domestic corporation related through capital contribution set
forth in said paragraph to
be the first domestic corporation set forth in said paragraph and if there is any deductible amount pertaining to said domestic corporation
related through
capital contribution, the amount of stated capital, etc. set forth in said
paragraph of said domestic corporation related through capital contribution shall be the remaining amount after deducting said deductible
amount from said amount of stated capital, etc.; and the amount of liabilities owed by said domestic corporation related through
capital contribution to the foreign
controlling shareholder, etc. and the fund provider, etc. set forth in said
paragraph shall be the amount obtained by adding the amount of liabilities
owed to said foreign controlling shareholder, etc. and fund provider, etc. and said deductible amount.
(26) The amount calculated as specified by Cabinet Order as the interest on a
domestic corporation's net assets prescribed in Article 66-5, paragraph (4),
item (vi) of the Act and the amount calculated as specified by Cabinet Order as the amount of net assets prescribed in item (vii)
of said paragraph, where said domestic corporation is a corporation in the public interest, etc. prescribed in
Article 2, item (vi) of the Corporation Tax Act or an association or foundation without juridical personality, shall be, notwithstanding
the provisions of
paragraph (19) to the preceding paragraph, the amount obtained by
multiplying the amount of equity capital for the relevant business year of said domestic corporation by the ratio of the value of
assets for the profit-making business prescribed in Article 2, item (xiii) of the Corporation Tax Act
conducted by said domestic corporation out of the value of the total assets on
the final day of the relevant business year.
(27) The transaction specified by Cabinet Order prescribed in Article 66-5,
paragraph (4), item (viii) of the Act shall be the relevant cash-secured bond
lending transaction or bond transaction with a repurchase/resale agreement,
where any of the bonds listed as follows are lent in a cash-secured bond lending transaction or transferred in a bond transaction
with a repurchase/resale
agreement:
(i) Bonds borrowed in a cash-secured bond lending transaction
(ii) Bonds purchased in a bond transaction with a repurchase/resale agreement. (28) The domestic source income specified by Cabinet
Order prescribed in Article
66-5, paragraph (4), item (ix) of the Act for a nonresident shall be the domestic source income of a nonresident set forth in said
item as specified in Article 164, paragraph (1), items (i) to (iii) of the Income Tax Act, in accordance with the
category of said nonresident listed in said items (excluding the income for
which income tax shall be reduced or exempted pursuant to the provisions of a tax convention (meaning a tax convention prescribed
in Article 1-3, paragraph (1), item (ii); hereinafter the same shall apply in this paragraph)); and the domestic source income specified
by Cabinet Order prescribed in Article 66-5,
paragraph (4), item (ix) of the Act for a foreign corporation shall be the
domestic source income of a foreign corporation set forth in Article 66-5,
paragraph (4), item (ix) of the Act as specified in Article 141, items (i) to (iii) of the Corporation Tax Act, in accordance with
the category of said foreign
corporation listed in said items (excluding the income for which corporation tax shall be reduced or exempted pursuant to the provisions
of a tax convention).
(29) The provisions of paragraph (1), paragraphs (3) to (18), paragraph (22), paragraph (23), paragraph (27) and the preceding paragraph
shall apply
mutatis mutandis to the case of applying the provisions of paragraphs (1) to (4)
and paragraphs (6) to (9) of Article 66-5 of the Act which are applied mutatis mutandis pursuant to paragraph (10) of said Article.
In this case, the terms
listed in the middle column of the following table which are used in the
provisions listed in the left-hand column of said table shall be deemed to be replaced with the terms listed in the right-hand column
of said table.
Paragraph (1), item (i)
domestic corporation foreign corporation
(such expenses shall be limited to | and which pertains to business that said foreign corporation conducts in Japan (hereinafter referred to as a "domestic business" in this Article) (such expenses shall be limited, in the case where said foreign corporation is an association or foundation without juridical personality, which pertains to a profit-making business prescribed in Article 2, item (xiii) of the Corporation Tax Act (hereinafter referred to as a "profit-making business" in this Article) conducted by said foreign corporation and also limited to | |
(limited to liabilities | which pertain to a domestic business (where said foreign corporation is an association or foundation without juridical personality, limited to liabilities pertaining to a profit-making business conducted by said foreign corporation and also limited to liabilities | |
Paragraph (1), item (ii), and paragraph (4) and paragraph (5) | domestic corporation | foreign corporation |
Paragraph (6) | in paragraph (10)) which pertain to | in paragraph (10) and paragraph (22)) of a domestic business (where said foreign corporation is an association or foundation without juridical personality, limited to liabilities pertaining to a profit- making business conducted by said foreign corporation) and which pertain to |
Paragraph (7) and paragraph (8) | domestic corporation | foreign corporation |
Paragraph (10) | a domestic corporation which seeks | a foreign corporation which seeks |
Paragraph (11), item (i) and item (ii) | domestic corporation | foreign corporation |
Paragraph (11), item (i) and item (ii) | a foreign corporation | any other foreign corporation |
Paragraph (11), item (iii) | domestic corporation | foreign corporation |
a nonresident (meaning a nonresident prescribed in Article 2, paragraph (1), item (i)-2 of the Act; the same shall apply in paragraph (28)) or a foreign corporation (hereinafter such nonresident or foreign corporation shall be referred to as a "nonresident, etc." in this item) | a nonresident (meaning a nonresident prescribed in Article 2, paragraph (1), item (i)-2 of the Act; the same shall apply in paragraph (28)) or any other foreign corporation | |
said nonresident, etc. | said nonresident or other foreign corporation | |
said foreign corporation's | said other foreign corporation's | |
Paragraph (13) and paragraph (15) | domestic corporation | foreign corporation |
Paragraph (22) | The amount calculated as specified by Cabinet Order as the amount of net assets prescribed in Article 66-5, paragraph (4), item (vii) of the Act | The amount calculated as specified by Cabinet Order as the interest on a domestic corporation's net assets that are held by a foreign controlling shareholder, etc. and the amount calculated as specified by Cabinet Order as the amount of net assets prescribed in Article 66- 5, paragraph (4), item (vii) of the Act |
Paragraph (22) | domestic corporation | foreign corporation |
Paragraph (22) | the amount of stated capital, etc. prescribed in Article 2, item (xvi) of the Corporation Tax Act on the final day of the relevant business year of said domestic corporation (where said amount of stated capital, etc. is less than the amount of stated capital or capital contributions, said amount of stated capital or capital contributions; | the amount obtained by multiplying the amount of stated capital, etc. prescribed in Article 2, item (xvi) of the Corporation Tax Act on the final day of the relevant business year of said domestic corporation by the ratio of the book value of the assets pertaining to a domestic business (where said foreign corporation is an association or foundation without juridical personality, limited to assets pertaining to a profit-making business conducted by said foreign corporation) out of the book value of the total assets on the same day ( |
the total assets | the total assets of a domestic business (where said foreign corporation is a corporation in the public interest, etc. or an association or foundation without juridical personality, limited to assets pertaining to a profit-making business conducted by said foreign corporation) | |
the total liabilities | the total liabilities which pertain to a domestic business (where said foreign corporation is a corporation in the public interest, etc. or an association or foundation without juridical personality, limited to liabilities pertaining to a profit- making business conducted by said foreign corporation) | |
Paragraph (23) | domestic corporation | foreign corporation |
(30) With respect to the application of the provisions of Article 22 of the Order for
Enforcement of the Corporation Tax Act in the case where the provisions of
Article 66-5, paragraph (1) of the Act shall apply, the term "the sum of the
amount of interest on liabilities prescribed in said paragraph to be paid for the relevant business year" in Article 22, paragraph
(1) of said Order shall be deemed to be replaced with "the sum of the amount of interest on liabilities
prescribed in said paragraph to be paid for the relevant business year (where
there is any amount that shall not be included in deductible expenses pursuant to the provisions of Article 66-5, paragraph (1) (Special
Provisions on Taxation
on Interest on Liabilities, etc. Payable to Foreign Controlling Shareholders,
etc.) of the Act on Special Measures Concerning Taxation, such sum shall be
the remaining amount after deducting said amount);" the term "the sum of the amount of interest on liabilities that a domestic
corporation set forth in said paragraph pays for the business year set forth in said paragraph" in paragraph (2) of said Article
shall be deemed to be replaced with "the sum of the amount
of interest on liabilities that a domestic corporation set forth in said paragraph pays for the business year set forth in said paragraph
(where there is any
amount that shall not be included in deductible expenses pursuant to the
provisions of Article 66-5, paragraph (1) (Special Provisions on Taxation on
Interest on Liabilities, etc. Payable to Foreign Controlling Shareholders, etc.) of the Act on Special Measures Concerning Taxation,
such sum shall be the remaining amount after deducting said amount);" the term "the amount listed in item (i)" in
paragraph (1) and paragraph (2) of said Article shall be deemed to be replaced with "the amount listed in item (i) (where there
is any amount
that shall not be included in deductible expenses pursuant to the provisions of
Article 66-5, paragraph (1) of the Act on Special Measures Concerning Taxation, such amount shall be the remaining amount after deducting
the amount
equivalent to the amount exceeding the average balance of liabilities
prescribed in Article 39-13, paragraph (1), item (i) (Calculation of the Amount
of Interest on Liabilities, etc. Payable to Foreign Controlling Shareholders, etc. to be Excluded from Deductible Expenses) of the
Order for Enforcement of the
Act on Special Measures Concerning Taxation (Cabinet Order No. 43 of 1957) (including the cases where it is applied by replacing the
terms under the
provisions of paragraph (9) of said Article) (in the case where the provisions of paragraph (1) of said Article is applied by replacing
the terms under the
provisions of paragraph (2) of said Article, after deducting the amount
equivalent to the amount exceeding the average balance of the total liabilities prescribed in said item which is applied by replacing
the terms under the
provisions of paragraph (2) of said Article));" the term "(hereinafter referred to
as the 'sum of" in paragraph (3) of said Article shall be deemed to be replaced with "(where there is any amount that
shall not be included in deductible
expenses pursuant to the provisions of Article 66-5, paragraph (1) of the Act on
Special Measures Concerning Taxation, the remaining amount after deducting said amount; hereinafter referred to as the 'sum of";
and the term "paragraph (4), item (i) of said Article" in said paragraph shall be deemed to be replaced
with "Article 23, paragraph (4), item (i) of the Act."
Section 8-4 Special Provisions on Taxation on Income of a Domestic
Corporation's Specified Foreign Subsidiaries
(Scope of Specified Foreign Subsidiaries, etc.)
Article 39-14 (1) The affiliated foreign company specified by Cabinet Order prescribed in Article 66-6, paragraph (1) of the Act
shall be any of the
following:
(i) An affiliated foreign company (meaning an affiliated foreign company
prescribed in Article 66-6, paragraph (2), item (i) of the Act; hereinafter the same shall apply in this Section) that has its head
office or principal office in a state or territory where there are no taxes imposed on corporate income
(ii) An affiliated foreign company whose tax imposed on its income for the relevant business year is 25 percent or less of said income.
(2) Whether or not an affiliated foreign company falls under the category of an affiliated foreign company set forth in item (ii)
of the preceding paragraph shall be determined as specified as follows:
(i) The amount of income set forth in item (ii) of the preceding paragraph shall
be the amount obtained by adding the amount of income calculated pursuant
to the provisions of the laws and regulations concerning foreign corporation
taxes (meaning foreign corporation taxes prescribed in Article 69, paragraph
(1) of the Corporation Tax Act; hereinafter the same shall apply in this
Section) of the state or territory where the head office or principal office of said affiliated foreign company is located (hereinafter
referred to as the
"state of the head office" in this Section) (where there are two or more laws
and regulations concerning said foreign corporation taxes, pursuant to the provisions of the principal ones; hereinafter referred
to as the "laws and
regulations of the state of the head office" in this paragraph) with regard to
said affiliated foreign company's amount of income in its settlement of
accounts for the relevant business year and the sum of the amounts listed in
(a) to (e) pertaining to said calculated amount of income and then deducting therefrom the amount listed in (f) pertaining to said
calculated amount of
income:
(a) The amount of income which shall not be included in the foreign
corporation tax base under the laws and regulations of the state of the head office (excluding the following amounts):
1. The amount of a dividend of surplus, dividend of profit or distribution of
surplus prescribed in Article 23, paragraph (1), item (i) of the
Corporation Tax Act (hereinafter referred to as a "dividend of surplus, etc." in this Section) received from a corporation
located in the state of the head office (including the amount specified in Article 66-8,
paragraph (1), item (ii) of the Act; hereinafter referred to as the
"amount of a dividend, etc." in this paragraph)
2. The amount of a dividend, etc. received from a corporation located in a state or territory other than the state of the head office,
which shall not be included in the foreign corporation tax base on condition that
the ratio of the shares, etc. (meaning the shares or capital
contributions; hereinafter the same shall apply in this Section) held by the affiliated foreign company out of the total number or
total amount
of said corporation's issued shares or capital contributions (excluding shares that said corporation holds in itself) (hereinafter
referred to as the "issued shares, etc." in this Section) is not less than the ratio
specified by said laws and regulations of the state of the head office
(b) The amount of a dividend, etc. that the affiliated foreign company shall pay and which is included in deductible expenses
(c) The amount of foreign corporation tax that the affiliated foreign company shall pay and which is included in deductible expenses
(d) The amount of reserves among the casualty reserves set forth in Article
57-5, paragraph (1) or Article 57-6, paragraph (1) of the Act (hereinafter referred to as the "insurance reserve" in this
paragraph and paragraph (2)
of the following Article) that the affiliated foreign company has set aside, which is included in deductible expenses, and which is
equivalent to the amount to be excluded from deductible expenses when the provisions of
Article 57-5 or Article 57-6 of the Act apply
(e) Where the amount that has been included in gross profits for the
insurance reserves set aside by the affiliated foreign company (limited to
the insurance reserves that can be set aside when the provisions of Article
57-5 or Article 57-6 of the Act apply) does not reach the amount that should be included in gross profits when these provisions apply,
the
amount of said shortfall
(f) The amount of foreign corporation tax that shall be refunded to the affiliated foreign company and which is included in gross
profits
(ii) The amount of tax set forth in item (ii) of the preceding paragraph shall be the sum of the amounts listed as follows:
(a) The amount of foreign corporation tax to be imposed on the amount of the
affiliated foreign company's income in its settlement of accounts for the relevant business year in the state of the head office
or in a state or
territory other than the state of the head office (including the amount to be
deducted from the foreign corporation tax of the state of the head office by deeming that said affiliated foreign company has paid
said amount under
the laws and regulations of the state of the head office and excluding the
amount of foreign corporation tax to be imposed on the amount listed in (a),
2. of the preceding item)
(b) The amount of foreign corporation tax reduced or exempted for the
affiliated foreign company for the relevant business year in the state of the head office, which is deemed to have been paid by said
affiliated foreign company pursuant to the provisions of a tax convention prescribed in
Article 1-3, paragraph (1), item (ii) in the case where the provisions of
Article 69, paragraph (8) or Article 81-15, paragraph (8) of the Corporation
Tax Act are applied to a domestic corporation pertaining to said affiliated foreign company
(iii) Where the foreign corporation tax rates of the state of the head office
increase in accordance with the amount of income, the amount of foreign corporation tax set forth in (a) of the preceding item shall
be the amount calculated based on the highest rates out of such tax rates
(iv) Where the amount of income set forth in item (ii) of the preceding
paragraph proves to be a loss, the amount of foreign corporation tax shall be determined based on the foreign corporation tax rate
to be applied in the
state of the head office to any income that arises from revenue pertaining to
the affiliated foreign company's principal business (in the case where said revenue falls under what is listed in 1. or 2. of
item (i), (a), revenue other
than said revenue).
(3) A nonresident who has a special relationship specified by Cabinet Order to a resident or domestic corporation prescribed in Article
66-6, paragraph (2), item (i) of the Act shall be a nonresident prescribed in Article 2, paragraph (1), item (i)-2 of the Act listed
as follows:
(i) A relative of the resident prescribed in Article 2, paragraph (1), item (i)-2 of
the Act (hereinafter referred to as a "resident" in this paragraph and Article
39-16, paragraph (3) and paragraph (8))
(ii) A person in a relationship with the resident where a marital relationship is de facto, though a marriage has not been registered
(iii) An employee of the resident
(iv) A person other than those listed in the preceding three items who maintains his/her living by receiving money or any other assets
from the resident
(v) A relative of any of the persons listed in the preceding three items who
depends on such person for his/her livelihood
(vi) An officer of the domestic corporation (meaning an officer prescribed in Article 2, item (xv) of the Corporation Tax Act; hereinafter
the same shall apply through to Article 39-16) and a person listed in the items of Article 72-
3 of the Order for Enforcement of the Corporation Tax Act with a relationship to said officer.
(Calculation of Amount of Undistributed Income of Specified Foreign
Subsidiaries, etc.)
Article 39-15 (1) The amount of undistributed income calculated in accordance with the standards specified by Cabinet Order prescribed
in Article 66-6,
paragraph (2), item (ii) of the Act shall be the remaining amount after
deducting the amount listed in item (iii) pertaining to the amount of income of a specified foreign subsidiary, etc. prescribed in
paragraph (1) of said Article (hereinafter referred to as a "specified foreign subsidiary, etc." in this Article and paragraphs
(1) to (3) of the following Article) in its settlement of accounts
for the relevant business year from the sum of the amount listed in item (i) and the amount listed in item (ii) pertaining to said
income (where the amount
listed in item (i) pertaining to said income is a loss, said amount of
undistributed income shall be the remaining amount after deducting the sum of said amount of loss and the amount listed in item (iii)
pertaining to said
amount of income from the amount listed in item (ii) pertaining to said amount of income):
(i) The amount of income or amount of a loss calculated, with regard to the
amount of income of a specified foreign subsidiary, etc. in its settlement of
accounts for the relevant business year, in accordance with the provisions of
Part II, Chapter I, Section 1, Subsection 2 to Subsection 9 (excluding Article
23, Article 26, paragraphs (1) to (4), Article 28, Articles 38 to 41, Article 55, paragraph (3), Article 57, Article 58, Article 59,
and Articles 61-11 to 61-13 of the Corporation Tax Act), and Subsection 11 of said Act, and the provisions
of Article 43, Article 45-2, Article 52-2, Article 57-5, Article 57-6, Article 57-8, Article 57-10, Article 61-4, Articles 65-7 to
65-9 (limited to the part
pertaining to item (xix) of the table in Article 65-7, paragraph (1) of the Act), Article 66-4, paragraph (3), Article 67-12 and Article
67-13 of the Act
(hereinafter referred to as the "provisions of the laws and regulations of
Japan" in this item) (where the provisions of Article 66-4, paragraph (1) or
Article 68-88, paragraph (1) of the Act is applied to a transaction with a
domestic corporation listed in the items of Article 66-6, paragraph (1) of the Act related to said specified foreign subsidiary, etc.,
the amount of income or amount of a loss calculated in accordance with the provisions of the laws and regulations of Japan by deeming
that the transaction was carried out at the
arm's length price prescribed in these provisions)
(ii) The amount of corporate income tax payable in the relevant business year (meaning taxes to be imposed based on the amount of
the corporation's income in the state of the head office or in a state or territory other than the
state of the head office or by local entities in such state or territory including the state of the head office (including taxes listed
in the items of Article 141, paragraph (2) of the Order for Enforcement of the Corporation Tax Act to be imposed in such state or
territory or by local entities in such state or
territory) and taxes equivalent to incidental taxes to be imposed incidentally
as prescribed in Article 2, item (xlv) of the Corporation Tax Act (excluding
interest tax) and other taxes similar to the tax equivalent to said incidental taxes; hereinafter the same shall apply in this Section)
(iii) The amount of corporate income tax to be refunded in the relevant business year.
(2) Notwithstanding the provisions of the preceding paragraph, a domestic
corporation listed in the items of Article 66-6, paragraph (1) of the Act may deem that the amount obtained by adding the amount of
income calculated,
with regard to the amount of income of a specified foreign subsidiary, etc. in its
settlement of accounts for the relevant business year, pursuant to the
provisions of the laws and regulations concerning corporate income taxes of the state of the head office of said specified foreign
subsidiary, etc. (where there
are two or more laws and regulations concerning said corporate income taxes, pursuant to the provisions of the principal ones; hereinafter
referred to as the "laws and regulations of the state of the head office" in this paragraph), (where the provisions of
Article 66-4, paragraph (1) or Article 68-88, paragraph (1) of
the Act is applied to a transaction between said specified foreign subsidiary,
etc. and said domestic corporation, the amount of income calculated pursuant to the provisions of the laws and regulations of the
state of the head office by deeming that the transaction was carried out at the arm's length price
prescribed in these provisions), and the sum of the amount listed in items (i) to
(xiii) pertaining to said calculated amount of income and then deducting
therefrom the amount listed in item (xiii) and item (xiv) pertaining to said
calculated amount of income (where the amount calculated pursuant to the
provisions of the laws and regulations of the state of the head office proves to be a loss, said amount shall be the remaining amount
after deducting the sum
of said amount of loss and the amount listed in items (xiv) to (xvi) pertaining to said calculated amount from the sum of the amounts
listed in items (i) to (xiii) pertaining to said calculated amount) shall be the amount calculated in
accordance with the standards specified by Cabinet Order prescribed in Article
66-6, paragraph (2), item (ii) of the Act:
(i) The amount of income which shall not be included in the corporate income
tax base for the relevant business year under the laws and regulations of the state of the head office
(ii) The amount of a dividend of surplus, etc. (including the amount specified in
Article 66-8, paragraph (1), item (ii) of the Act; referred to as the "amount of a dividend, etc." in the following paragraph)
that the specified foreign
subsidiary, etc. shall pay and which is included in deductible expenses for
the relevant business year
(iii) The excess amount that exceeds the amount equivalent to that to be included in deductible expenses, when the provisions of Article
31 of the Corporation Tax Act apply, out of the amount included in deductible
expenses for the relevant business year as the depreciation allowance for the depreciable assets that the specified foreign subsidiary,
etc. holds (excluding goodwill obtained on or before March 31, 1998) (such inclusive amount shall
be limited to the amount calculated, with the acquisition costs of said
depreciable assets (where there is any amount of past depreciation already included in deductible expenses for the relevant business
year, the amount after deducting said amount) as the limit of the amount to be included in deductible expenses for the relevant business
year)
(iv) The amount equivalent to that included in deductible expenses for the
relevant business year due to changes in the valuation of the assets that the specified foreign subsidiary, etc. holds, which is not
to be included in
deductible expenses when the provisions of Article 33 of the Corporation Tax
Act apply
(v) The amount equivalent to the amount of remuneration to be paid to the officers of the specified foreign subsidiary, etc. included
in deductible
expenses for the relevant business year, which is not to be included in
deductible expenses when the provisions of Article 34 or Article 35 of the
Corporation Tax Act apply
(vi) The amount equivalent to the amount of remuneration to be paid to
employees of the specified foreign subsidiary, etc. included in deductible expenses for the relevant business year, which is not to
be included in
deductible expenses when the provisions of Article 36 of the Corporation Tax
Act apply
(vii) The amount equivalent to the amount of a contribution that the specified foreign subsidiary, etc. makes (excluding a contribution
to the state of the head office or local entities in such state which is equivalent to that
prescribed in Article 37, paragraph (3), item (i) of the Corporation Tax Act), which is included in deductible expenses for the relevant
business year and which is not to be included in deductible expenses when the provisions of
paragraph (1) of said Article and Article 66-4, paragraph (3) of the Act shall apply
(viii) The amount of corporate income tax that the specified foreign subsidiary, etc. shall pay and which is included in deductible
expenses for the relevant
business year
(ix) The amount of a loss incurred in business years preceding said relevant
business year, pursuant to the provisions of the laws and regulations of the state of the head office that are equivalent to those
of Article 57, Article 58 or Article 59 of the Corporation Tax Act, which is included in deductible
expenses for the relevant business year
(x) The amount equivalent to the amount of insurance reserves that the specified foreign subsidiary, etc. has set aside, which is
included in
deductible expenses for the relevant business year and which is not to be included in deductible expenses when the provisions of Article
57-5 or Article
57-6 of the Act apply
(xi) Where the amount that has been included in gross profits for the relevant business year regarding the insurance reserves set
aside by the specified
foreign subsidiary, etc. (limited to the insurance reserves that can be set
aside when the provisions of Article 57-5 or Article 57-6 of the Act apply) is less than the amount that should be included in gross
profits when the
provisions of Article 57-5 or Article 57-6 of the Act apply, the amount of said shortfall
(xii) The amount equivalent to the amount of expenses equivalent to
entertainment and social expenses prescribed in Article 61-4, paragraph (1)
of the Act that the specified foreign subsidiary, etc. pays, which is included
in deductible expenses for the relevant business year and which is not to be included in deductible expenses when the provisions of
said Article apply
(xiii) The amount equivalent to the amount of a loss of the specified foreign
subsidiary, etc. (meaning the amount of a loss related to a partnership, etc. prescribed in Article 67-12, paragraph (1) of the Act
or the amount of a loss prescribed in Article 67-13, paragraph (1) of the Act incurred due to a
partnership business prescribed in said paragraph), which is not to be included in deductible expenses when the provisions of Article
67-12,
paragraph (1) or Article 67-13, paragraph (1) of the Act apply
(xiv) The amount equivalent to the amount which is to be included in
deductible expenses when the provisions of Article 67-12, paragraph (2) or
Article 67-13, paragraph (2) of the Act apply
(xv) The amount of corporate income tax to be refunded to the specified foreign subsidiary, etc. which is included in gross profits
for the relevant business
year
(xvi) The amount equivalent to that included in gross profits for the relevant business year due to changes in the valuation of the
assets that the specified foreign subsidiary, etc. holds, which is not to be included in gross profits
when the provisions of Article 25 of the Corporation Tax Act apply.
(3) Where there is any amount of deductible dividend, etc. (meaning the amount equivalent to the amount specified respectively in
the following items for the category of cases listed in the relevant items; hereinafter the same shall apply in this paragraph) for
the relevant business year of a specified foreign
subsidiary, etc. related to a domestic corporation listed in the items of Article
66-6, paragraph (1) of the Act, the amount calculated in accordance with the
standards specified by Cabinet Order prescribed in Article 66-6, paragraph (2), item (ii) of the Act shall be the remaining amount
after deducting said amount of deductible dividend, etc. from the amount calculated pursuant to these
provisions, notwithstanding the provisions of paragraph (1) or the preceding paragraph:
(i) Where the amount of a dividend, etc. that said specified foreign subsidiary, etc. receives from any other specified foreign subsidiary,
etc. related to said domestic corporation (including a specified foreign subsidiary, etc. prescribed in Article 68-90, paragraph
(1) of the Act; hereinafter referred to as the
"other specified foreign subsidiary, etc." in this paragraph) in the relevant business year does not exceed the amount of
a dividend payable
corresponding to the capital contributions of said specified foreign subsidiary, etc. out of the total amount of a dividend payable
by said other specified
foreign subsidiary, etc. in the business year including the base date for
paying said dividend, etc. (hereinafter referred to as the "base business year" in this paragraph) and said base business
year is the business year during
which the taxable retained income prescribed in Article 66-6, paragraph (1)
of the Act (hereinafter referred to as the "taxable retained income" in this
Section) or individually taxable retained income prescribed in Article 68-90,
paragraph (1) of the Act (hereinafter referred to as the "individually taxable retained income" in this Section) arises:
The amount of said dividend, etc.
(ii) Where the amount of a dividend, etc. that said specified foreign subsidiary, etc. receives from any other specified foreign subsidiary,
etc. related to said domestic corporation in the relevant business year exceeds the amount of a
dividend payable corresponding to the capital contributions for the base
business year pertaining to said amount of dividend, etc.: Where the amount of a dividend payable corresponding to the capital contributions
for the
relevant business year preceding the base business year of said other
specified foreign subsidiary, etc. shall be appropriated to said amount of
dividend, etc. in reverse chronological order and said amount of dividend, etc. has been categorized for the relevant business year
in accordance with said amount of dividend payable corresponding to the capital contributions for the relevant business year, the
sum of the amount of a dividend, etc. to be
appropriated with the amount of a dividend payable corresponding to the
capital contributions for the business year during which the taxable retained income or individually taxable retained income arises.
(4) In the preceding paragraph and this paragraph, the meanings of the terms
listed respectively in the following items shall be as specified respectively in the relevant items:
(i) The amount of a dividend payable: The remaining amount after deducting
the sum of the amounts listed as follows from the amount of undistributed income prescribed in Article 66-6, paragraph (2), item (ii)
of the Act for the relevant business year of a specified foreign subsidiary, etc. (where there is any amount of deductible dividend,
etc. prescribed in the preceding
paragraph, or where the provisions of Article 66-4, paragraph (1) or Article
68-88, paragraph (1) of the Act is applied to a transaction with a domestic corporation listed in the items of Article 66-6, paragraph
(1) of the Act
related to said specified foreign subsidiary, etc. and the amount of income to be reduced pursuant to the provisions of paragraph
(1) or paragraph (2)
contains any amount that shall not be paid to said domestic corporation, the amount obtained by adding together those amounts to such
amount of
undistributed income) (where the amount of corporate income tax to be
refunded as prescribed in (a) exceeds the amount of corporate income tax payable as prescribed in (a), such remaining amount shall
be the amount obtained by adding said amount of undistributed income and said excess
amount and then deducting therefrom the sum of the amounts listed in (b)
and (c)):
(a) The amount of corporate income tax payable in the relevant business year
(where there is any amount of corporate income tax to be refunded in the relevant business year, the remaining amount after deducting
said amount
of corporate income tax to be refunded)
(b) The amount payable due to the appropriation of surplus for the relevant business year (excluding the amount of corporate income
tax and the
amount of a dividend of surplus, etc.)
(c) The amount paid as the expenses for the relevant business year (excluding the amount of corporate income tax and the amount of
a dividend of surplus, etc.) which was included in the amount of
undistributed income prescribed in Article 66-6, paragraph (2), item (ii) of the Act for the relevant business year, because said
amount was not
included in deductible expenses for calculating the amount of income pursuant to the provisions of paragraph (1) or paragraph (2)
or was
included in the amount of income pursuant to the provisions of said
paragraph
(ii) The amount of a dividend payable corresponding to the capital
contributions: The amount obtained by multiplying the amount of a dividend payable by a specified foreign subsidiary, etc. by the
ratio of the number or
the amount of the shares, etc. of said specified foreign subsidiary, etc. that any other specified foreign subsidiary, etc. (hereinafter
referred to as the "other specified foreign subsidiary, etc." in this item) holds out of the total issued shares, etc.
of said specified foreign subsidiary, etc. (where said
specified foreign subsidiary, etc. has issued the shares, etc. in which claims
prescribed in Article 66-6, paragraph (1) of the Act (hereinafter referred to as the "claims" in this item and paragraph
(3) and paragraph (7) of the
following Article) with different contents are vested, or the shares, etc. in
which claims with different contents are deemed to be substantially vested
(referred to as the "shares, etc. in which different claims are vested" in
paragraph (3) of the following Article), the ratio of the amount of a dividend of surplus, etc. that said other specified foreign
subsidiary, etc. can receive
based on said claims out of the total amount of a dividend of surplus, etc.). (5) The amount obtained as a result of an adjustment
for the amount of a loss
prescribed in Article 66-6, paragraph (2), item (ii) of the Act shall be the amount obtained by calculating the amount of income,
pursuant to the
provisions of paragraph (1), paragraph (2) or paragraph (3), with regard to the
income of a specified foreign subsidiary, etc. in its settlement of accounts for
the relevant business year (hereinafter referred to as the "amount of adjusted income" in this paragraph and paragraph (7))
and then deducting therefrom
the amount equivalent to the sum of the loss incurred in business years that commenced within seven years before the first day of
the relevant business year (excluding business years that commenced before April 1, 1978 and business years during which the company
did not fall under the category of a specified foreign subsidiary, etc. (including specified foreign Subsidiaries, etc.
prescribed in Article 40-4, paragraph (1) or Article 68-90, paragraph (1) of the Act)) (such loss shall exclude the amount deducted
in business years preceding said relevant business year pursuant to the provisions of this paragraph or
Article 39-115, paragraph (5)) (where said sum of the loss exceeds the amount of adjusted income for the relevant business year, said
amount of adjusted
income).
(6) A loss prescribed in the preceding paragraph shall be a loss calculated where the provisions of paragraph (1), paragraph (2) or
paragraph (3) are applied to
the amount of income of a specified foreign subsidiary, etc. in its settlement of
accounts for the relevant business year.
(7) When making a calculation set forth in paragraph (1), item (i), if there is any amount to be included in deductible expenses in
the relevant business year,
pursuant to the provisions of Article 33 and Articles 42 to 53 of the Corporation Tax Act, and the provisions of Article 43, Article
45-2, Article 52-2, Article 57-5, Article 57-6, Article 57-8, Articles 65-7 to 65-9 (limited to the part pertaining
to item (xix) of the table in Article 65-7, paragraph (1) of the Act), Article 67-12,
paragraph (2) and Article 67-13, paragraph (2) of the Act, whose provisions are to apply under the provisions of said item, said amount
shall be included in
deductible expenses for calculating the amount of adjusted income for the
relevant business year, only when detailed statements concerning the inclusion of said amount in deductible expenses are attached
to a final return form for
the relevant business year set forth in Article 66-6, paragraph (5) of the Act;
provided, however, that this shall not apply when the district director of the
tax office finds that there was any unavoidable reason for the failure to attach detailed statements and said detailed statements
have been submitted.
(8) Where a domestic corporation, which was subject to the provisions of
paragraph (1) for calculating the amount of income of the specified foreign subsidiary, etc. in its settlement of accounts for the
relevant business year, seeks the application of paragraph (2) for calculating the amount of income of said specified foreign subsidiary,
etc. in its settlement of accounts for the
relevant business year in business years following the one to which the
provisions of paragraph (1) have been applied; or where a domestic corporation, which was subject to the provisions of paragraph (2)
for calculating the amount of income of the specified foreign subsidiary, etc. in its settlement of accounts for the relevant business
year, seeks the application of paragraph (1) for
calculating the amount of income of the specified foreign subsidiary, etc. in its
settlement of accounts for the relevant business year in business years
following the one to which the provisions of paragraph (2) have been applied, it shall receive approval from the competent district
director with jurisdiction
over its place for tax payment, in advance.
(Calculation, etc. of the Amount of Taxable Retained Income of Specified
Foreign Subsidiaries, etc. Related to Domestic Corporations)
Article 39-16 (1) The amount obtained as a result of an adjustment to the
amount of undistributed income set forth in Article 66-6, paragraph (1) of the
Act for the amount of taxes and a dividend of surplus, etc. on said
undistributed income shall be the remaining amount after deducting the sum of the amounts listed as follows from the amount of undistributed
income
prescribed in Article 66-6, paragraph (2), item (ii) (hereinafter referred to as the "amount of undistributed income" in
this paragraph) for the relevant
business year of a specified foreign subsidiary, etc. (where the amount of corporate income tax to be refunded as prescribed in item
(i) exceeds the amount of corporate income tax payable as prescribed in said item, such remaining amount shall be the amount obtained
by adding the amount of
undistributed income and said excess amount and then deducting therefrom
the amount listed in item (ii)). In this case, when the sum of the amounts listed in item (i) and item (ii) exceeds said amount of
undistributed income, the
amount listed in item (i) shall be deducted first and then the amount listed in item (ii) shall be deducted:
(i) The amount of corporate income tax payable in the relevant business year
(where there is any amount of corporate income tax to be refunded in the
relevant business year, the remaining amount after deducting said amount of corporate income tax to be refunded)
(ii) The sum of the amount of a dividend of surplus, etc. by deeming the
relevant business year to be the base business year (meaning the business year including the base day for paying a dividend of surplus,
etc.; hereinafter the same shall apply in this item) (such amount of dividend of surplus, etc.
shall be limited to that for which the payment obligation was fixed by the
final day of the business year of a domestic corporation related to said specified foreign subsidiary, etc., which includes the day
on which two months have elapsed after the day following the final day of the relevant business year; hereinafter the same shall
apply in this item) (where the
whole or a part of the amount of a dividend of surplus, etc. by deeming the relevant business year to be the base business year has
been paid to any
person listed as follows, said sum shall be deemed to be zero):
(a) Affiliated foreign companies related to said domestic corporation
(excluding a specified foreign subsidiary, etc. (including a specified foreign subsidiary, etc. prescribed in Article 68-90, paragraph
(1) of the Act)
related to said domestic corporation) whose tax burden imposed, in the
state of the head office, on the amount of the dividend of surplus, etc. that it receives is not more than the tax-burden base specified
by Ordinance of
the Ministry of Finance as being extremely low, compared with that
imposed on corporate income in Japan (referred to as the "low tax-burden base" in Article 39-19, paragraph (2))
(b) Other specified foreign Subsidiaries, etc. (including a specified foreign
subsidiary, etc. prescribed in Article 68-90, paragraph (1) of the Act; the same shall apply in item (iii) of the following paragraph)
related to said domestic corporation.
(2) The amount calculated as specified by Cabinet Order prescribed in Article 66-
6, paragraph (1) of the Act shall be the amount obtained by multiplying the
eligible retained income prescribed in said paragraph for the relevant business year of a specified foreign subsidiary, etc. related
to a domestic corporation
listed in the items of said paragraph (hereinafter referred to as the "eligible
retained income" in this Section) by the ratio of the shares, etc. for considering the claims held by said domestic corporation
out of the total issued shares, etc. of said specified foreign subsidiary, etc. at the end of the relevant business
year of said specified foreign subsidiary, etc. (where any of the events listed in
item (i) or item (ii) occurred with regard to said specified foreign subsidiary,
etc. or an event listed in item (iii) occurred with regard to an affiliated foreign company related to said domestic corporation (limited
to those that hold the
taxed amount of a dividend, etc. before deduction pertaining to said specified foreign subsidiary, etc.) in the relevant business
year of said domestic
corporation relating to the application of the provisions of said paragraph, such
amount shall be the remaining amount after deducting the amount specified respectively in these items from said calculated amount):
(i) An event listed in Article 66-8, paragraph (1), item (i) of the Act (limited to
the payment of a dividend of surplus, etc. which has not been deducted for calculating the amount of said eligible retained income
of said specified
foreign subsidiary, etc.): The amount obtained by multiplying the amount of
said dividend of surplus, etc. (where the amount of said dividend of surplus, etc. exceeds said eligible retained income, the amount
equivalent to said
eligible retained income) by the ratio of the shares, etc. for considering the
claims held by said domestic corporation out of the total issued shares, etc. of said specified foreign subsidiary, etc. at the end
of the relevant business year pertaining to said eligible retained income (excluding the shares, etc. for
considering the claims indirectly held via a person listed in item (ii), (a) and
(b) of the preceding paragraph with a relationship to said domestic corporation)
(ii) An event listed in Article 66-8, paragraph (1), item (ii) of the Act: The amount obtained by multiplying the amount specified
in said item by the ratio of the shares, etc. for considering the claims held by said domestic corporation out of the total issued
shares, etc. of said specified foreign
subsidiary, etc. at the time when said event occurred (where the amount
specified in said item has been delivered to a person listed in item (ii), (a)
and (b) of the preceding paragraph with a relationship to said domestic
corporation, excluding the shares, etc. for considering the claims indirectly held via such person)
(iii) An event listed in Article 66-8, paragraph (1), item (iii) of the Act: The
amount specified in said item (where said amount has been received from an affiliated foreign company that falls under the category
of any other specified foreign subsidiary, etc., the remaining amount after deducting from said
amount, the amount equivalent to the sum of the amount to be deducted for
calculating the amount of eligible retained income, taxable retained income or individually taxable retained income pertaining to
said other specified foreign subsidiary, etc. and the amount to be included in deductible expenses due to said event under the provisions
of said paragraph or Article 68-92,
paragraph (1) of the Act), with the taxed amount of a dividend, etc. before deduction as the upper limit.
(3) In the preceding paragraph and this paragraph, the meanings of the terms
listed respectively in the following items shall be as specified respectively in the relevant items:
(i) Shares, etc. for considering the claims held: The number or the amount
adding together the number or the amount of the shares, etc. of a foreign corporation directly held by a domestic corporation (where
said foreign
corporation has issued the shares, etc. in which different claims are vested,
the number or the amount obtained by multiplying the issued shares, etc. of said foreign corporation by the ratio of the amount of
a dividend of surplus,
etc. that said domestic corporation can receive based on said claims out of the total amount) and the shares, etc. for considering
the claims indirectly held
(ii) Shares, etc. for considering the claims indirectly held: The number or the
amount of the shares, etc. obtained by multiplying the issued shares, etc. of a first foreign corporation by the ratios specified
respectively in the following
items for the category of cases listed in the relevant items (where this falls
under both of the following cases, the sum of the ratios specified respectively as follows):
(a) Where a domestic corporation holds the whole or a part of the issued
shares, etc. of a second foreign corporation which is the shareholder, etc. (meaning a shareholder, etc. prescribed in Article 2,
item (xiv) of the
Corporation Tax Act; hereinafter the same shall apply in this Article) of a
first foreign corporation (hereinafter such second foreign corporation shall be simply referred to as the "second foreign corporation"
in (a)): The ratio
obtained by multiplying said domestic corporation's ratio of shareholding
(meaning the ratio of the number or the amount of the shares, etc. held by the shareholder, etc. out of the total issued shares, etc.
of the corporation
that issues said shares, etc. (where said issuing corporation has issued
shares, etc. in which different claims are vested, the ratio of the amount of a dividend of surplus, etc. that said shareholder, etc.
can receive based on
said claims out of the total amount); hereinafter the same shall apply in this item) in the second foreign corporation by the second
foreign
corporations' ratio of shareholding in the first foreign corporation (where
there are two or more such second foreign corporations, the sum of the ratios calculated for each of them)
(b) Where a single foreign corporation or two or more foreign corporations are
interposed between a first foreign corporation and a second foreign
corporation (limited to a second foreign corporation for which the whole or a part of the issued shares, etc. are held by a domestic
corporation;
hereinafter referred to as the "second foreign corporation" in this item) (hereinafter such interposed foreign corporations
shall be referred to as "foreign corporations related through capital contribution" in this item) and said domestic corporation,
said second foreign corporation, foreign
corporations related through capital contribution and said foreign
corporation have a link through the holding of shares, etc.: The ratio
obtained by multiplying said domestic corporation's ratio of shareholding in said second foreign corporation sequentially by said
second foreign
corporation's ratio of shareholding in the foreign corporation related
through capital contribution, by the foreign corporation related through capital contribution's ratio of shareholding in other
foreign corporations
related through capital contribution, and by the foreign corporation related
through capital contribution's ratio of shareholding in the first foreign corporation (where there are two or more links, the
sum of the ratios
calculated for each of them)
(iii) The taxed amount of a dividend, etc. before deduction: Out of the amount of a dividend of surplus, etc. which an affiliated
foreign company related to said domestic corporation has received from a specified foreign subsidiary,
etc. related to said domestic corporation during a period of two years or less
preceding the day on which an event listed in item (iii) of the preceding
paragraph occurred (such amount of dividend of surplus, etc. shall include
the amount specified in Article 66-8, paragraph (1), item (ii) of the Act) and which shall not be deducted for calculating the amount
of taxable retained income pertaining to said specified foreign subsidiary, etc., under the
provisions of the preceding paragraph (including the amount that shall not
be included in the amount calculated as specified by Cabinet Order
prescribed in Article 66-8, paragraph (1) of the Act pertaining to said
specified foreign subsidiary, etc., as calculated under the provisions of Article
39-19, paragraph (2) or paragraph (3)), the part which corresponds to the
shares, etc. for considering the claims of said specified foreign subsidiary, etc. indirectly held by said domestic corporation via
said affiliated foreign
company (such part shall exclude the amount already appropriated for the application of the provisions of the preceding paragraph,
paragraph (1) of
said Article, and Article 39-116, paragraph (2), and the provisions of Article
68-92, paragraph (1) of the Act).
(4) The deduction of the amount specified in the items of paragraph (2) under the provisions of said paragraph shall be made first
with the amount specified in
item (i) of said paragraph and then sequentially with the amount specified in
item (ii) of said paragraph and the amount specified in item (iii) of said paragraph.
(5) The number of the shares or the amount of capital contributions of a foreign
corporation specified by Cabinet Order as those held indirectly as prescribed in
Article 66-6, paragraph (2), item (iii) of the Act shall be the number or the amount of the shares, etc. obtained by multiplying the
issued shares, etc. of a first foreign corporation by the ratios specified respectively in the following
items for the category of cases listed in the relevant items (where this falls
under both of the following cases, the sum of the ratios specified respectively as follows):
(i) Where an individual or domestic corporation holds the whole or a part of the issued shares, etc. of a second foreign corporation
which is the shareholder,
etc. of a first foreign corporation (hereinafter referred to as the "second
foreign corporation" in this item): The ratio obtained by multiplying the ratio of shareholding (meaning the ratio of the number
or the amount of the shares, etc. held by the shareholder, etc. out of the total issued shares, etc. of the
corporation that issues said shares, etc.; hereinafter the same shall apply in this paragraph) of said individual or domestic corporation
in said second
foreign corporation by said second foreign corporation's ratio of shareholding in the first foreign corporation (where there are
two or more such second
foreign corporations, the sum of the ratios calculated for each of them)
(ii) Where a single foreign corporation or two or more foreign corporations are interposed between a first foreign corporation and
a second foreign
corporation (limited to a second foreign corporation for which the whole or a
part of the issued shares, etc. are held by an individual or domestic
corporation; hereinafter referred to as the "second foreign corporation" in
this paragraph) (hereinafter such interposed foreign corporations shall be
referred to as "foreign corporations related through capital contribution" in this paragraph) and said individual or domestic
corporation, said second
foreign corporation, foreign corporations related through capital contribution
and said first foreign corporation have a link through the holding of shares, etc.: The ratio obtained by multiplying the ratio of
the shareholding of said
individual or domestic corporation in said second foreign corporation
sequentially by said second foreign corporation's ratio of shareholding in the foreign corporation related through capital contribution,
by the foreign
corporation related through capital contribution's ratio of shareholding in
other foreign corporations related through capital contribution, and by the foreign corporation related through capital contribution's
ratio of
shareholding in the first foreign corporation (where there are two or more links, the sum of the ratios calculated for each of them).
(6) The number of voting rights of a foreign corporation specified by Cabinet
Order as being held indirectly as prescribed in Article 66-6, paragraph (2), item
(iv) of the Act shall be the number of voting rights obtained by multiplying the total number of voting rights (meaning the voting
rights prescribed in Article
66-6, paragraph (1), item (i), (a) of the Act; hereinafter the same shall apply in this paragraph) of a first foreign corporation
by the ratios specified
respectively in the following items for the category of cases listed in the
relevant items (where this falls under both of the following cases, the sum of the ratios specified respectively as follows):
(i) Where an individual or domestic corporation holds the whole or a part of the
voting rights of a second foreign corporation which are shareholders, etc. of said foreign corporation (hereinafter referred to as
"second foreign
corporation" in this item): The ratio obtained by multiplying the ratio of
voting rights (meaning the ratio of the number of voting rights held by the
shareholders, etc. out of the total number; hereinafter the same shall apply in this paragraph) of said individual or domestic corporation
pertaining to said second foreign corporation by said second foreign corporation' ratio of voting rights pertaining to said foreign
corporation (where there are two or
more second foreign corporations, the sum of the ratios calculated for each of
them)
(ii) Where a single foreign corporation or two or more foreign corporations are
interposed between said foreign corporation and a second foreign corporation (limited to a second foreign corporation for which the
whole or a part of the voting rights are held by an individual or domestic corporation; hereinafter referred to as the "second
foreign corporation" in this paragraph) (hereinafter such interposed foreign corporations shall be referred to as a "foreign
corporations related through capital contribution" in this paragraph) and said individual or domestic corporation, said second
foreign corporation, foreign corporations related through capital contribution and said foreign
corporation have a link through holding the voting rights: The ratio obtained by multiplying the ratio of voting rights of said individual
or domestic
corporation pertaining to said second foreign corporation sequentially by said second foreign corporation's ratio of voting rights
pertaining to the foreign
corporations related through capital contribution, by the foreign corporation related through capital contribution's ratio of
voting rights pertaining to
other foreign corporations related through capital contribution, and by the foreign corporation related through capital contribution's
ratio of voting
rights pertaining to said foreign corporation (where there are two or more links, the sum of the ratios calculated for each of them).
(7) The amount of a dividend of surplus, etc. specified by Cabinet Order as being receivable based on the claims vested in the shares,
etc. of a foreign
corporation held indirectly as prescribed in Article 66-6, paragraph (2), item (v)
of the Act shall be the amount of a dividend of surplus, etc. obtained by
multiplying the total amount of a dividend of surplus, etc. receivable based on the claims vested in the shares, etc. of a foreign
corporation by the ratio
specified respectively in the following items for the category of cases listed in
the relevant items (where this falls under both of the following cases, the sum of the ratios specified respectively as follows):
(i) Where an individual or domestic corporation holds the whole or a part of the claims vested in the shares, etc. of a second foreign
corporation which is the shareholder, etc. of said foreign corporation (hereinafter referred to as the
"second foreign corporation" in this item): The ratio obtained by multiplying
the ratio of claims (meaning the ratio of the amount of a dividend of surplus, etc. receivable based on the claims vested in the shares,
etc. held by the
shareholders, etc. out of the total amount; hereinafter the same shall apply in this paragraph) of said individual or domestic corporation
pertaining to said second foreign corporation by said second foreign corporation' ratio of
claims pertaining to said foreign corporation (where there are two or more
second foreign corporations, the sum of the ratios calculated for each of them)
(ii) Where a single foreign corporation or two or more foreign corporations are
interposed between said foreign corporation and a second foreign corporation (limited to a second foreign corporation for which the
whole or a part of the claims vested in the shares, etc. are held by an individual or domestic
corporation; hereinafter referred to as the "second foreign corporation" in
this paragraph) (hereinafter such interposed foreign corporations shall be
referred to as a "foreign corporations related through capital contribution" in this paragraph) and said individual or domestic
corporation, said second
foreign corporation, foreign corporations related through capital contribution
and said foreign corporation have a link through holding the claims vested in the shares, etc.: The ratio obtained by multiplying
the ratio of claims of said
individual or domestic corporation pertaining to said second foreign
corporation sequentially by said second foreign corporation's ratio of claims pertaining to the foreign corporations related through
capital contribution,
by the foreign corporation related through capital contribution's ratio of claims pertaining to other foreign corporations related
through capital contribution, and by the foreign corporation related through capital
contribution's ratio of claims pertaining to said foreign corporation (where
there are two or more links, the sum of the ratios calculated for each of them). (8) A person who has a special relationship specified
by Cabinet Order to a
resident or a domestic corporation prescribed in Article 66-6, paragraph (2), item (vi) of the Act shall be an individual or corporation
listed as follows:
(i) An individual listed as follows:
(a) A relative of the resident
(b) A person in a relationship with the resident where a marital relationship is de facto, though a marriage has not been registered
(c) An employee of the resident
(d) A person other than those listed in (a) to (c) who maintains his/her living by receiving money or any other assets from the resident
(e) A relative of any of the persons listed in (b) to (d) who depends on such person for his/her livelihood
(f) An officer of the domestic corporation and a person listed in the items of
Article 72-3 of the Order for Enforcement of the Corporation Tax Act with a relationship to said officer
(ii) A corporation listed as follows:
(a) Where a resident or a domestic corporation (including an individual who has a special relationship prescribed in the preceding
item to said resident or domestic corporation; hereinafter referred to as a "resident, etc." in this paragraph) controls
any other corporation, said other corporation
(b) Where a resident, etc. or a corporation which has a special relationship
prescribed in (a) to said resident, etc. controls any other corporation, said other corporation
(c) Where a resident, etc. or a corporation which has a special relationship prescribed in (a) and (b) to said resident, etc. controls
any other
corporation, said other corporation
(d) Where any of the two or more corporations which have a special
relationship prescribed in (a) to (c) to the same person is a resident, etc., a corporation other than the one falling under said
resident, etc. out of those which have such special relationship to the same person
(9) The provisions of Article 4, paragraph (3) of the Order for Enforcement of the
Corporation Tax Act shall apply mutatis mutandis when controlling any other corporation listed in (a) to (c) of item (ii) of the preceding
paragraph.
(10) The amount of expenses specified by Cabinet Order set forth in Article 66-6,
paragraph (1) of the Act which is applied by replacing the terms pursuant to the provisions of paragraph (3) of said Article shall
be the sum of personnel
expenses for officers and employees of a specified foreign subsidiary, etc.
engaged in the business at said specified foreign subsidiary, etc. prescribed in paragraph (3) of said Article (limited to the amount
of income calculated in
accordance with the provisions of the laws and regulations of Japan prescribed in paragraph (1), item (i) of the preceding Article
or pursuant to the provisions of paragraph (2) of said Article or the amount to be included in deductible
expenses for calculating the amount of a loss for the relevant business year of
said specified foreign subsidiary, etc.).
(Determination, etc. of Business of Specified Foreign Subsidiaries, etc.)
Article 39-17 (1) The persons specified by Cabinet Order prescribed in Article
66-6, paragraph (4), item (i) of the Act shall be any of the following:
(i) Other consolidated corporations which have the consolidated full controlling interest with a consolidated corporation listed in
the items of Article 68-90,
paragraph (1) of the Act which pertains to a specified foreign subsidiary, etc.
prescribed in Article 66-6, paragraph (4) of the Act (hereinafter referred to as a "specified foreign subsidiary, etc."
in this paragraph) that is mainly
engaged in business listed in item (i) of said paragraph
(ii) A person who holds over 50 percent of the total number or total amount of
the issued shares, etc. of a domestic corporation listed in the items of Article
66-6, paragraph (1) of the Act which pertains to a specified foreign subsidiary, etc. that is mainly engaged in business listed in
Article 66-6, paragraph (4), item (i) of the Act (excluding a person falling under any of those listed in the
items of Article 40-4, paragraph (1), items of Article 66-6, paragraph (1),
items of Article 68-90, paragraph (1) of the Act and the preceding item who is a person with a relationship to said specified foreign
subsidiary, etc.)
(iii) A person who holds over 50 percent of the total number or total amount of
the issued shares, etc. of a consolidated corporation listed in the items of
Article 68-90, paragraph (1) of the Act (where said consolidated corporation is a consolidated subsidiary corporation, a consolidated
parent corporation
related to said consolidated corporation) which pertains to a specified foreign subsidiary, etc. that is mainly engaged in business
listed in Article 66-6,
paragraph (4), item (i) of the Act (excluding a person falling under any of
those listed in the items of Article 40-4, paragraph (1), items of Article 66-6, paragraph (1), items of Article 68-90, paragraph
(1) of the Act and the
preceding two items who is a person with a relationship to said specified
foreign subsidiary, etc.)
(iv) Where a person listed in the items of Article 40-4, paragraph (1), items of
Article 66-6, paragraph (1) or items of Article 68-90, paragraph (1) of the Act with a relationship to a specified foreign subsidiary,
etc. that is mainly
engaged in business listed in Article 66-6, paragraph (4), item (i) of the Act
holds the shares, etc. indirectly pertaining to said specified foreign
subsidiary, etc. (such shares, etc. shall mean the number of the shares or the amount of the capital contributions of a foreign corporation
specified by
Cabinet Order as being held through indirect ownership as prescribed in
Article 66-6, paragraph (2), item (iii) of the Act), the second foreign
corporation prescribed in paragraph (5), item (i) of the preceding Article or the second foreign corporation and foreign corporations
related through
capital contribution prescribed in item (ii) of said paragraph which pertain to said shares, etc. held indirectly
(v) A person who has a special relationship specified by Cabinet Order
prescribed in Article 66-6, paragraph (2), item (vi) of the Act to any of the
persons listed as follows (excluding a person falling under any of those listed in the items of Article 40-4, paragraph (1), items
of Article 66-6, paragraph (1), items of Article 68-90, paragraph (1) of the Act and the preceding items
who is a person with a relationship to a specified foreign subsidiary, etc. that
is mainly engaged in business listed in Article 66-6, paragraph (4), item (i) of the Act):
(a) A specified foreign subsidiary, etc. that is mainly engaged in business
listed in Article 66-6, paragraph (4), item (i) of the Act
(b) A person listed in the items of Article 40-4, paragraph (1), items of Article
66-6, paragraph (1) or items of Article 68-90, paragraph (1) of the Act with a relationship to a specified foreign subsidiary, etc.
that is mainly engaged in business listed in Article 66-6, paragraph (4), item (i) of the Act
(c) A person listed in the preceding items.
(2) The case specified by Cabinet Order prescribed in Article 66-6, paragraph (4), item (i) of the Act shall be any of the cases specified
respectively in the
following items, in accordance with the category of the principal business to be
conducted for the relevant business year of a specified foreign subsidiary, etc. prescribed in said paragraph:
(i) Wholesale business: Where, out of the total revenue from selling inventory
assets for the relevant business year (where there are any commissions to be received for agent or intermediary services for the buying
or selling of
inventory assets for the relevant business year, such revenues shall include
the amount from the transactions for which said commissions were
generated; hereinafter referred to as the "amount of sales transactions" in this item), the ratio of the sum of the amount
of sales transactions with a
person other than affiliated persons (meaning those listed in the items of Article 40-4, paragraph (1), items of Article 66-6, paragraph
(1), items of Article 68-90, paragraph (1) of the Act and the items of the preceding
paragraph who are related to said specified foreign subsidiary, etc.;
hereinafter the same shall apply in this paragraph and the following
paragraph) exceeds 50 percent, or out of the sum of the acquisition costs for acquiring inventory assets for the relevant business
year (where there are
any commissions to be received for agent or intermediary services for the buying or selling of inventory assets for the relevant business
year, such acquisition costs shall include the amount of transactions for which said
commissions were generated; hereinafter referred to as the "amount of
purchase transactions" in this item), the ratio of the sum of the amount of
purchase transactions with a person other than affiliated persons exceeds 50 percent
(ii) Banking business: Where, out of the sum of the total interest received for the relevant business year, the ratio of the sum of
said interest to be received from a person other than affiliated persons exceeds 50 percent, or out of the
sum of the total interest paid for the relevant business year, the ratio of the
sum of said interest to be paid to a person other than affiliated persons exceeds 50 percent
(iii) Trust business: Where, out of the sum of the total trust charge for the relevant business year, the ratio of the sum of said
trust charge to be
received from a person other than affiliated persons exceeds 50 percent
(iv) Financial instruments business: Where, out of the sum of the total
commissions received (including profits from the buying and selling of securities) for the relevant business year, the ratio of the
sum of said commissions to be received from a person other than affiliated persons exceeds 50 percent
(v) Insurance business: Where, out of the sum of the total premium income for
the relevant business year, the ratio of the sum of said premium income to be received from a person other than affiliated persons
(where said premium
income pertains to reinsurance, limited to premium income from insurance
for assets held by a person other than affiliated persons or damages incurred by a person other than affiliated persons) exceeds 50
percent
(vi) Water transportation business or air transportation business: Where, out
of the total revenue from the operation or rental of vessels or operation or rental of aircraft for the relevant business year, the
ratio of the sum of said
revenue to be received from a person other than affiliated persons exceeds 50
percent.
(3) Where transactions prescribed in the preceding paragraph between a specified foreign subsidiary, etc. and an affiliated person
related to said
specified foreign subsidiary, etc. are conducted indirectly via a person other than an affiliated person related to said specified
foreign subsidiary, etc.
(hereinafter referred to as a "non-affiliated person" in this paragraph),
transactions between said specified foreign subsidiary, etc. and said non-
affiliated person shall be deemed to have been conducted directly between said
specified foreign subsidiary, etc. and said affiliated person and the provisions of the items of the preceding paragraph shall apply,
except in the case where
there are justifiable grounds for having said non-affiliated person intervene in such transactions.
(4) The water areas specified by Cabinet Order prescribed in Article 66-6,
paragraph (4), item (ii) of the Act shall be inland water and territorial sea and exclusive economic zones or water areas equivalent
to continental shelves
related to a state or territory prescribed in said item.
(5) The case specified by Cabinet Order prescribed in Article 66-6, paragraph (4), item (ii) of the Act shall be any of the cases
specified respectively in the
following items, in accordance with the category of the principal business to be conducted for the relevant business year of a specified
foreign subsidiary, etc.
prescribed in said paragraph:
(i) Real estate business: Where conducting a buying and selling or rental
business of real estate (including acts to let others use said real estate) (real estate shall include the rights thereon; hereinafter
the same shall apply in
this item) mainly located in the state of the head office, providing agent or intermediary services for the buying and selling or
rental business of said real estate, and managing said real estate
(ii) Rental and leasing business: Where conducting a rental business for goods to be provided for use mainly in the state of the head
office
(iii) Business other than those listed in paragraph (2) and the preceding two items: Where conducting a business mainly in the state
of the head office.
(Calculation, etc. of Foreign Corporation Tax on Taxable Retained Income of
Specified Foreign Subsidiaries, etc.)
Article 39-18 (1) The amount calculated as specified by Cabinet Order prescribed in Article 66-7, paragraph (1) of the Act shall
be the amount obtained by
multiplying the amount of foreign corporation tax to be imposed on a specified foreign subsidiary, etc. prescribed in said paragraph
(hereinafter referred to as a "specified foreign subsidiary, etc." in this Article) on its income for a business year containing
eligible retained income (hereinafter referred to as a "taxable
business year" through to paragraph (4)) by the ratio of the taxable retained
income pertaining to a domestic corporation prescribed in Article 66-7,
paragraph (1) of the Act out of the sum of the eligible retained income for the relevant taxable business year (where there is any
amount of deductible
dividend, etc. prescribed in Article 39-15, paragraph (3), the amount obtained by adding said amount) and the amount of a dividend
of surplus, etc. to be
deducted for calculating the amount of said eligible retained income (where
said amount exceeds said taxable retained income, the amount equivalent to said taxable retained income).
(2) In the case where a specified foreign subsidiary, etc. has been subject to two or more foreign corporation taxes or to a foreign
corporation tax twice or more on its income for a taxable business year, when a domestic corporation related to said specified foreign
subsidiary, etc. seeks the application of the provisions
of Article 66-7, paragraph (1) (including the cases where it is applied pursuant to the provisions of paragraph (2) of said Article
by deeming the amount to be
as specified therein; hereinafter the same shall apply in this Article) or Article
68-91, paragraph (1) (including the cases where it is applied pursuant to the provisions of paragraph (2) of said Article by deeming
the amount to be as specified therein; hereinafter the same shall apply in this Article) of the Act,
regarding the amount of said foreign corporation taxes in two or more business years or consolidated business years; with respect
to the application of the
provisions of Article 66-7, paragraph (1) of the Act for a business year following the first one of said two or more business years
or consolidated business years,
the amount obtained by deducting the amount listed in item (ii) (the amount
listed in item (iii), when seeking the application of the provisions of Article 66-
7, paragraph (1) of the Act for the first time after receiving the application of
the provisions of Article 68-91, paragraph (1) of the Act) from the amount listed in item (i) shall be deemed to be the calculated
amount prescribed in the
preceding paragraph:
(i) The amount calculated pursuant to the provisions of the preceding
paragraph regarding the sum of the amount of foreign corporation taxes that were imposed on income for the relevant taxable business
year by the final
day of a business year subject to the provisions of Article 66-7, paragraph (1)
of the Act (hereinafter referred to as the "applicable business year" in this paragraph) (such amount of foreign corporation
taxes shall be limited to
those to which the provisions of Article 66-7, paragraph (1) or Article 68-91,
paragraph (1) of the Act, pursuant to the provisions of paragraph (4) or
Article 39-118, paragraph (4); hereinafter the same shall apply in this paragraph)
(ii) The amount calculated pursuant to the provisions of the preceding
paragraph regarding the sum of the amount of foreign corporation taxes that were imposed on income for the relevant taxable business
year by the day
preceding the first day of the applicable business year
(iii) The amount calculated pursuant to the provisions of Article 39-118,
paragraph (1) regarding the sum of the amount of foreign corporation taxes that were imposed on income for the relevant taxable business
year by the
day preceding the first day of the applicable business year.
(3) Out of the amount of foreign corporation taxes that were imposed on a
specified foreign subsidiary, etc. on its income for a taxable business year, the amount deemed to be the amount of creditable foreign
corporation taxes
prescribed in Article 66-7, paragraph (1) of the Act that shall be paid by a
domestic corporation related to said specified foreign subsidiary, etc., pursuant to the provisions of said paragraph, (hereinafter
referred to as the "amount of
creditable foreign corporation taxes" in this Article) shall be deemed to be
payable by the domestic corporation in a business year specified respectively in the following items for the category of foreign corporation
taxes listed in the
relevant items:
(i) The foreign corporation tax that was imposed on the domestic corporation on its income for the relevant taxable business year
of said specified foreign subsidiary, etc. on or prior to the final day of the business year for which the provisions of Article
66-6, paragraph (1) of the Act are applied regarding the
amount equivalent to the taxable retained income for the relevant taxable
business year: The business year subject to the provisions of Article 66-6, paragraph (1) of the Act
(ii) The foreign corporation tax that was imposed on the domestic corporation
on its income for the relevant taxable business year of said specified foreign subsidiary, etc. after the final day of the business
year for which the
provisions of Article 66-6, paragraph (1) of the Act are applied regarding the
amount equivalent to the taxable retained income for the relevant taxable
business year (where the provisions of Article 66-7, paragraph (2) of the Act are applied, after the final day of the consolidated
business year for which
the provisions of Article 68-90, paragraph (1) of the Act were applied
regarding the amount equivalent to the individually taxable retained income for the relevant taxable business year): Said business
year involving the day on which the tax was imposed.
(4) Where a specified foreign subsidiary, etc. has been subject to two or more
foreign corporation taxes or to a foreign corporation tax twice or more on its income for a taxable business year, a domestic corporation
to which the
provisions of Article 66-6, paragraph (1) of the Act are applied, regarding the amount equivalent to the taxable retained income for
the relevant taxable business year of said specified foreign subsidiary, etc., shall choose whether or not it will seek the application
of the provisions of Article 66-7, paragraph (1)
of the Act regarding the amount of respective foreign corporation taxes on the
taxable retained income subject to the provisions of Article 66-6, paragraph (1)
of the Act.
(5) In the case where a domestic corporation was subject to the provisions of
Article 66-7, paragraph (1) of the Act, regarding the amount of foreign
corporation tax imposed on the income of a specified foreign subsidiary, etc. related to the domestic corporation, when said amount
of foreign corporation tax was reduced in a business year after the business year subject to the
provisions of said paragraph (hereinafter referred to as the "applicable
business year" in this paragraph), it shall be deemed that the remaining
amount after deducting the amount listed in item (ii) from the amount listed in item (i) has been reduced from the part of said amount
of foreign corporation
tax that was deemed to be the amount of creditable foreign corporation tax
payable by the domestic corporation, pursuant to the provisions of paragraph
(1) of said Article, as on the day of the reduction of said foreign corporation tax: (i) The part of said amount of foreign corporation
tax that was deemed to be
the amount of creditable foreign corporation tax payable by the domestic corporation in the applicable business year
(ii) The part that is deemed to be the amount of creditable foreign corporation tax payable by the domestic corporation when the provisions
of Article 66-7, paragraph (1) of the Act are applied in the applicable business year to said amount of foreign corporation tax after
the reduction.
(6) In the case where a domestic corporation was subject to the provisions of
Article 68-91, paragraph (1) of the Act, regarding the amount of foreign
corporation tax imposed on the income of a specified foreign subsidiary, etc. related to the domestic corporation, when said amount
of foreign corporation
tax was reduced in a business year after the consolidated business year subject
to the provisions of said paragraph (hereinafter referred to as the "applicable consolidated business year" in this paragraph),
it shall be deemed that the remaining amount after deducting the amount listed in item (ii) from the amount listed in item (i) has
been reduced from the part of said amount of
foreign corporation tax that was deemed to be the amount of individually creditable foreign corporation tax payable by the domestic
corporation,
pursuant to the provisions of paragraph (1) of said Article (hereinafter referred to as the "amount of individually creditable
foreign corporation tax" in this
Article), as on the day of the reduction of said foreign corporation tax:
(i) The part of said amount of foreign corporation tax that was deemed to be
the amount of individually creditable foreign corporation tax payable by the domestic corporation in the applicable consolidated business
year
(ii) The part that is deemed to be the amount of individually creditable foreign corporation tax payable by the domestic corporation
when the provisions of
Article 68-91, paragraph (1) of the Act are applied in the applicable
consolidated business year to said amount of foreign corporation tax after the reduction.
(7) Where the amount of creditable foreign corporation tax or individually
creditable foreign corporation tax has been deemed to have been reduced,
pursuant to the provisions of paragraph (5) or the preceding paragraph, the
provisions of Article 69, paragraph (10) of the Corporation Tax Act shall apply as specified in Article 150 (excluding paragraph (2))
of the Order for
Enforcement of the Corporation Tax Act. In this case, in paragraph (1) of said
Article, the term "Article 69, paragraph (8) of the Act (including the cases
where it is applied pursuant to the provisions of paragraph (9) of said Article by deeming the amount to be as specified therein)"
shall be deemed to be
replaced with "Article 69, paragraph (8) of the Act (including the cases where it is applied pursuant to the provisions of paragraph
(9) of said Article by
deeming the amount to be as specified therein) and Article 66-7, paragraph (1)
(Credit for Foreign Tax on Taxable Retained Income of Specified Foreign
Subsidiaries, etc. of Domestic Corporations) of the Act on Special Measures Concerning Taxation (including the cases where it is applied
pursuant to the provisions of paragraph (2) of said Article);" and the term "the amount of
reduced creditable foreign corporation tax" shall be deemed to be replaced with
"the amount of reduced creditable foreign corporation tax (including the
amount of creditable foreign corporation tax or individually creditable foreign corporation tax that is deemed to have been reduced
pursuant to the provisions of Article 39-18, paragraph (5) or paragraph (6) (Reduction of Foreign
Corporation Tax on Taxable Retained Income of Specified Foreign Subsidiaries,
etc.) of the Order for Enforcement of the Act on Special Measures Concerning
Taxation)."
(8) Where there is any amount included in the gross profits pursuant to the
provisions of Article 66-6, paragraph (1) of the Act for calculating the amount of income for the relevant business year of a domestic
corporation listed in the items of said paragraph, said amount included in gross profits shall be
included in the foreign income prescribed in the main clause of Article 142, paragraph (3) of the Order for Enforcement of the Corporation
Tax Act for
calculating the maximum amount of deduction prescribed in Article 69,
paragraph (1) of the Corporation Tax Act for the relevant business year of said domestic corporation; provided, however, that in the
case where the state of the head office of a specified foreign subsidiary, etc. related to the domestic
corporation is a state or territory that does not impose any foreign corporation taxes prescribed in Article 141, paragraph (1) of
said Order on the income of said specified foreign subsidiary, etc., the amount to be included in said foreign income shall be the
amount equivalent to one-third of said amount included in
the gross profits.
(9) The part of the amount of foreign corporation taxes listed in the items of paragraph (3) that are deemed to be the amount of creditable
foreign
corporation tax payable by a domestic corporation related to a specified foreign
subsidiary, etc., pursuant to the provisions of Article 66-7, paragraph (1) of the
Act, shall be included in foreign income prescribed in the main clause of Article
142, paragraph (3) of the Order for Enforcement of the Corporation Tax Act for calculating the maximum amount of deduction prescribed
in Article 69,
paragraph (1) of the Corporation Tax Act for a business year specified
respectively in the relevant items of the domestic corporation.
(10) Out of the amount deemed to have been reduced from the amount of
creditable foreign corporation tax or individually creditable foreign corporation tax, pursuant to the provisions of paragraph (5)
or paragraph (6), the amount
equivalent to the amount to be appropriated, pursuant to the provisions of
paragraph (7), for deduction from the amount of creditable foreign corporation tax to be paid prescribed in Article 150, paragraph
(1) of the Order for
Enforcement of the Corporation Tax Act under the provisions of said paragraph or for deduction from the amount exceeding the maximum
amount of deduction prescribed in paragraph (3) of said Article under the provisions of said
paragraph shall be included in deductible expenses for calculating the amount
of income for a business year of a domestic corporation prescribed in paragraph
(5) or paragraph (6) for making such deduction. In this case, said amount to be included in deductible expenses shall be allocated
as the amount of deductible expenses for calculating the amount of foreign income prescribed in the main
clause of Article 142, paragraph (3) of said Order.
(11) The business year specified by Cabinet Order prescribed in Article 66-7,
paragraph (3) of the Act shall be the business year specified respectively in the items of paragraph (3), in accordance with the category
of the amount of
foreign corporation tax imposed on the income of a specified foreign subsidiary, etc.
(12) In the case where there is any taxed amount of retained income prescribed in Article 66-8, paragraph (1) of the Act (including
the amount deemed to be
the taxed amount of retained income pursuant to the provisions of paragraph
(2) or paragraph (3) of said Article) that was included in deductible expenses for calculating the amount of income for the relevant
business year of a
domestic corporation prescribed in Article 66-8, paragraph (1) of the Act,
pursuant to the provisions of said paragraph, in the business year of the
domestic corporation including the day on which any of the events listed in the items of said paragraph occurred with regard to a
specified foreign subsidiary, etc. related to said domestic corporation, or an affiliated foreign company
related to said domestic corporation, when said taxed amount of retained income included in deductible expenses includes the amount
of foreign
corporation tax on said specified foreign subsidiary, etc. that was deemed to be the amount of creditable foreign corporation tax
payable by said domestic
corporation, pursuant to the provisions of Article 66-7, paragraph (1) of the Act,
and which consists of taxable retained income pertaining to what was the basis for calculating the amount for which a deduction under
the provisions of
Article 69, paragraphs (1) to (3) of the Corporation Tax Act shall be made,
pursuant to the provisions of Article 66-7, paragraph (1) of the Act, or that was deemed to be the amount of individually creditable
foreign corporation tax
payable by said domestic corporation, pursuant to the provisions of Article 68-
91, paragraph (1) of the Act, and which consists of individually taxable
retained income pertaining to what was the basis for calculating the amount
for which a deduction under the provisions of Article 81-15, paragraphs (1) to
(3) of the Corporation Tax Act shall be made, pursuant to the provisions of
Article 68-91, paragraph (1) of the Act, the part of the amount corresponding to the amount of foreign corporation tax on the specified
foreign subsidiary, etc.
that was deemed to be the amount of creditable foreign corporation tax payable by said domestic corporation, which was the basis for
said calculation, and
which consists of said taxable retained income or the part of the amount
corresponding to the amount of foreign corporation tax on the specified foreign subsidiary, etc. that was deemed to be the amount
of individually creditable foreign corporation tax payable by said domestic corporation, which was the basis for said calculation,
and which consists of said individually taxable
retained income shall be deemed to have been reduced on the final day of the
relevant business year. In this case, the provisions of Article 69, paragraph
(10) of said Act shall apply by replacing the terms in said paragraph as follows:
the term "the part of the amount deemed to be payable by said domestic
corporation pursuant to the provisions of paragraph (8)" shall be deemed to be replaced with "the part of the amount deemed
to be payable by said domestic corporation pursuant to the provisions of paragraph (8), and out of the amount of foreign corporation
tax to be imposed on the income of a specified foreign
subsidiary, etc. prescribed in Article 66-7, paragraph (1) (Credit for Foreign
Tax on Taxable Retained Income of Specified Foreign Subsidiaries, etc. of
Domestic Corporations) of the Act on Special Measures Concerning Taxation, the part of the amount deemed to be payable by said domestic
corporation
pursuant to the provisions of said paragraph;" the term "in the case where said
amount of foreign corporation tax was reduced (" shall be deemed to be
replaced with "in the case where said amount of foreign corporation tax was reduced (in the case where the reduction is deemed
to have been made
pursuant to the provisions of Article 39-18, paragraph (12) (Calculation, etc. of
Foreign Corporation Tax on Taxable Retained Income of Specified Foreign
Subsidiaries, etc.) of the Order for Enforcement of the Act on Special Measures
Concerning Taxation; or" the term "the part of the amount deemed to be
payable by said domestic corporation pursuant to the provisions of paragraph (8) of said Article" shall be deemed to be replaced
with "the part of the amount deemed to be payable by said domestic corporation pursuant to the provisions of paragraph (8) of
said Article, and out of the amount of foreign corporation
tax to be imposed on the income of a specified foreign subsidiary, etc.
prescribed in Article 68-91, paragraph (1) (Credit for Foreign Tax on the
Individually Taxable Retained Income of the Specified Foreign Subsidiary, etc.
of a Consolidated Corporation) of said Act, the part of the amount deemed to be payable by said domestic corporation pursuant to the
provisions of said
paragraph;" and the term "paragraphs (1) to (3) of said Article" shall be deemed to be replaced with "Article
81-15, paragraphs (1) to (3)."
(13) The provisions of paragraph (7) shall apply mutatis mutandis where the amount of creditable foreign corporation tax or individually
creditable foreign corporation tax is deemed to have been reduced pursuant to the provisions of
the preceding paragraph.
(14) The amount of foreign corporation tax that was deemed to be the part of the
creditable foreign corporation tax payable by a domestic corporation prescribed in paragraph (12), pursuant to the provisions of Article
66-7, paragraph (1) of
the Act, that is deemed to have been reduced pursuant to the provisions of
paragraph (12) shall be included in deductible expenses for calculating the amount of income for a business year prescribed in said
paragraph of said
domestic corporation. In this case, said amount to be included in deductible
expenses shall be allocated as the amount of deductible expenses for
calculating the amount of foreign income prescribed in the main clause of
Article 142, paragraph (3) of the Order for Enforcement of the Corporation Tax
Act.
(15) With respect to the application of the provisions of Article 73 of the Order for
Enforcement of the Corporation Tax Act in the business year subject to the
provisions of the preceding paragraph of a domestic corporation prescribed in said paragraph, the term "(Inclusion in Gross Profits
of the Amount of Foreign Tax of Specified Foreign Subsidiaries, etc. to be Deducted from Corporation
Tax)" in paragraph (2), item (x) of said Article shall be deemed to be replaced
with "(Inclusion in Gross Profits of the Amount of Foreign Tax of Specified
Foreign Subsidiaries, etc. to be Deducted from Corporation Tax) and Article 39-
18, paragraph (14) (Calculation, etc. of Foreign Corporation Tax on Taxable
Retained Income of Specified Foreign Subsidiaries, etc.) of the Order for
Enforcement of the Act on Special Measures Concerning Taxation."
(16) The provisions of Article 66-8, paragraph (5) and paragraph (6) of the Act shall apply mutatis mutandis where the provisions
of paragraph (14) shall
apply.
(17) In the case where there is any amount to be included in deductible expenses for calculating the amount of income for the relevant
business year of a
domestic corporation prescribed in Article 66-8, paragraph (1) of the Act,
pursuant to the provisions of said paragraph, in the business year of said
domestic corporation including the day on which any of the events listed in the items of said paragraph occurred, with regard to a
specified foreign subsidiary, etc. related to said domestic corporation, or an affiliated foreign company
related to said domestic corporation; with regard to the calculation of the
maximum amount of deduction prescribed in Article 69, paragraph (1) of the
Corporation Tax Act for the relevant business year of said domestic corporation, said amount included in deductible expenses shall
be allocated as the amount
of deductible expenses for calculating the amount of foreign income prescribed
in the main clause of Article 142, paragraph (3) of the Order for Enforcement of the Corporation Tax Act; provided however, that in
the case where the state of
the head office of the specified foreign subsidiary, etc. is a state or territory
that does not impose any foreign corporation taxes prescribed in Article 141,
paragraph (1) of said Order on the income of said specified foreign subsidiary, etc., the amount to be allocated as the amount of
deductible expenses for
calculating the amount of said foreign income shall be the amount equivalent to one-third of said amount included in the deductible
expenses.
(Calculation of the Taxed Amount of Dividend, etc. of Specified Foreign
Subsidiaries, etc.)
Article 39-19 (1) The affiliated foreign company prescribed in Article 66-8,
paragraph (1) of the Act which is specified by Cabinet Order shall be one of the affiliated foreign companies that holds the taxed
amount of a dividend, etc. before deduction prescribed in Article 39-16, paragraph (3), item (iii) (referred to as the "taxed
amount of a dividend, etc. before deduction" in the following
paragraph) pertaining to a specified foreign subsidiary, etc. prescribed in
Article 66-8, paragraph (1) of the Act (hereinafter referred to as a "specified foreign subsidiary, etc." in this Article).
(2) The amount calculated as specified by Cabinet Order prescribed in Article 66-
8, paragraph (1) of the Act shall be the amount specified respectively in the
following items for the category of cases listed in the relevant items (excluding the amount to be deducted for calculating the amount
of taxable retained income, pursuant to the provisions of Article 39-16, paragraph (2), pertaining to a specified foreign subsidiary,
etc.):
(i) Where an event listed in Article 66-8, paragraph (1), item (i) of the Act has
occurred with regard to a specified foreign subsidiary, etc. related to a
domestic corporation prescribed in said paragraph (excluding the case where said event occurred during the business year or consolidated
business year
preceding the business year of the domestic corporation including the day on which two months had elapsed after the day following
the final day of the business year of the specified foreign subsidiary, etc. including the base day
for the payment of a dividend of surplus, etc. specified in Article 66-8,
paragraph (1), item (i) of the Act (hereinafter the business year including such base day shall be referred to as the "base business
year" in this item and the following paragraph, and such business year of the domestic
corporation shall be referred to as the "applicable business year" in the
following paragraph)), when said amount of a dividend of surplus, etc. proves to exceed the amount of a dividend of surplus, etc.
to be deducted for
calculating the amount of eligible retained income prescribed in Article 66-6, paragraph (1) of the Act for the relevant base business
year of the specified foreign subsidiary, etc.: The amount obtained by multiplying said excess amount by the ratio of the shares,
etc. for considering the claims held by said
domestic corporation that are prescribed in Article 39-16, paragraph (3), item
(i) out of the total issued shares, etc. of said specified foreign subsidiary, etc.
at the end of said base business year (in the case where a dividend of surplus, etc. has been paid to an affiliated foreign company
related to the domestic
corporation (excluding a specified foreign subsidiary, etc. related to the domestic corporation and a specified foreign subsidiary,
etc. prescribed in
Article 68-90, paragraph (1) of the Act; hereinafter the same shall apply in
this paragraph) whose tax burden imposed in the state of the head office on the amount of the dividend of surplus, etc. that it receives
is not more than the low tax-burden base or to any other specified foreign subsidiary, etc.
related to the domestic corporation (including a specified foreign subsidiary, etc. prescribed in Article 68-90, paragraph (1) of
the Act; hereinafter the same shall apply in this paragraph); excluding the shares, etc. for
considering the claims indirectly held (meaning the shares, etc. for
considering the claims indirectly held prescribed in Article 39-16, paragraph (3), item (ii); the same shall apply in the following
item) via said affiliated foreign company and said other specified foreign subsidiary, etc.)
(ii) Where an event listed in Article 66-8, paragraph (1), item (ii) of the Act has
occurred with regard to a specified foreign subsidiary, etc. related to a domestic corporation prescribed in said paragraph: The amount
obtained by multiplying the amount specified in said item by the ratio of the shares, etc. for considering the claims held by said
domestic corporation that are
prescribed in Article 39-16, paragraph (3), item (i) out of the total issued shares, etc. of said specified foreign subsidiary, etc.
at the time when said event occurred (in the case where money or any other assets have been
delivered to an affiliated foreign company related to the domestic corporation whose tax burden imposed in the state of the head office
on the amount that
it receives as specified in Article 66-8, paragraph (1), item (ii) of the Act is not more than the low tax-burden base or to any other
specified foreign
subsidiary, etc. related to the domestic corporation; excluding the shares, etc.
for considering the claims indirectly held via said affiliated foreign company and said other specified foreign subsidiary, etc.)
(iii) Where an event listed in Article 66-8, paragraph (1), item (iii) of the Act
has occurred with regard to an affiliated foreign company related to a
domestic corporation prescribed in said paragraph: The amount specified in
said item (where said amount has been received from an affiliated foreign company that falls under the category of any other specified
foreign
subsidiary, etc., the remaining amount after deducting from said amount, the amount equivalent to the sum of the amount to be deducted
for calculating
the amount of eligible retained income, taxable retained income or individually taxable retained income pertaining to said other specified
foreign subsidiary, etc. and the amount to be included in deductible expenses due to said event, under the provisions of said paragraph
or Article 68-92,
paragraph (1) of the Act), with the taxed amount of a dividend, etc. before
deduction as the upper limit.
(3) With respect to the application of the provisions of item (i) of the preceding paragraph, in the case where payment has been made
for two or more
dividends of surplus, etc. whose base dates for the payment are included in the base business year, with regard to a specified foreign
subsidiary, etc. related to a domestic corporation prescribed in Article 66-8, paragraph (1) of the Act
(where payment was made for said two or more dividends of surplus, etc. on a
day within a business year or consolidated business year preceding the
applicable business year pertaining to the base business year for said dividend of surplus, etc. (hereinafter such paid dividend of
surplus, etc. shall be referred to as a "specified dividend of surplus, etc." in this paragraph), excluding said
two or more dividends of surplus) (including the cases where payment has been
made for a specified dividend of surplus, etc. and payment has not been made for a dividend of surplus, etc. whose base date for payment
is included in said base business year, up to the day on which six months have elapsed after the final day of the base business year
for said specified dividend of surplus, etc.);
the amount specified in item (i) of the preceding paragraph shall be the amount obtained by multiplying the excess amount when the
amount listed in item (i) exceeds the amount listed in item (ii) by the ratio prescribed in item (i) of said
paragraph and then deducting therefrom the amounts listed in item (iii) and item (iv):
(i) The sum of a dividend of surplus, etc. (limited to that whose base date for payment is included in said base business year) that
said specified foreign subsidiary, etc. has paid, up to the final day of the business year of the domestic corporation including
the day on which an event listed in Article
66-8, paragraph (1), item (i) of the Act occurred (where no dividend of surplus, etc. other than a specified dividend of surplus,
etc. was paid, up to the final
day of the business year including the day on which six months have elapsed after the final day of the base business year for said
specified dividend of
surplus, etc.)
(ii) The sum of the amounts to be deducted for calculating the amount of
eligible retained income for said base business year of said specified foreign
subsidiary, etc., with regard to the sum of the dividends of surplus, etc. set forth in the preceding item
(iii) The sum of the amounts to be deducted for calculating the amount of
taxable retained income for said base business year of said specified foreign subsidiary, etc., with regard to the sum of the dividends
of surplus, etc. set
forth in item (i)
(iv) The sum of the amounts included in deductible expenses, pursuant to the provisions of said paragraph or Article 68-92, paragraph
(1) of the Act, in a business year or consolidated business year preceding the business year of said domestic corporation that includes
the day on which an event listed in Article 66-8, paragraph (1), item (i) of the Act occurred, with regard to the
sum of the dividends of surplus, etc. set forth in item (i).
(4) In the case where a domestic corporation prescribed in Article 66-8,
paragraph (1) of the Act holds the taxed amount of retained income prescribed
in said paragraph that pertains to a specified foreign subsidiary, etc. related to said domestic corporation, and the taxed amount
of retained income prescribed in Article 66-9-8, paragraph (1) of the Act that pertains to a specified foreign corporation prescribed
in Article 66-9-6, paragraph (1) of the Act (limited to a foreign corporation that is the same as said specified foreign subsidiary,
etc.) related to said domestic corporation, the amount calculated as specified by
Cabinet Order prescribed in Article 66-8, paragraph (1) of the Act shall not
exceed the amount calculated pursuant to the provisions of the preceding two paragraphs based on the remaining amount after deducting
the amount to be included in deductible expenses pursuant to the provisions of Article 66-9-8,
paragraph (1) of the Act from the amount specified in the items of Article 66-8,
paragraph (1) of the Act.
(5) With respect to the application of the provisions of Article 66-8, paragraph (1)
of the Act in or after the business year including the day of a qualified merger prescribed in paragraph (3) of said Article (referred
to as a "qualified merger,
etc." in the following paragraph) of a domestic corporation set forth in said
paragraph, in the case where the provisions of said paragraph apply, the taxed amount of retained income specified in the items of
said paragraph (meaning
the taxed amount of retained income prescribed in paragraph (1) of said
Article; hereinafter the same shall apply in this Article) or the individually
taxed amount of retained income (meaning the individually taxed amount of retained income prescribed in Article 68-92, paragraph (1)
of the Act;
hereinafter the same shall apply in this Article) shall be deemed to be the taxed amount of retained income for a business year of
said domestic
corporation specified respectively in the following items for the category of
business years or consolidated business years listed in the relevant items of a merged corporation, split corporation, corporation
making a capital
contribution in kind, or corporation effecting a post-formation acquisition of assets and/or liabilities (referred to as a "merged
corporation, etc." in the
following paragraph):
(i) A business year within ten years prior to the merger prescribed in Article
66-8, paragraph (3), item (i) of the Act (hereinafter referred to as a "business year within ten years prior to the merger"
in this paragraph and the
following paragraph) of a merged corporation pertaining to a qualified merger or a business year within ten years prior to the company
split
prescribed in paragraph (3), item (ii) of said Article (hereinafter referred to
as a "business year within ten years prior to the company split" through to paragraph (7)) of a split corporation pertaining
to a qualified split-off-type company split (excluding a business year within ten years prior to the
merger or business year within ten years prior to the company split listed in
the following item): The relevant business year of said domestic corporation
including the first day of a business year within ten years prior to the merger of said merged corporation or the relevant business
year of said domestic
corporation including the first day of a business year within ten years prior to the company split of said split corporation
(ii) A business year within ten years prior to the merger of a merged
corporation pertaining to a qualified merger that started on or after the first day of the business year including the day of said
qualified merger of the domestic corporation (hereinafter referred to as the "business year of the
merger" in this item) or a business year within ten years prior to the
company split of a split corporation pertaining to a qualified split-off type company split that started on or after the first day
of the business year including the day of said qualified split-off type company split of the domestic corporation (hereinafter referred
to as the "business year of the
split succession" in this item): The business year including the day preceding
the first day of the business year of the merger or business year of the split succession of said domestic corporation
(iii) A business year within ten years prior to the company split, etc. prescribed in Article 66-8, paragraph (3), item (iii) of the
Act (hereinafter referred to as
a "business year within ten years prior to the company split, etc." in this
Article) of a split corporation, etc. (meaning a split corporation, corporation making a capital contribution in kind, or corporation
effecting a post-
formation acquisition of assets and/or liabilities; hereinafter the same shall
apply in this paragraph and paragraph (8)) pertaining to a qualified spin-off-
type company split, etc. (meaning a qualified spin-off-type company split, etc. prescribed in Article 66-8, paragraph (3), item (iii)
of the Act; hereinafter the same shall apply in this paragraph and paragraph (8)) (excluding a business year within ten years prior
to the company split when falling under the case
listed in the following item and a business year within ten years prior to the company split, etc. listed in item (v)): The relevant
business year of said domestic corporation including the first day of a business year within ten
years prior to the company split, etc. of said split corporation, etc.
(iv) A business year of a split corporation, etc. pertaining to a qualified spin- off-type company split, etc. that includes the day
of said qualified spin-off- type company split, etc. or a business year within ten years prior to the company split, etc. of the
split corporation, etc. where the first day of the
consolidated business year is before the first day of the business year of said
domestic corporation that includes the day of said qualified spin-off-type company split, etc.: The relevant business year of said
domestic corporation including the final day of a business year within ten years prior to the
company split, etc. of said split corporation, etc.
(v) A business year within ten years prior to the company split, etc. of a split corporation, etc. pertaining to a qualified spin-off-type
company split, etc.
that started on or after the first day of a business year of said domestic
corporation including the day of said qualified spin-off-type company split,
etc. (hereinafter referred to as the "business year of the split succession, etc." in this item): The relevant business
year of said domestic corporation
including the day preceding the first day of the business year of the split succession, etc.
(6) In the case where the first day of the oldest business year or consolidated business year out of the relevant business years or
consolidated business years that started within ten years prior to the first day of the business year
including the day of a qualified merger, etc. of a domestic corporation set forth
in Article 66-8, paragraph (3) of the Act (hereinafter referred to as the "first day of the business year of the domestic corporation
ten years before" in this
paragraph) falls after the first day of the oldest business year or consolidated business year out of a business year within ten years
prior to the merger, business year within ten years prior to the company split or business year
within ten years prior to the company split, etc. of a merged corporations, etc.
pertaining to said qualified merger, etc. (hereinafter referred to as a "business year of the merged corporations, etc. within
the preceding ten years" in this
paragraph) (in the case of a qualified merger, etc. made among two or more merged corporations, etc., after the first day of the relevant
business year or consolidated business year of the merged corporations, etc. whichever started
the earliest; hereinafter referred to as the "first day of the business year of the
merged corporations, etc. ten years before" in this paragraph), the provisions of the preceding paragraph shall apply by deeming
the respective periods
classifying the period between said first day of the business year of the merged corporations, etc. ten years before and the day preceding
said first day of the
business year of the domestic corporation ten years before (in the case where said domestic corporation is to be established through
said qualified merger, etc., the day preceding the first day of the business year of the domestic
corporation including the day of the qualified merger, etc.; hereinafter the same shall apply in this paragraph) by the corresponding
business year of the merged corporations, etc. within the preceding ten years pertaining to said
first day of the business year of the merged corporations, etc. ten years before
(for the period including said preceding day, the period between the first day of the business year or consolidated business year
of said merged corporation, etc. including said preceding day and the day preceding said first day of the
business year of the domestic corporation ten years before) to be the relevant business year of said domestic corporation.
(7) The amount calculated as specified by Cabinet Order prescribed in Article 66-
8, paragraph (3), item (ii) of the Act shall be the amount specified respectively in the following items for the category of the taxed
amount of retained income or individually taxed amount of retained income listed in the relevant items: (i) The taxed amount of retained
income: The amount obtained by multiplying
respectively the taxed amount of retained income for a business year within
ten years prior to the company split of a split corporation pertaining to a qualified split-off-type company split the ratio of the
shares, etc. for
considering the claims held prescribed in Article 39-16, paragraph (3), item
(i) (hereinafter referred to as the "shares, etc. for considering the claims held" in this Article) that are listed in (b)
out of the shares, etc. for
considering the claims held that are listed in (a):
(a) Said specified foreign subsidiary, etc.'s shares, etc. for considering the claims held which the split corporation held immediately
prior to said
qualified split-off-type company split
(b) Said specified foreign subsidiary, etc.'s shares, etc. for considering the claims held which are to be transferred from the
split corporation to a
domestic corporation as set forth in Article 66-8, paragraph (3) of the Act
through said qualified split-off-type company split
(ii) The individually taxed amount of retained income: The amount obtained by multiplying respectively the individually taxed amount
of retained income
for a business year within ten years prior to the company split of a split
corporation pertaining to a qualified split-off-type company split by the ratio of the shares, etc. for considering the claims held
that are listed in (b) out of
the shares, etc. for considering the claims held that are listed in (a):
(a) Said specified foreign subsidiary, etc.'s shares, etc. for considering the claims held which the split corporation held immediately
prior to said
qualified split-off-type company split
(b) Said specified foreign subsidiary, etc.'s shares, etc. for considering the
claims held which are to be transferred from the split corporation to a domestic corporation set forth in Article 66-8, paragraph
(3) of the Act through said qualified split-off-type company split.
(8) The amount calculated as specified by Cabinet Order prescribed in Article 66-
8, paragraph (3), item (iii) of the Act shall be the amount specified respectively in the following items for the category of the
taxed amount of retained income
or individually taxed amount of retained income listed in the relevant items: (i) The taxed amount of retained income: The amount
obtained by multiplying
respectively the taxed amount of retained income for a business year within
ten years prior to the company split, etc. of a split corporation, etc.
pertaining to a qualified spin-off-type company split, etc. by the ratio of the shares, etc. for considering the claims held that
are listed in (b) out of the
shares, etc. for considering the claims held that are listed in (a):
(a) Said specified foreign subsidiary, etc.'s shares, etc. for considering the
claims held which the split corporation, etc. held immediately prior to said qualified spin-off-type company split, etc.
(b) Said specified foreign subsidiary, etc.'s shares, etc. for considering the claims held which are to be transferred from the
split corporation, etc. to a domestic corporation set forth in Article 66-8, paragraph (3) of the Act
through said qualified spin-off-type company split
(ii) The individually taxed amount of retained income: The amount obtained by multiplying respectively the individually taxed amount
of retained income
for a business year within ten years prior to the company split, etc. of a split corporation, etc. pertaining to a qualified spin-off-type
company split, etc. by the ratio of the shares, etc. for considering the claims held that are listed in
(b) out of the shares, etc. for considering the claims held that are listed in
(a):
(a) Said specified foreign subsidiary, etc.'s shares, etc. for considering the
claims held which the split corporation, etc. held immediately prior to said qualified spin-off-type company split, etc.
(b) Said specified foreign subsidiary, etc.'s shares, etc. for considering the claims held which are to be transferred from the
split corporation, etc. to a domestic corporation set forth in Article 66-8, paragraph (3) of the Act
through said qualified spin-off-type company split.
(9) The amount included in deductible expenses pursuant to the provisions of
Article 66-8, paragraph (1) of the Act shall be included in the amount of income prescribed in Article 9, paragraph (1), item (i),
(a) of the Order for Enforcement of the Corporation Tax Act for calculating the amount of revenue reserves of a
domestic corporation subject to the provisions of Article 66-8, paragraph (1) of
the Act.
(Determination, etc. of Affiliated Foreign Companies)
Article 39-20 (1) In the case referred to in Article 66-6, paragraph (1) of the Act, whether or not a foreign corporation falls under
the category of an affiliated foreign company shall be determined according to its status at the end of the relevant business year
of said foreign corporation and whether or not a
domestic corporation falls under the category of a corporation listed in the
items of said paragraph shall be determined according to its status at the end of the relevant business year of an affiliated foreign
company related to such
corporation.
(2) Where a domestic corporation listed in the items of Article 66-6, paragraph (1)
of the Act has been dissolved through a merger by the day on which two months have elapsed after the final day of the relevant business
year of an
affiliated foreign company related to said domestic corporation, the number of the shares, etc. of said affiliated foreign company
prescribed in paragraph (2), item (iii) of said Article which were directly and indirectly held by the domestic corporation (hereinafter
referred to as the "number of the shares, etc. directly and indirectly held" in this paragraph) and which have been succeeded
to by
the merging corporation pertaining to the merger shall be deemed to be the
number of the shares, etc. directly and indirectly held by the merging
corporation on the final day of the relevant business year of said affiliated foreign company.
(3) The amount included in the gross profits of a domestic corporation subject to the provisions of Article 66-6, paragraph (1) of
the Act, pursuant to the
provisions of said paragraph, shall not be included in the amount of income, etc.
prescribed in the provisions of Article 67, paragraph (3) and paragraph (5) of the Corporation Tax Act for applying these provisions.
(4) The amount included in the gross profits pursuant to the provisions of Article
66-6, paragraph (1) of the Act shall not be included in the amount of income
prescribed in Article 9, paragraph (1), item (i), (a) of the Order for Enforcement of the Corporation Tax Act for calculating the
amount of revenue reserves of a
domestic corporation subject to the provisions of Article 66-6, paragraph (1) of the Act.
Section 8-5 Special Provisions on Taxation on Income of the Specified Foreign Corporations of a Domestic Corporation That Is a Specially-
Related Shareholder, etc.
(Scope, etc. of Specially-Related Shareholders, etc.)
Article 39-20-8 (1) An individual who has a special relationship specified by
Cabinet Order prescribed in Article 66-9-6, paragraph (1) of the Act to a person who falls under the category of a specified shareholder,
etc. shall be any of the
following:
(i) An individual who has a special relationship prescribed in Article 4,
paragraph (1) of the Order for Enforcement of the Corporation Tax Act to a person who falls under the category of a specified shareholder,
etc. (meaning a specified shareholder, etc. prescribed in Article 66-9-6, paragraph (2), item (i) of the Act; hereinafter the same
shall apply in this paragraph and the
following paragraph)
(ii) An officer (meaning an officer prescribed in Article 2, item (xv) of the
Corporation Tax Act; hereinafter the same shall apply in this Section) of a corporation that falls under the category of a specified
shareholder, etc. and a person listed in the items of Article 72-3 of the Order for Enforcement of
the Corporation Tax Act with a relationship to said officer (referred to as a
"specially-related person" in the following item)
(iii) An officer of a specially-related domestic corporation (meaning a specially- related domestic corporation prescribed in Article
66-9-6, paragraph (2), item (ii) of the Act; hereinafter the same shall apply in this Section) and a
specially-related person of said officer.
(2) A corporation which has a special relationship specified by Cabinet Order prescribed in Article 66-9-6, paragraph (1) of the Act
to a person who falls
under the category of a specified shareholder, etc. shall be any of the following: (i) Where a specified shareholder, etc. (including
an individual who has a
special relationship to said specified shareholder, etc. as prescribed in item (i) or item (ii) of the preceding paragraph) or an
individual who has a special relationship to a specially-related domestic corporation as prescribed in item (iii) of said paragraph
(hereinafter referred to as a "person determined to be
a shareholder, etc." in this paragraph) controls any other corporation, said other corporation
(ii) Where a person determined to be a shareholders, etc. and a corporation
which has a special relationship thereto as prescribed in the preceding item control any other corporation, said other corporation
(iii) Where a person determined to be a shareholders, etc. and a corporation
which has a special relationship thereto as prescribed in the preceding two items control any other corporation, said other corporation.
(3) The provisions of Article 4, paragraph (3) and paragraph (4) of the Order for
Enforcement of the Corporation Tax Act shall apply mutatis mutandis where the provisions of the preceding paragraph shall apply.
(4) The relationship specified by Cabinet Order prescribed in Article 66-9-6,
paragraph (1) of the Act shall be the relevant relationship in the case where a specially-related shareholder, etc. prescribed in
said paragraph (hereinafter
referred to as a "specially-related shareholder, etc." in this Section) and a
specially-related domestic corporation have a relationship where the ratio of
the shares, etc. indirectly held by the specially-related shareholder, etc.
pertaining to the specially-related domestic corporation (meaning the ratio specified respectively in the following items for the
category of cases listed in
the relevant items (where this falls under both of the following cases, the sum of the ratios specified respectively as follows))
is 80 percent or more:
(i) Where out of the total number or total amount of shares or capital
contributions issued by a foreign corporation (excluding that falling under the category of a specially-related shareholder, etc.;
hereinafter the same shall apply in this item) which is a shareholder, etc. (meaning a shareholder, etc. prescribed in Article 2,
item (xiv) of the Corporation Tax Act; hereinafter the same shall apply in this Section) of a specially-related domestic
corporation (such issued shares or capital contributions shall exclude shares
that said foreign corporation holds in itself and the total number or total amount of such issued shares or capital contributions
shall be referred to as the "issued shares, etc." in this Section), a specially-related shareholder, etc. holds 80 percent
or more of the number or the amount of such shares, etc.
(meaning shares or capital contributions; hereinafter the same shall apply in this Section): The ratio of the number or the amount
of the shares, etc. of the specially-related domestic corporation held by said foreign corporation which is a shareholder, etc. out
of the total issued shares, etc. of said specially-
related domestic corporation (where there are two or more such foreign
corporations which are shareholders, etc., the sum of the ratios calculated for each of them)
(ii) Where a single corporation or two or more corporations are interposed
between a corporation which is a shareholder, etc. of a specially-related
domestic corporation (excluding a foreign corporation which is a shareholder, etc. set forth in the preceding item falling under the
case listed in said item and a corporation falling under the category of a specially-related
shareholder, etc.) and a specially-related shareholder, etc. and have a link
with them through holding the shares, etc. (where said corporation which is
a shareholder, etc. is a domestic corporation and said interposed corporations is a (are all) domestic corporations, excluding said
domestic corporations and a corporation falling under the category of a specially-related shareholder,
etc.; hereinafter referred to as "corporations related through capital
contribution" in this item) (limited to the case where 80 percent or more of
the number or the amount of the issued shares, etc. of both the corporations related through capital contribution and the corporation
which is a
shareholder, etc. are held by a specially-related shareholder, etc. or
corporations related through capital contribution (such specially-related
shareholder, etc. or foreign corporations related through capital contribution shall be limited to those 80 percent or more of the
number or the amount of
whose issued shares, etc. are held by a specially-related shareholder, etc. or other corporations related through capital contribution)):
The ratio of the number or the amount of the shares, etc. of a specially-related domestic
corporation held by said corporation which is a shareholder, etc. out of the
total issued shares, etc. of said specially-related domestic corporation (where there are two or more such corporations which are
shareholders, etc., the
sum of the ratios calculated for each of them).
(5) A foreign corporation specified by Cabinet Order prescribed in Article 66-9-6, paragraph (1) of the Act shall be any of the following:
(i) A foreign corporation falling under the category of a foreign corporation
which is a shareholder, etc. prescribed in item (i) of the preceding paragraph, where the ratio of the shares, etc. held indirectly
as prescribed in the
preceding paragraph is 80 percent or more
(ii) A foreign corporation falling under the category of a foreign corporation
which is a shareholder, etc. prescribed in item (ii) of the preceding paragraph and a foreign corporation falling under the category
of a corporation related
through capital contribution prescribed in said item, where the ratio of the shares, etc. held indirectly as prescribed in the preceding
paragraph is 80
percent or more
(iii) A foreign corporation, over 50 percent of the number or the amount of whose issued shares, etc. are held directly or indirectly
by a foreign
corporation listed in the preceding two items (excluding a foreign corporation falling under the category of a foreign corporation
listed in the preceding two items and a foreign corporation falling under the category of a specially-
related shareholder, etc.).
(6) In item (iii) of the preceding paragraph, whether or not a foreign corporation directly or indirectly holds over 50 percent of
the issued shares, etc. shall be determined based on the sum of the ratio of the shares, etc. held directly by a first foreign corporation
listed in item (i) and item (ii) of said paragraph
pertaining to a second foreign corporation (excluding a foreign corporation
falling under the category of a foreign corporation listed in item (i) or item (ii)
of said paragraph and a foreign corporation falling under the category of a specially-related shareholder, etc.; hereinafter the same
shall apply in this
paragraph) (such ratio of the shares, etc. held directly shall mean the ratio of
the number or the amount of the shares, etc. of the second foreign corporation held by the first foreign corporation listed in item
(i) and item (ii) of the
preceding paragraph out of the total issued shares, etc. of said second foreign
corporation) and the ratio of the shares, etc. held indirectly by the first foreign corporation listed in item (i) and item (ii) of
said paragraph pertaining to said second foreign corporation (such ratio of the shares, etc. held indirectly shall mean the ratio
specified respectively in the following items for the category of
cases listed in the relevant items (where this falls under both of the following cases, the sum of the ratios specified respectively
as follows)):
(i) Where a first foreign corporation listed in item (i) and item (ii) of the
preceding paragraph holds over 50 percent of the number or the amount of
the issued shares, etc. of a foreign corporation which is the shareholder, etc.
of a second foreign corporation: The ratio of the number or the amount of the shares, etc. of said second foreign corporation held
by said foreign
corporation which is its shareholder, etc. out of the total issued shares, etc. of said second foreign corporation (where there are
two or more such foreign
corporations which are shareholders, etc., the sum of the ratios calculated for each of them)
(ii) Where a single foreign corporation or two or more foreign corporations are
interposed between a single foreign corporation which is a shareholder, etc. of a second foreign corporation (excluding a foreign
corporation which is a
shareholder, etc. set forth in the preceding item falling under the case listed
in said item) and a foreign corporation listed in item (i) and item (ii) of the
preceding paragraph and have a link with them through holding the shares,
etc. (hereinafter referred to as a "foreign corporations related through capital contribution" in this item) (limited to
the case where over 50 percent of the number or the amount of the issued shares, etc. in both the foreign
corporation related through capital contribution and in the foreign
corporation which is the shareholder, etc. are held by the first foreign
corporation listed in item (i) and item (ii) of said paragraph or by a foreign corporation related through capital contribution (such
first foreign
corporation or foreign corporation related through capital contribution shall be limited to those for which over 50 percent of the
number or the amount of the issued shares, etc. are held by a foreign corporation listed in item (i) and item (ii) of said paragraph
or any other corporations related through capital contribution)): The ratio of the number or the amount of the shares, etc. of said
second foreign corporation held by said foreign corporation which is a
shareholder, etc. out of the total issued shares, etc. of said second foreign
corporation (where there are two or more such foreign corporations which are shareholders, etc., the sum of the ratios calculated
for each of them).
(7) An affiliated foreign corporation specified by Cabinet Order prescribed in
Article 66-9-6, paragraph (1) of the Act shall be any of the following:
(i) An affiliated foreign corporation (meaning an affiliated foreign corporation prescribed in Article 66-9-6, paragraph (1) of the
Act; hereinafter the same shall apply in this Section) which has its head office or principal office in a
state or territory where there are no taxes imposed on corporate income
(ii) An affiliated foreign corporation whose tax imposed on its income for the relevant business year is 25 percent or less of said
income.
(8) The provisions of Article 39-14, paragraph (2) shall apply mutatis mutandis to the determination as to whether or not an affiliated
foreign corporation falls
under the category of an affiliated foreign corporation set forth in item (ii) of the preceding paragraph.
(9) An individual who has a special relationship to a shareholder, etc. specified
by Cabinet Order prescribed in Article 66-9-6, paragraph (2), item (i) of the Act shall be an individual who has a special relationship
prescribed in Article 4,
paragraph (1) of the Order for Enforcement of the Corporation Tax Act to a shareholder, etc. of a domestic corporation.
(10) A corporation which has a special relationship to a shareholder, etc.
specified by Cabinet Order prescribed in Article 66-9-6, paragraph (2), item (i)
of the Act shall be any of the following:
(i) Where one of the shareholders, etc. of a domestic corporation (where said domestic corporation holds shares, etc. in itself, excluding
said domestic
corporation; hereinafter referred to as a "person determined to be a
shareholder, etc." in this paragraph) (regarding a person determined to be a shareholder, etc. who is an individual, said person
determined to be a
shareholder, etc. and an individual who has a special relationship thereto as
prescribed in the preceding paragraph; hereinafter the same shall apply in this paragraph) controls any other corporation, said other
corporation
(ii) Where one of the persons determined to be a shareholder, etc. and a
corporation which has a special relationship thereto as prescribed in the preceding item govern any other corporation, said other
corporation
(iii) Where one of the persons determined to be a shareholder, etc. and a
corporation which has a special relationship thereto as prescribed in the
preceding two items control any other corporation, said other corporation.
(11) The provisions of Article 4, paragraph (3) and paragraph (4) of the Order for
Enforcement of the Corporation Tax Act shall apply mutatis mutandis where the provisions of the preceding paragraph shall apply.
(12) A domestic corporation specified by Cabinet Order prescribed in Article 66-9-
6, paragraph (2), item (ii) of the Act shall be a domestic corporation which has received the transfer of almost all the assets and
liabilities of a specified
domestic corporation prescribed in said item immediately prior to a merger,
split, transfer of business or for other reasons (hereinafter referred to as
"specified reasons" in this paragraph) due to said specified reasons.
(Calculation of Undistributed Income of Specified Foreign Corporations)
Article 39-20-9 (1) The amount of undistributed income calculated in accordance with the standards specified by Cabinet Order prescribed
in Article 66-9-6,
paragraph (2), item (iii) of the Act shall be the amount calculated, pursuant to the provisions of Article 39-15, paragraph (1) or
paragraph (2), or paragraph
(3) of said Article, with regard to the income of a specified foreign corporation
prescribed in Article 66-9-6, paragraph (1) of the Act (hereinafter referred to as a "specified foreign corporation" in
this Article and paragraph (1) and
paragraph (2) of the following Article) in its settlement of accounts for the relevant business year.
(2) The amount obtained as a result of an adjustment for the amount of a loss
prescribed in Article 66-9-6, paragraph (2), item (iii) of the Act shall be the amount obtained by calculating the amount of income,
pursuant to the
provisions of the preceding paragraph, with regard to the income of a specified
foreign corporation in its settlement of accounts for the relevant business year (hereinafter referred to as the "amount of adjusted
income" in this paragraph) and then deducting therefrom the amount equivalent to the sum of the loss
incurred in business years that commenced within seven years preceding the
first day of the relevant business year (excluding a business year that commenced before October 1, 2007 and a business year during
which the
corporation did not fall under the category of a specified foreign corporation
(including a specified foreign corporation prescribed in Article 40-10,
paragraph (1) or Article 68-93-6, paragraph (1) of the Act)) (such loss shall exclude the amount deducted in business years preceding
said relevant business year pursuant to the provisions of this paragraph or Article 39-120-9, paragraph (2)) (where said sum of the
loss exceeds the amount of adjusted
income for the relevant business year, said amount of adjusted income).
(3) A loss prescribed in the preceding paragraph shall be a loss calculated with regard to the amount of income of a specified foreign
corporation in its
settlement of accounts for the relevant business year, where the calculation has been made pursuant to the provisions of paragraph
(1).
(4) The provisions of Article 39-15, paragraph (7) and paragraph (8) shall apply
mutatis mutandis where the amount of income of a specified foreign
corporation in its settlement of accounts for the relevant business year is
calculated pursuant to the provisions of paragraph (1) or paragraph (2) of said
Article.
(Calculation, etc. of the Amount of Taxable Retained Income of Specified
Foreign Corporations)
Article 39-20-10 (1) The amount obtained as a result of an adjustment to the
amount of undistributed income set forth in Article 66-9-6, paragraph (1) of the
Act for the amount of taxes and a dividend of surplus, etc. on said
undistributed income shall be the amount calculated with regard to the
amount of undistributed income prescribed in Article 66-9-6, paragraph (2), item (iii) of the Act for the relevant business year of
a specified foreign
corporation, pursuant to the provisions of Article 39-16, paragraph (1).
(2) The amount calculated as specified by Cabinet Order prescribed in Article 66-
9-6, paragraph (1) of the Act shall be the amount calculated with regard to the eligible retained income (meaning the eligible retained
income prescribed in said paragraph; hereinafter the same shall apply in this Section) for the
relevant business year of a specified foreign corporation related to a domestic corporation which is a specially-related shareholder,
etc., pursuant to the
provisions of Article 39-16, paragraphs (2) to (4).
(3) The provisions of Article 39-16, paragraph (5) shall apply mutatis mutandis to the number of shares or the amount of capital contributions
of a foreign
corporation specified by Cabinet Order as being held indirectly as prescribed in Article 66-9-6, paragraph (2), item (iv) of the Act.
In this case, in Article 39-16, paragraph (5), item (i), the term "an individual" shall be deemed to be replaced with "a
resident (meaning a resident prescribed in Article 2, paragraph (1),
item (i)-2 of the Act; hereinafter the same shall apply in this paragraph);" the
term "said individual" shall be deemed to be replaced with "said resident;" and in item (ii) of said paragraph,
the term "an individual" shall be deemed to be
replaced with "a resident;" and the term "said individual" shall be deemed to be replaced with "said resident."
(4) The amount of expenses specified by Cabinet Order set forth in Article 66-9-6, paragraph (1) of the Act which is applied by replacing
the terms pursuant to
the provisions of paragraph (3) of said Article shall be the amount calculated
with regard to the sum of personnel expenses for officers and employees of a specified foreign corporation engaged in the business
of said specified foreign corporation prescribed in paragraph (3) of said Article, pursuant to the
provisions of Article 39-16, paragraph (10).
(Determination, etc. of Business of Specified Foreign Corporations)
Article 39-20-11 (1) The person specified by Cabinet Order prescribed in Article
66-9-6, paragraph (4), item (i) of the Act shall be any of the following:
(i) Other consolidated corporations which have the consolidated full controlling interest with a consolidated corporation falling
under the category of a
specially-related shareholder, etc. which pertains to a specified foreign corporation prescribed in Article 66-9-6, paragraph (4),
item (i) of the Act
(hereinafter referred to as a "specified foreign corporation" in this paragraph)
that is mainly engaged in business listed in item (i) of said paragraph (such
other consolidated corporations shall exclude those falling under the category of specially-related shareholders, etc. pertaining
to said specified foreign
corporation)
(ii) A person who holds over 50 percent of the number or the amount of the total issued shares, etc. of a corporation falling under
the category of a specially-related shareholder, etc. pertaining to a specified foreign
corporation that is mainly engaged in business listed in Article 66-9-6, paragraph (4), item (i) of the Act (excluding a person falling
under the
category of a specially-related shareholder, etc. pertaining to said specified foreign corporation and a person falling under the
category of persons listed in the preceding item)
(iii) A person who holds over 50 percent of the number or the amount of the
total issued shares, etc. of a consolidated corporation falling under the category of a specially-related shareholder, etc. (where
said consolidated
corporation is a consolidated subsidiary corporation, a consolidated parent
corporation related to said consolidated corporation) which pertains to a specified foreign corporation that is mainly engaged in
business listed in
Article 66-9-6, paragraph (4), item (i) of the Act (excluding a person falling
under the category of a specially-related shareholder, etc. pertaining to said specified foreign corporation and a person falling
under the category of
persons listed in the preceding two items)
(iv) An affiliated foreign corporation related to a specially-related shareholder, etc. pertaining to a specified foreign corporation
that is mainly engaged in
business listed in Article 66-9-6, paragraph (4), item (i) of the Act
(v) A corporation which is a shareholder, etc. prescribed in Article 39-20-8,
paragraph (4), item (ii) or corporations related through capital contribution which intervene between a specially-related domestic
corporation and a
specially-related shareholder, etc. pertaining to a specified foreign
corporation that is mainly engaged in business listed in Article 66-9-6, paragraph (4), item (i) of the Act (excluding a person falling
under the category of persons listed in item (i) or the preceding item)
(vi) A person who has a special relationship specified by Cabinet Order
prescribed in Article 66-9-6, paragraph (1) of the Act to the persons listed as follows (excluding a person who falls under the category
of the specially- related domestic corporation of a specified foreign corporation that is mainly
engaged in business listed in Article 66-9-6, paragraph (4), item (i) of the Act,
a person who falls under the category of a specially-related shareholder, etc. and a person who falls under the category of persons
listed in the preceding
items):
(a) A specified foreign corporation that is mainly engaged in business listed in Article 66-9-6, paragraph (4), item (i) of the Act
(b) A specially-related domestic corporation pertaining to a specified foreign
corporation that is mainly engaged in business listed in Article 66-9-6, paragraph (4), item (i) of the Act
(c) An individual or corporation falling under the category of a specially-
related shareholder, etc. pertaining to a specified foreign corporation that is mainly engaged in business listed in Article 66-9-6,
paragraph (4), item
(i) of the Act
(d) Those listed in the preceding items
(2) The provisions of Article 39-17, paragraph (2) and paragraph (3) shall apply mutatis mutandis to the case specified by Cabinet
Order prescribed in Article
66-9-6, paragraph (4), item (i) of the Act. In this case, the term "those listed in the items of Article 40-4, paragraph (1),
items of Article 66-6, paragraph (1),
items of Article 68-90, paragraph (1) of the Act and the items of the preceding paragraph" in Article 39-17, paragraph (2), item
(i) shall be deemed to be
replaced with "a specially-related domestic corporation prescribed in Article
66-9-6, paragraph (2), item (ii) of the Act, specially-related shareholder, etc. prescribed in paragraph (1) of said Article and those
listed in the items of
Article 39-20-11, paragraph (1)."
(3) The provisions of Article 39-17, paragraph (5) shall apply mutatis mutandis to the case specified by Cabinet Order prescribed
in Article 66-9-6, paragraph (4), item (ii) of the Act.
(Calculation, etc. of Foreign Corporation Tax on Taxable Retained Income of
Specified Foreign Corporations)
Article 39-20-12 (1) The amount calculated as specified by Cabinet Order
prescribed in Article 66-9-7, paragraph (1) of the Act shall be the amount
calculated, pursuant to the provisions of Article 39-18, paragraph (1), with regard to the amount of foreign corporation tax (meaning
foreign corporation tax prescribed in Article 69, paragraph (1) of the Corporation Tax Act; the same shall apply in paragraph (3))
to be imposed on a specified foreign
corporation prescribed in Article 66-9-7, paragraph (1) of the Act (referred to as
a "specified foreign corporation" in paragraph (3)) on its income for a business year containing eligible retained income.
(2) In the case where the provisions of Article 69, paragraphs (1) to (7),
paragraph (10) and paragraphs (15) to (18) of the Corporation Tax Act are applied by deeming the calculated amount to be the amount
of creditable
foreign corporation tax prescribed in paragraph (1) of said Article payable by a domestic corporation that is a specially-related
shareholder, etc. pursuant to
the provisions of Article 66-9-7, paragraph (1) of the Act, the matters
concerning the application of these provisions shall be as prescribed in the
provisions of Article 39-18, paragraphs (2) to (10) and paragraphs (12) to (17). (3) The business year specified by Cabinet Order
prescribed in Article 66-9-7,
paragraph (3) of the Act shall be the business year specified respectively in the items of Article 39-18, paragraph (3), in accordance
with the category of the amount of foreign corporation tax imposed on the income of a specified foreign
corporation.
(Calculation of Taxed Amount of Dividend, etc. of Specified Foreign
Corporations)
Article 39-20-13 (1) The affiliated foreign corporation prescribed in Article 66-9-
8, paragraph (1) of the Act which is specified by Cabinet Order shall be one of
the affiliated foreign corporations which holds the taxed amount of a dividend, etc. before deduction pertaining to a specified foreign
corporation prescribed in Article 66-9-8, paragraph (1) of the Act (hereinafter referred to as a "specified foreign corporation"
through to paragraph (3)) (such taxed amount of a
dividend, etc. before deduction shall mean the taxed amount of a dividend, etc.
before deduction prescribed in Article 39-16, paragraph (3), item (iii), when calculating the amount of eligible retained income for
the relevant business year of a specified foreign corporation as prescribed in Article 39-16,
paragraphs (2) to (4), pursuant to the provisions of Article 39-20-10, paragraph
(2)).
(2) The amount calculated as specified by Cabinet Order prescribed in Article 66-
9-8, paragraph (1) of the Act shall be the amount obtained by calculating the amount specified in the items of said paragraph, where
an event listed in the items of said paragraph has occurred, with regard to a specified foreign
corporation related to a domestic corporation which is a specially-related
shareholder, etc. or an affiliated foreign corporation related to said domestic corporation as prescribed in said paragraph, pursuant
to the provisions of
Article 39-19, paragraph (2) and paragraph (3).
(3) In the case where a domestic corporation, which is a specially-related
shareholder, etc. prescribed in Article 66-9-8, paragraph (1) of the Act, holds the taxed amount of retained income prescribed in
said paragraph that
pertains to a specified foreign corporation related to said domestic corporation and the taxed amount of retained income prescribed
in Article 66-8, paragraph (1) of the Act that pertains to a specified foreign subsidiary, etc. prescribed in Article 66-6, paragraph
(1) of the Act (limited to a foreign corporation that is
the same as said specified foreign corporation) related to said domestic
corporation, the amount calculated as specified by Cabinet Order prescribed in Article 66-9-8, paragraph (1) of the Act shall not
exceed the amount calculated pursuant to the provisions of the preceding paragraph based on the remaining amount after deducting
the amount to be included in deductible expenses
pursuant to the provisions of Article 66-8, paragraph (1) of the Act from the amount specified in the items of Article 66-9-8, paragraph
(1) of the Act.
(4) The matters concerning the application of the provisions of Article 66-8,
paragraphs (3) to (6) of the Act which are applied mutatis mutandis pursuant to Article 66-9-8, paragraph (3) of the Act shall be
as prescribed in the
provisions of Article 39-19, paragraphs (5) to (8).
(5) The provisions of Article 39-19, paragraph (9) shall apply mutatis mutandis to
the calculation of the amount of revenue reserves of a domestic corporation
which is a specially-related shareholder, etc. subject to the provisions of Article
66-9-8, paragraph (1) of the Act.
(Determination, etc. of Specified Relationship)
Article 39-20-14 (1) Where the provisions of Article 66-9-6, paragraph (1) of the Act shall apply, whether or not a domestic corporation
falls under the category of a specified domestic corporation prescribed in Article 66-9-6, paragraph (2),
item (i) of the Act shall be determined according to its status immediately
before an event causing a specified relationship prescribed in paragraph (1) of said Article occurred, and whether or not said specified
relationship actually
exists afterwards between a specially-related shareholder, etc. and a specially-
related domestic corporation and whether or not a foreign corporation falls under the category of an affiliated foreign corporation
shall be determined according to its status at the end of the relevant business year of said
specially-related domestic corporation.
(2) Where a foreign corporation has been determined as falling under the
category of an affiliated foreign corporation at the end of the relevant business year of a specially-related domestic corporation,
pursuant to the provisions of
the preceding paragraph, the provisions of Article 66-9-6 of the Act shall apply to the eligible retained income for the relevant
business year including the day on which said affiliated foreign corporation (limited to that falling under the
category of a specified foreign corporation prescribed in Article 66-9-6,
paragraph (1) of the Act) was determined as falling under such category.
(3) Where a domestic corporation which is a specially-related shareholder, etc. pertaining to a specially-related domestic corporation
has been dissolved
through a merger by the day on which two months have elapsed after the final
day of the relevant business year of an affiliated foreign corporation related to said domestic corporation, the number of the shares,
etc. of said affiliated
foreign corporation prescribed in Article 66-9-6, paragraph (2), item (iv) of the
Act which were directly and indirectly held by the domestic corporation (hereinafter referred to as the "number of the shares,
etc. directly and indirectly held" in this paragraph) and which have been transferred to the
merging corporation pertaining to the merger (such merging corporation shall
be limited to one falling under the category of a specially-related shareholder, etc. related to said specially-related domestic corporation
and one that proves
to fall under the category of a specially-related shareholder, etc. related to said specially-related domestic corporation by receiving
the transfer of the number
of the shares, etc. of said affiliated foreign corporation directly and indirectly
held by said domestic corporation through the merger; hereinafter the same shall apply in this paragraph) shall be deemed to be the
number of the shares,
etc. directly and indirectly held by the merging corporation on the final day of the relevant business year of said affiliated foreign
corporation.
(4) The provisions of Article 39-20, paragraph (3) and paragraph (4) shall apply mutatis mutandis to the application of the provisions
of Article 67, paragraph (3) and paragraph (5) of the Corporation Tax Act and the calculation of the amount of revenue reserves of
a domestic corporation which is a specially- related shareholder, etc., where there is any amount included in the gross
profits of said domestic corporation pursuant to the provisions of Article 66-9-6, paragraph (1) of the Act.
(5) The provisions of Article 14-10, paragraphs (1) to (5) and paragraphs (7) to
(11) of the Order for Enforcement of the Corporation Tax Act shall apply
mutatis mutandis where the provisions of Article 66-9-6, paragraph (8) of the Act shall apply under the provisions of said Article
(excluding paragraph (3), paragraph (4) and paragraph (6)) to Article 66-9-9 of the Act, Articles 39-20-8 to 39-20-10 (excluding
paragraph (4)), and Article 39-20-12 to this Article.
(6) With regard to a trust corporation or a beneficiary of a trust subject to
corporation taxation prescribed in Article 4-7 of the Corporation Tax Act, in addition to what is specified in the preceding paragraph,
other necessary matters concerning the application of the provisions of Article 66-9-6
(excluding paragraph (3), paragraph (4) and paragraph (6)) to Article 66-9-9 of the Act, Articles 39-20-8 to 39-20-10 (excluding paragraph
(4)), or Article 39-
20-12 to this Article shall be specified by Ordinance of the Ministry of Finance.
Section 9 Other Special Provisions
(Interest from Deposits, etc. Managed in a Special International Financial
Transactions Account to Which the Special Provisions on Tax Exemption Do
Not Apply)
Article 39-30 The interest specified by Cabinet Order prescribed in Article 67-11, paragraph (1) of the Act shall be the interest
to be received by a foreign
corporation prescribed in said paragraph which is attributed to business
conducted by said person in Japan at any fixed place prescribed in Article 141, item (i) of the Corporation Tax Act.
(Special Provisions on Taxation of Special Purpose Companies) Article 39-32-2
(9) With regard to the application of the provisions of Article 73, paragraph (2) and Article 77-2, paragraph (2) of the Order for
Enforcement of the Corporation Tax Act to special purpose companies, the term "without applying the following provisions"
in these provisions shall be deemed to be replaced with "without
applying the following provisions and the provisions of Article 67-14,
paragraph (1) (Special Provisions on Taxation of Special Purpose Companies) of the Act on Special Measures Concerning Taxation."
(10) The amount of foreign corporation tax prescribed in Article 67-14, paragraph (4) of the Act that is to be credited under said
paragraph (hereinafter referred to as the "amount of creditable foreign corporation tax" in this Article) shall be
the sum of the amounts that remain after deducting, from the amounts
specified in the following items for persons listed in the respective items, the amount of a dividend of profit (meaning the amount
of a dividend of profit
prescribed in Article 67-14, paragraph (1) of the Act; hereinafter the same shall
apply in this Article) of a special purpose company pertaining to the amount of creditable foreign corporation tax that these persons
are to receive (where said sum of the amounts exceeds the amount of foreign corporation tax prescribed in Article 67-14, paragraph
(4) of the Act that the special purpose company has
paid, the amount of said paid foreign corporation tax):
(i) A resident prescribed in Article 2, paragraph (1), item (i)-2 of the Act: The amount obtained by dividing the amount of the dividend
of profit that the
resident is to receive by the rate that remains after deducting the tax rate prescribed in Article 182, item (ii) of the Income Tax
Act from one
(ii) A domestic corporation: The amount obtained by dividing the amount of the dividend of profit that the domestic corporation is
to receive by the rate that remains after deducting the tax rate prescribed in Article 213, paragraph (2), item (ii) of the Income
Tax Act from one
(iii) A nonresident prescribed in Article 2, paragraph (1), item (i)-2 of the Act or a foreign corporation: The amount obtained by
dividing the amount of the
dividend of profit that the nonresident or foreign corporation is to receive by the rate that remains after deducting the tax rate
prescribed in Article 213, paragraph (1), item (i) of the Income Tax Act from one.
(11) When a special purpose company collects income tax on the amount of a
dividend of profit (limited to the amount pertaining to the business year for
which it is to pay the amount of creditable foreign corporation tax) pursuant to the provisions of Article 181 or Article 212 of the
Income Tax Act, said amount of creditable foreign corporation tax shall be credited against the amount of
income tax that it is to collect and pay.
(12) Where the provisions of Article 67-14, paragraph (4) of the Act has applied to the amount of a dividend of profit of a special
purpose company that an
individual or a corporation is to receive, the amount of creditable foreign
corporation tax pertaining to said amount of dividend of profit shall be added to said amount of dividend of profit that these persons
are to receive.
(13) A special purpose company, which was subject to the provisions of Article 67-
14, paragraph (4) of the Act, shall preserve a document certifying that the amount of foreign corporation tax prescribed in said paragraph
has been
imposed and other documents specified by Ordinance of the Ministry of
Finance, as specified by Ordinance of the Ministry of Finance.
(Special Provisions on Taxation of Investment Corporations) Article 39-32-3
(8) The requirements specified by Cabinet Order prescribed in Article 67-15,
paragraph (1), item (ii), (g) of the Act shall be that an investment corporation has not borrowed funds from any person other than
an institutional investor
prescribed in item (i), (b), 2. of said paragraph.
(9) With regard to the application of the provisions of Article 73, paragraph (2) and Article 77-2, paragraph (2) of the Order for
Enforcement of the Corporation Tax Act to investment corporations, the term "without applying the following
provisions" in these provisions shall be deemed to be replaced with "without
applying the following provisions and the provisions of Article 67-15,
paragraph (1) (Special Provisions on Taxation of Investment Corporations) of the Act on Special Measures Concerning Taxation."
(10) The amount of foreign corporation tax prescribed in Article 67-15, paragraph (5) of the Act that is to be credited under said
paragraph (hereinafter referred to as the "amount of creditable foreign corporation tax" in this Article) shall be
the sum of the amounts that remain after deducting, from the amount specified in the following items for persons listed in the respective
items, the amount of
a dividend, etc. (meaning the amount of a dividend, etc. prescribed in Article
67-15, paragraph (1) of the Act; hereinafter the same shall apply in this
Article) of an investment corporation pertaining to the amount of creditable
foreign corporation tax that these persons are to receive (where said sum of the amounts exceeds the amount of foreign corporation
tax prescribed in Article
67-15, paragraph (5) of the Act that the investment corporation has paid, the
amount of said paid foreign corporation tax):
(i) A resident prescribed in Article 2, paragraph (1), item (i)-2 of the Act: The amount obtained by dividing the amount of the dividend,
etc. that the
resident is to receive by the rate that remains after deducting the tax rate prescribed in Article 182, item (ii) of the Income Tax
Act from one
(ii) A domestic corporation: The amount obtained by dividing the amount of the
dividend, etc. that the domestic corporation is to receive by the rate that
remains after deducting the tax rate prescribed in Article 213, paragraph (2), item (ii) of the Income Tax Act from one
(iii) A nonresident prescribed in Article 2, paragraph (1), item (i)-2 of the Act or a foreign corporation: The amount obtained by
dividing the amount of the
dividend, etc. that the nonresident or foreign corporation is to receive by the
rate that remains after deducting the tax rate prescribed in Article 213, paragraph (1), item (i) of the Income Tax Act from one.
(11) When an investment corporation collects income tax on the amount of a
dividend, etc. (limited to the amount pertaining to the business year for which it is to pay the amount of creditable foreign corporation
tax) pursuant to the
provisions of Article 181 or Article 212 of the Income Tax Act, said amount of creditable foreign corporation tax shall be credited
against the amount of
income tax that it is to collect and pay.
(12) Where the provisions of Article 67-15, paragraph (5) of the Act have applied to the amount of a dividend, etc. of an investment
corporation that an
individual or a corporation is to receive, the amount of creditable foreign
corporation tax pertaining to said amount of dividend, etc. shall be added to said amount of dividend, etc. that these persons are
to receive.
(13) An investment corporation which was subject to the provisions of Article 67-
15, paragraph (5) of the Act shall preserve a document certifying that the amount of foreign corporation tax prescribed in said paragraph
has been
imposed and other documents specified by Ordinance of the Ministry of
Finance, as specified by Ordinance of the Ministry of Finance.
(Interest from and Bond Issue Discounts for Foreign Private Bonds to Which the Special Provisions on Tax Exemption Do Not Apply)
Article 39-33 (1) The interest or bond issue discounts specified by Cabinet Order prescribed in Article 67-16, paragraph (2) of the
Act shall be the interest or
bond issue discounts listed as follows:
(i) The interest or bond issue discounts to be received by a foreign corporation listed in Article 141, item (i) of the Corporation
Tax Act which is attributed to business conducted by said person in Japan at any fixed place prescribed in said item
(ii) The interest or bond issue discounts to be received by a foreign corporation
listed in Article 141, item (ii) or item (iii) of the Corporation Tax Act which is attributed to the person's business prescribed
in these items.
(2) The profit from the redemption specified by Cabinet Order prescribed in
Article 67-16, paragraph (3) of the Act shall be the profit from the redemption listed as follows:
(i) The profit from the redemption to be received by a foreign corporation listed
in Article 141, item (i) of the Corporation Tax Act which is attributed to business conducted by said person in Japan at any fixed
place prescribed in said item
(ii) The profit from the redemption to be received by a foreign corporation
listed in Article 141, item (ii) or item (iii) of the Corporation Tax Act which is attributed to the person's business prescribed
in these items.
(Special Provisions on Taxation on Book-Entry National Bonds in Separate
Trading)
Article 39-33-2 The amount specified by Cabinet Order prescribed in Article 67-
17, paragraph (2) of the Act shall be the amount specified respectively in the following items for the category of cases listed in
the relevant items:
(i) Where a foreign corporation holds book-entry national bonds in separate
trading (meaning book-entry national bonds in separate trading prescribed
in Article 67-17, paragraph (1) of the Act; hereinafter the same shall apply in this Article) that falls under the category of securities
for buying and selling
prescribed in Article 61-3, paragraph (1), item (i) of the Corporation Tax Act
at the end of a business year, and when any valuation loss prescribed in
Article 61-3, paragraph (2) of the Corporation Tax Act has been incurred for said book-entry national bonds in separate trading: The
amount equivalent to said valuation loss
(ii) Where a foreign corporation holds book-entry national bonds in separate
trading that falls under the category of securities for redemption prescribed
in Article 119-14 of the Order for Enforcement of the Corporation Tax Act at the end of a business year, and when any adjusted loss
prescribed in Article
139-2, paragraph (2) of said Order has been incurred for said book-entry
national bonds in separate trading: The amount equivalent to said adjusted loss
(iii) Where an event listed in Article 68, paragraph (1), item (ii), (a) of the
Order for Enforcement of the Corporation Tax Act has occurred with regard to book-entry national bonds in separate trading held by
a foreign
corporation, and when their book value has been reduced by accounting for
the amount as a loss through changes in the valuation pursuant to the provisions of Article 33, paragraph (2) of the Corporation Tax
Act: The amount equivalent to the amount with the variance prescribed in said paragraph as the upper limit
(iv) Where a foreign corporation has transferred book-entry national bonds in
separate trading, and when any loss on the transfer prescribed in Article 61-
2, paragraph (1) of the Corporation Tax Act has been incurred for the
transfer of said book-entry national bonds in separate trading: The amount equivalent to said loss on the transfer
(v) Where, in a business year when a foreign corporation holds book-entry national bonds in separate trading, the amount that should
be included in deductible expenses for calculating the amount of income for the relevant business year contains the amount of selling
expenses, general
administrative expenses and any other expenses prescribed in Article 22,
paragraph (3), item (ii) of the Corporation Tax Act that arose in connection with both a business that creates income for the holding
or transfer of book- entry national bonds in separate trading and a business that creates income
other than said income (hereinafter referred to as the "amount of common
expenses" in this item): The amount equivalent to the part of said amount of common expenses that is to be appropriated as deductible
expenses for
calculating the amount of income for the holding or transfer of said book-
entry national bonds in separate trading, based on the amount of revenue, asset value, the number of employees, and any other standards
that are
deemed to be rational in light of the details of the business conducted by said foreign corporation and the nature of the expenses.
(Special Provisions on the Scope of a Qualified Merger, etc.)
Article 39-34-3 (1) A merger satisfying the requirements specified by Cabinet
Order prescribed in Article 68-2-3, paragraph (1) of the Act shall be a merger that satisfies all of the following requirements:
(i) Any of the principal businesses conducted by a merged corporation before the merger and any of the businesses conducted by a merging
corporation before the merger are interrelated
(ii) The sum of the amounts of sales, revenue and any other profits from the businesses conducted without interruption by a merging
corporation before the merger does not fall below approximately half of the sum of such
amounts from the businesses conducted without interruption by a merged corporation before the merger
(iii) The principal businesses conducted by a merging corporation before the merger do not fall under any of the following:
(a) The holding of shares (including capital contributions; hereinafter the
same shall apply in this Article) or bonds
(b) The provision of industrial property rights or any other rights concerning technology, production methods involving special technology
or any other
equivalent rights or methods (including the right to use such rights) or
copyrights (including publication rights, neighboring rights and any other equivalent rights)
(iv) Before the merger, a merging corporation has an office, store, factory or
any other fixed facility that is considered to be necessary for conducting its principal business in Japan, and takes charge of managing,
controlling and operating the business on its own account
(v) The majority of specified officers (meaning specified officers prescribed in
Article 4-2, paragraph (4), item (ii) of the Order for Enforcement of the
Corporation Tax Act; hereinafter the same shall apply in this Article) of a merging corporation before the merger are not those listed
as follows:
(a) Persons who are officers (meaning officers prescribed in Article 2, item
(xv) of the Corporation Tax Act; hereinafter the same shall apply in this
Article) or have status as officials and employees of a merged corporation
or who were formerly officers or employees of said merged corporation
(b) Persons who are officers or have status as officers and employees of a
foreign parent corporation of a merging corporation (meaning a corporation
(limited to a foreign corporation) that has a relationship specified by
Cabinet Order prescribed in Article 2, item (xii)-8 of the Corporation Tax
Act; hereinafter the same shall apply in this item) or who were formerly officers or employees of said foreign parent corporation
(c) Persons who have a special relationship prescribed in Article 4, paragraph
(1) of the Order for Enforcement of the Corporation Tax Act to a person listed in (a) or (b).
(2) The company split satisfying the requirements specified by Cabinet Order
prescribed in Article 68-2-3, paragraph (2) of the Act shall be the company split that satisfies all of the following requirements:
(i) Any of the businesses conducted by a split corporation before the company split, which is to be conducted by a succeeding corporation
in the company split as a result of said company split, and any of the businesses conducted
by the succeeding corporation in the company split before said company split are interrelated
(ii) The sum of the amounts of sales, revenue and any other profits from the businesses conducted without interruption by a succeeding
corporation in the company split before the company split does not fall below approximately
half of the sum of such amounts from the businesses conducted without
interruption by a split corporation before the company split
(iii) The principal businesses conducted by a succeeding corporation in the
company split before the company split do not fall under any of the following: (a) The holding of shares or bonds
(b) The provision of industrial property rights or any other rights concerning
technology, production methods involving special technology or any other equivalent rights or methods (including the right to use
such rights) or
copyrights (including publication rights, neighboring rights and any other
equivalent rights)
(iv) Before the company split, a succeeding corporation in the company split
has an office, store, factory or any other fixed facility that is considered to be necessary for conducting its principal business
in Japan, and takes charge of managing, controlling and operating the business on its own account
(v) The majority of specified officers of a succeeding corporation in the company
split before the company split are not those listed as follows:
(a) Persons who are officers or have status as officers and employees of a split corporation or who were formerly officers or employees
of said split corporation
(b) Persons who are officers or have status as officers and employees of the
foreign parent corporation of a succeeding corporation in the company split
(meaning a corporation (limited to a foreign corporation) that has a
relationship specified by Cabinet Order prescribed in Article 2, item (xii)-
11 of the Corporation Tax Act; hereinafter the same shall apply in this item) or who were formerly officers or employees of said foreign
parent corporation
(c) Persons who have a special relationship prescribed in Article 4, paragraph
(1) of the Order for Enforcement of the Corporation Tax Act to a person listed in (a) or (b).
(3) The company split specified by Cabinet Order prescribed in Article 68-2-3,
paragraph (2), item (i) of the Act shall be the company split in which almost all of the assets and liabilities pertaining to a split
corporation immediately prior
to said company split are to be transferred to a succeeding corporation in the company split.
(4) The share exchange satisfying the requirements specified by Cabinet Order
prescribed in Article 68-2-3, paragraph (3) of the Act shall be the share exchange that satisfies all of the following requirements:
(i) Any of the principal businesses conducted by a wholly owned subsidiary
corporation in a share exchange before the share exchange and any of the businesses conducted by the fully controlling parent corporation
in the share exchange before the share exchange are interrelated
(ii) The sum of the amounts of sales, revenue and any other profits from the
businesses conducted without interruption by a fully controlling parent corporation in a share exchange before the share exchange
does not fall below approximately half of the sum of such amounts from the businesses
conducted without interruption by the wholly owned subsidiary corporation in the share exchange before the share exchange
(iii) The principal businesses conducted by a fully controlling parent
corporation in a share exchange before the share exchange do not fall under any of the following:
(a) The holding of shares or bonds
(b) The provision of industrial property rights or any other rights concerning technology, production methods involving special technology
or any other
equivalent rights or methods (including the right to use such rights) or
copyrights (including publication rights, neighboring rights and any other equivalent rights)
(iv) Before the share exchange, the fully controlling parent corporation in the share exchange has an office, store, factory or any
other fixed facility that is considered to be necessary for conducting its principal business in Japan, and takes charge of managing,
controlling and operating the business on its own account
(v) The majority of specified officers of a fully controlling parent corporation in a share exchange before the share exchange are
not those listed as follows: (a) Persons who are officers or have status as officers and employees of a
wholly owned subsidiary corporation in a share exchange or who were
formerly officers or employees of said wholly owned subsidiary corporation in the share exchange
(b) Persons who are officers or have status as officers and employees of the foreign parent corporation of a fully controlling parent
corporation in a share exchange (meaning a corporation (limited to a foreign corporation)
that has a relationship specified by Cabinet Order prescribed in Article 2,
item (xii)-16 of the Corporation Tax Act; hereinafter the same shall apply in this item) or who were formerly officers or employees
of said foreign parent corporation
(c) Persons who have a special relationship prescribed in Article 4, paragraph
(1) of the Order for Enforcement of the Corporation Tax Act to a person listed in (a) or (b).
(5) The foreign corporation specified by Cabinet Order prescribed in Article 68-2-
3, paragraph (5), item (i) of the Act shall be that listed as follows:
(i) A foreign corporation that has its head office or principal office in a state or territory where there are no taxes imposed on
corporate income
(ii) A foreign corporation, in any of the business years that started within two
years prior to the first day of the business year of the foreign corporation including the date of a merger, company split, share
exchange, or capital contribution in kind set forth in Article 68-2-3, paragraphs (1) to (4) of the Act, whose tax imposed on its
income for the relevant business year was 25 percent or less of said income.
(6) The provisions of Article 39-14, paragraph (2) shall apply mutatis mutandis to
the determination as to whether or not a foreign corporation falls under the category of a foreign corporation set forth in item (ii)
of the preceding
paragraph.
(7) A foreign corporation that satisfies all of the following requirements shall not be included in the category of foreign corporations
listed in the items of
paragraph (5):
(i) A corporation's principal businesses do not fall under any of the categories of the holding of shares or bonds, the provision
of industrial property rights or any other rights concerning technology, production methods involving
special technology or any other equivalent rights or methods (including the
right to use such rights) or copyrights (including publication rights,
neighboring rights and any other equivalent rights), or the lending of vessels or aircraft
(ii) A corporation has an office, store, factory or any other fixed facility that is
considered to be necessary for conducting its principal business in the state or territory where its head office or principal office
is located, and takes
charge of managing, controlling and operating the business on its own account
(iii) In any of the business years that started within two years prior to the first day of the business year of the foreign corporation
including the date of a
merger, company split, share exchange, or capital contribution in kind set forth in Article 68-2-3, paragraphs (1) to (4) of the Act
(hereinafter such business year shall be referred to as a "business year(s) within the preceding two years" in this item),
the foreign corporation falls under any of the cases specified respectively as follows for the category of its principal businesses
listed as follows:
(a) Wholesale business, banking business, trust business, financial
instruments business, insurance business, water transportation business or air transportation business: The cases specified respectively
as follows for the category of its principal businesses listed as follows:
1. Wholesale business: Where, out of the total revenue from selling
inventory assets for any of the business years within the preceding two years (where there are any commissions to be received for
agent or
intermediary services for the buying or selling of inventory assets, such revenues shall include the amount from the transactions
for
which said commissions were generated; hereinafter referred to as the
"amount of sales transactions" in this item), the ratio of the sum of the amount of sales transactions with a person other
than affiliated
persons exceeds 50 percent, or out of the sum of the acquisition costs for acquiring inventory assets for any of the business years
within the preceding two years (where there are any commissions to be received
for agent or intermediary services for the buying or selling of inventory
assets, such acquisition costs shall include the amount from the
transactions for which said commissions were generated; hereinafter referred to as the "amount of purchase transactions"
in this item), the ratio of the sum of the amount of purchase transactions with a person other than affiliated persons exceeds 50
percent
2. Banking business: Where, out of the sum of the total interest received
for any of the business years within the preceding two years, the ratio of the sum of said interest to be received from a person other
than affiliated persons exceeds 50 percent, or out of the sum of the total
interest paid for any of the business years within the preceding two
years, the ratio of the sum of said interest to be paid to a person other than affiliated persons exceeds 50 percent
3. Trust business: Where, out of the sum of the total trust charge for any of
the business years within the preceding two years, the ratio of the sum of said trust charge to be received from a person other than
affiliated persons exceeds 50 percent
4. Financial instruments business: Where, out of the sum of the total
commissions received (including profits from the buying and selling of securities) for any of the business years within the preceding
two years, the ratio of the sum of said commissions to be received from a person
other than affiliated persons exceeds 50 percent
5. Insurance business: Where, out of the sum of the total premium income for any of the business years within the preceding two years,
the ratio of the sum of said premium income to be received from a person other
than affiliated persons (where said premium income pertains to
reinsurance, limited to premium income from insurance for assets held by a person other than affiliated persons or damages incurred
by a
person other than affiliated persons) exceeds 50 percent
6. Water transportation business or air transportation business: Where, out of the total revenue from the operation or rental of vessels
or
operation or rental of aircrafts for any of the business years within the
preceding two years, the ratio of the sum of said revenue to be received from a person other than affiliated persons exceeds 50 percent.
(b) Business other than those listed in (a): The cases specified respectively as
follows for the category of its principal businesses listed as follows:
1. Real estate business: Where conducting a buying and selling or rental
business of real estate (including acts to let others use said real estate) (real estate shall include the rights thereon; hereinafter
the same shall apply in this item) mainly located in the state of the head office (meaning a state or territory where the head office
or principal office is located; hereinafter the same shall apply in this item), providing agent or intermediary services for the
buying and selling or rental business
of said real estate, and managing said real estate
2. Rental and leasing business: Where conducting a rental business for goods to be provided for use mainly in the state of the head
office
3. Business other than those listed in (a) and in 1. and 2.: Where
conducting a business mainly in the state of the head office.
(8) Where transactions between a foreign corporation and its affiliated person are conducted indirectly via a person other than the
affiliated person of said
foreign corporation (hereinafter referred to as a "non-affiliated person" in this paragraph), transactions between said
foreign corporation and said non-
affiliated person shall be deemed to have been conducted directly between said
foreign corporation and said affiliated person and the provisions of item (iii), (a) of the preceding paragraph shall apply, except
in the case where there are
justifiable grounds for having said non-affiliated person intervene in such transactions.
(9) The affiliated person prescribed in paragraph (7), item (iii), (a) and the preceding paragraph shall be that listed as follows:
(i) When there is a relationship between a foreign corporation and any other corporation whereby either one of the corporations directly
or indirectly holds over 50 percent of the total number or total amount of the second
corporation's issued shares or capital contributions (excluding the shares that either corporation holds in itself; hereinafter
referred to as the "issued
shares, etc." in this Article), said second corporation (excluding a corporation falling under the category of persons listed
in the following item)
(ii) When there is a relationship whereby over 50 percent of the total number
or total amount of the issued shares, etc. of a foreign corporation and any other corporation are respectively held directly or indirectly
by the same
person (where said person is an individual, said individual and an individual
who has a special relationship prescribed in Article 4, paragraph (1) of the Order for Enforcement of the Corporation Tax Act to said
individual), said other corporation.
(10) The relationship specified by Cabinet Order prescribed in Article 68-2-3,
paragraph (5), item (ii) of the Act shall be the relationship listed as follows:
(i) When there is a relationship whereby a first domestic corporation directly or indirectly holds over 50 percent of the total number
or total amount of a
second domestic corporation's issued shares, etc., said relationship (excluding relationships falling under the category of relationships
listed in the
following item)
(ii) When there is a relationship whereby over 50 percent of the total number or total amount of two domestic corporations' respective
issued shares, etc. are held directly or indirectly by the same person (where said person is an
individual, said individual and an individual who has a special relationship prescribed in Article 4, paragraph (1) of the Order for
Enforcement of the Corporation Tax Act to said individual), the relationship between said two
domestic corporations.
(11) Whether or not there is any relationship listed in the items of the preceding paragraph shall be determined according to its
status immediately prior to a merger, company split or share exchange set forth in Article 68-2-3,
paragraphs (1) to (3) of the Act.
(12) The provisions of Article 39-12, paragraph (2) and paragraph (3) shall apply mutatis mutandis where the provisions of paragraph
(9) or paragraph (10)
shall apply. In this case the term "50 percent or more" in paragraph (2) and
paragraph (3) of said Article shall be deemed to be replaced with "over 50 percent."
(13) A nonresident who has a special relationship specified by Cabinet Order
prescribed in Article 68-2-3, paragraph (5), item (iii) of the Act to a resident or domestic corporation shall be a nonresident prescribed
in Article 2, paragraph (1), item (i)-2 of the Act who has a special relationship prescribed in Article 39-
14, paragraph (3) to a resident or domestic corporation prescribed in said item. (14) The relationship specified by Cabinet Order
prescribed in Article 68-2-3,
paragraph (5), item (iv) of the Act shall be a relationship listed as follows:
(i) When there is a relationship between a foreign corporation and a domestic corporation whereby said foreign corporation directly
or indirectly holds 80 percent or more of the total number or total amount of said domestic
corporation's issued shares, etc., said relationship (excluding relationships falling under the category of relationships listed
in the following item)
(ii) When there is a relationship whereby 80 percent or more of the total
number or total amount of the issued shares, etc. of a foreign corporation and a domestic corporation are respectively held directly
or indirectly by the
same person (where said person is an individual, said individual and an individual who has a special relationship prescribed in Article
4, paragraph (1) of the Order for Enforcement of the Corporation Tax Act to said
individual), the relationship between said foreign corporation and domestic
corporation.
(15) The provisions of Article 39-12, paragraph (2) and paragraph (3) shall apply mutatis mutandis where the provisions of the preceding
paragraph shall apply. In this case the term "50 percent or more" in paragraph (2) and paragraph (3)
of said Article shall be replaced with "80 percent or more."
(16) Matters concerning the determination as to whether or not the merger,
company split or share exchange satisfies the requirements listed in the items of paragraph (1), the items of paragraph (2) or the
items of paragraph (4) and any other matters necessary for the application of the provisions of the
preceding paragraphs shall be specified by Ordinance of the Ministry of
Finance.
(Special Provisions on Taxation of Shareholders, etc. in the Event of Specified
Merger, etc.)
Article 39-35 (1) The provisions of Article 119-7-2, paragraph (1) of the Order for
Enforcement of the Corporation Tax Act shall apply mutatis mutandis to the
relationship specified by Cabinet Order prescribed in Article 68-3, paragraph (1) of the Act; and the provisions of Article 119-7-2,
paragraph (3) of said Order shall apply mutatis mutandis to the relationship specified by Cabinet Order
prescribed in Article 68-3, paragraph (3) of the Act, respectively.
(2) Where a corporation has, as a result of a merger (limited to a merger that
does not fall under the category of a qualified merger) of a domestic corporation
to which said corporation issued old shares (meaning shares (including capital contributions; hereinafter the same shall apply in
this Article) that were held by said corporation), been provided with shares of a foreign corporation which has a relationship specified
by Cabinet Order prescribed in Article 68-3,
paragraph (1) of the Act, when the shares of said foreign corporation are shares of a specified foreign corporation with less tax
burden (meaning a specified
foreign corporation with less tax burden prescribed in Article 68-2-3, paragraph (5), item (i) of the Act; hereinafter the same shall
apply in
paragraph (4)), the provisions of Article 119, paragraph (1), item (v) of the
Order for Enforcement of the Corporation Tax Act (including the cases where it is applicable to the calculation made pursuant to the
provisions of Article 142
of the Corporation Tax Act) shall not apply to the acquisition costs of the
provided shares.
(3) Where a corporation has, as a result of a specified split-off-type company split prescribed in Article 68-3, paragraph (2) of
the Act which was implemented by
a domestic corporation to which said corporation issued old shares (meaning shares that were held by said corporation), been provided
with shares of a specified foreign parent corporation prescribed in said paragraph, the
provisions of Article 119, paragraph (1), item (vi) of the Order for Enforcement
of the Corporation Tax Act (including the cases where it is applicable to the
calculation made pursuant to the provisions of Article 142 of the Corporation
Tax Act) shall not apply to the acquisition costs of the provided shares.
(4) Where a corporation has, as a result of a share exchange (limited to a share exchange that does not fall under the category of
a qualified share exchange) implemented by a domestic corporation to which said corporation issued old shares (meaning shares that
were held by said corporation), been provided
with shares of a foreign corporation which has a relationship specified by
Cabinet Order prescribed in Article 68-3, paragraph (3) of the Act, when the shares of said foreign corporation are shares of a specified
foreign corporation with less tax burden, the provisions of Article 119, paragraph (1), item (viii) of the Order for Enforcement
of the Corporation Tax Act (including the cases
where it is applicable to the calculation made pursuant to the provisions of
Article 142 of the Corporation Tax Act) shall not apply to the acquisition costs of the provided shares.
(5) Where a foreign corporation has, as a result of a specified a split-off-type company split prescribed in Article 68-3, paragraph
(2) of the Act which was implemented by a domestic corporation to which said corporation issued old shares (meaning shares that were
held by said corporation), been provided
with shares of a specified foreign parent corporation prescribed in said
paragraph, the provisions of Article 188, paragraph (1), item (xvii) of the Order for Enforcement of the Corporation Tax Act shall
not apply to the calculation
made, with regard to the amount of said foreign corporation's income categorized as domestic source income prescribed in Article
142 of the Corporation Tax Act, in accordance with the provisions of Article 61-2,
paragraph (4) of said Act whose terms are replaced under the provisions of said paragraph.
(Special Provisions on Taxation of the Trust Corporation of a Special Purpose
Trust)
Article 39-35-2
(8) With regard to the application of the provisions of Article 73, paragraph (2) and Article 77-2, paragraph (2) of the Order for
Enforcement of the Corporation Tax Act in the case where the provisions of Article 68-3-2, paragraph (1) of the
Act apply, the term "without applying the following provisions" in these
provisions shall be deemed to be replaced with "without applying the following provisions and the provisions of Article 68-3-2,
paragraph (1) (Special
Provisions on Taxation of the Trust Corporation of a Special Purpose Trust) of the Act on Special Measures Concerning Taxation."
(9) The provisions of paragraph (1) to the preceding paragraph shall apply
mutatis mutandis when applying the provisions of Article 68-3-2, paragraph (1), paragraph (2), paragraph (6), paragraph (8) and paragraph
(9) of the Act which shall apply mutatis mutandis pursuant to paragraph (10) of said Article. In
this case, the terms listed in the middle column of the following table which
are used in the provisions listed in the left-hand column of said table shall be deemed to be replaced with the terms listed in the
right-hand column of said
table.
Paragraph (2) | calculated without applying the provisions of said paragraph and Article 57, paragraph (1), Article 58, paragraph (1) and Article 59, paragraph (2) of the Corporation Tax Act | calculated without applying the provisions of Article 57, paragraph (1), Article 58, paragraph (1) and Article 59, paragraph (2) of the Corporation Tax Act in the case where the calculation is made, with regard to the income categorized as domestic source income prescribed in Article 141 of said Act, in accordance with these provisions, pursuant to the provisions of Article 68-3-2, paragraph (1) of the Act and Article 142 of the Corporation Tax Act |
Paragraph (2) | income for the relevant business year | income categorized as domestic source income |
Paragraph (4) | said paragraph | Article 68-3-2, paragraph (10) of the Act |
The preceding paragraph | With regard to the application of the provisions of Article 73, paragraph (2) and Article 77-2, paragraph (2) of the Order for Enforcement of the Corporation Tax Act in the case where the provisions of Article 68-3-2, paragraph (1) apply | In the case where the provisions of Article 68-3-2, paragraph (1) apply and where calculation is to be made, in accordance with the provisions of Article 73, paragraph (2) and Article 77-2, paragraph (2) of the Order for Enforcement of the Corporation Tax Act, with regard to income categorized as domestic source income prescribed in Article 141 of the Corporation Tax Act under Article 142 of said Act, with regard to the application of these provisions |
The preceding paragraph | Article 68-3-2, paragraph (1) (Special Provisions on Taxation of the Trust Corporation of a Special Purpose Trust) | paragraph (1) of said Article which is applied mutatis mutandis pursuant to Article 68-3-2, paragraph (10) (Special Provisions on Taxation of the Trust Corporation of a Special Purpose Trust) |
(10) The amount of foreign corporation tax prescribed in Article 68-3-2, paragraph (4) of the Act that is to be credited under said
paragraph
(hereinafter referred to as the "amount of creditable foreign corporation tax" in this Article) shall be the sum of the
amounts that remain after deducting, from the amounts specified in the following items for the persons listed in the
respective items, the amount of a distribution of profit (meaning the amount of a distribution of profit prescribed in Article 68-3-2,
paragraph (1) of the Act;
hereinafter the same shall apply in this Article) of special purpose trusts pertaining to the amount of creditable foreign corporation
tax that these
persons are to receive (where said sum of the amounts exceeds the amount of
foreign corporation tax prescribed in Article 68-3-2, paragraph (4) of the Act
that a trust corporation for special purpose trusts has paid, the amount of said paid foreign corporation tax):
(i) A resident prescribed in Article 2, paragraph (1), item (i)-2 of the Act: The amount obtained by dividing the amount of the distribution
of profit that the resident is to receive by the rate that remains after deducting the tax rate
prescribed in Article 182, item (ii) of the Income Tax Act from one
(ii) A domestic corporation: The amount obtained by dividing the amount of the distribution of profit that the domestic corporation
is to receive by the rate
that remains after deducting the tax rate prescribed in Article 213, paragraph (2), item (ii) of the Income Tax Act from one
(iii) A nonresident prescribed in Article 2, paragraph (1), item (i)-2 of the Act or
a foreign corporation: The amount obtained by dividing the amount of the
distribution of profit that the nonresident or foreign corporation is to receive by the rate that remains after deducting the tax
rate prescribed in Article
213, paragraph (1), item (i) of the Income Tax Act from one.
(11) When a trust corporation for special purpose trusts collects income tax on
the amount of a distribution of profit (limited to the amount pertaining to the
business year for which it is to pay the amount of creditable foreign corporation tax) pursuant to the provisions of Article 181 or
Article 212 of the Income Tax
Act, said amount of creditable foreign corporation tax shall be credited against the amount of income tax that it is to collect and
pay.
(12) Where the provisions of Article 68-3-2, paragraph (4) of the Act have applied to the amount of a distribution of profit of special
purpose trusts that an
individual or a corporation is to receive, the amount of creditable foreign
corporation tax pertaining to said amount of distribution of profit shall be
added to said amount of distribution of profit that these persons are to receive. (13) A trust corporation for special purpose trusts,
which was subject to the
provisions of Article 68-3-2, paragraph (4) of the Act, shall preserve a
document certifying that the amount of foreign corporation tax prescribed in said paragraph has been imposed and other documents specified
by Ordinance
of the Ministry of Finance, as specified by Ordinance of the Ministry of Finance.
(Special Provisions on Taxation of the Trust Corporation of a Special
Investment Trusts) Article 39-35-3
(7) With regard to the application of the provisions of Article 73, paragraph (2)
and Article 77-2, paragraph (2) of the Order for Enforcement of the Corporation
Tax Act in the case where the provisions of Article 68-3-3, paragraph (1) of the
Act apply, the term "without applying the following provisions" in these
provisions shall be deemed to be replaced with "without applying the following provisions and the provisions of Article 68-3-3,
paragraph (1) (Special
Provisions on Taxation of the Trust Corporation of a Special Investment
Trusts) of the Act on Special Measures Concerning Taxation."
(8) The provisions of paragraph (1) to the preceding paragraph shall apply
mutatis mutandis when applying the provisions of Article 68-3-3, paragraph (1), paragraph (2), paragraph (6), paragraph (8) and paragraph
(9) of the Act which shall apply mutatis mutandis pursuant to paragraph (10) of said Article. In
this case, the terms listed in the middle column of the following table which
are used in the provisions listed in the left-hand column of said table shall be deemed to be replaced with the terms listed in the
right-hand column of said
table.
Paragraph (1) | trust corporation prescribed in Article 68-3-3, paragraph (1) of the Act | trust corporation prescribed in Article 68-3-3, paragraph (10) of the Act |
Paragraph (2) | calculated without applying the provisions of said paragraph and Article 57, paragraph (1), Article 58, paragraph (1) and Article 59, paragraph (2) of the Corporation Tax Act | calculated without applying the provisions of Article 57, paragraph (1), Article 58, paragraph (1) and Article 59, paragraph (2) of the Corporation Tax Act in the case where the calculation is made, with regard to the income categorized as domestic source income prescribed in Article 141 of said Act, in accordance with these provisions, pursuant to the provisions of Article 68-3-2, paragraph (1) of the Act and Article 142 of the Corporation Tax Act |
Paragraph (2) | income for the relevant business year | income categorized as domestic source income |
The preceding paragraph | With regard to the application of the provisions of Article 73, paragraph (2) and Article 77-2, paragraph (2) of the Order for Enforcement of the Corporation Tax Act in the case where the provisions of Article 68-3-2, paragraph (1) apply | In the case where the provisions of Article 68-3-2, paragraph (1) apply and where calculation is to be made, in accordance with the provisions of Article 73, paragraph (2) and Article 77-2, paragraph (2) of the Order for Enforcement of the Corporation Tax Act, with regard to income categorized as domestic source income prescribed in Article 141 of the Corporation Tax Act under Article 142 of said Act, with regard to the application of these provisions |
The preceding paragraph | Article 68-3-3, paragraph (1) (Special Provisions on Taxation of the Trust Corporation of a Special Investment Trust) | paragraph (1) of said Article which is applied mutatis mutandis pursuant to Article 68-3-3, paragraph (10) (Special Provisions on Taxation of the Trust Corporation of a Special Investment Trust) |
(9) The amount of foreign corporation tax prescribed in Article 68-3-3, paragraph (4) of the Act that is to be credited under said
paragraph (hereinafter referred to as the "amount of creditable foreign corporation tax" in this Article) shall be
the sum of the amounts that remain after deducting, from the amount specified
respectively in the following items for persons listed in the relevant items, the amount of a distribution of proceeds (meaning the
amount of a distribution of
proceeds prescribed in Article 68-3-3, paragraph (1) of the Act; hereinafter the same shall apply in this Article) of special investment
trusts pertaining to the amount of creditable foreign corporation tax that these persons are to receive
(where said sum of the amounts exceeds the amount of foreign corporation tax prescribed in Article 68-3-3, paragraph (4) of the Act
that a trust corporation
for special investment trusts has paid, the amount of said paid foreign
corporation tax):
(i) A resident prescribed in Article 2, paragraph (1), item (i)-2 of the Act: The amount obtained by dividing the amount of the distribution
of proceeds that the resident is to receive by the rate that remains after deducting the tax
rate prescribed in Article 182, item (ii) of the Income Tax Act from one
(ii) A domestic corporation: The amount obtained by dividing the amount of the distribution of proceeds that the domestic corporation
is to receive by the
rate that remains after deducting the tax rate prescribed in Article 213, paragraph (2), item (ii) of the Income Tax Act from one
(iii) A nonresident prescribed in Article 2, paragraph (1), item (i)-2 of the Act or a foreign corporation: The amount obtained by
dividing the amount of the
distribution of proceeds that the nonresident or foreign corporation is to
receive by the rate that remains after deducting the tax rate prescribed in
Article 213, paragraph (1), item (i) of the Income Tax Act from one.
(10) When a trust corporation for special investment trusts collects income tax on the amount of a distribution of proceeds (limited
to the amount pertaining to
the business year for which it is to pay the amount of creditable foreign
corporation tax) pursuant to the provisions of Article 181 or Article 212 of the
Income Tax Act, said amount of creditable foreign corporation tax shall be credited against the amount of income tax that it is to
collect and pay.
(11) Where the provisions of Article 68-3-3, paragraph (4) of the Act has applied
to the amount of a distribution of proceeds of special investment trusts that an individual or a corporation is to receive, the amount
of creditable foreign
corporation tax pertaining to said amount of distribution of proceeds shall be
added to said amount of distribution of proceeds that these persons are to receive.
(12) A trust corporation for special investment trusts, which was subject to the
provisions of Article 68-3-3, paragraph (4) of the Act, shall preserve a
document certifying that the amount of foreign corporation tax prescribed in said paragraph has been imposed and other documents specified
by Ordinance
of the Ministry of Finance, as specified by Ordinance of the Ministry of Finance.
Section 25 Special Provisions, etc. on Taxation of the Transactions of
Consolidated Corporations with Their Foreign Affiliated Persons
(Special Provisions on Taxation of the Transactions of Consolidated
Corporations with Their Foreign Affiliated Persons)
Article 39-112 (1) The special relationship specified by Cabinet Order prescribed in Article 68-88, paragraph (1) of the Act shall
be a relationship listed as
follows:
(i) A relationship whereby one corporation directly or indirectly holds 50
percent or more of the total number or total amount of a second corporation's issued shares or capital contributions (excluding
said the shares that either corporation holds in itself; hereinafter referred to as the "issued shares, etc." through to
paragraph (3))
(ii) Where 50 percent or more of the total number or total amount of the issued shares, etc. of two corporations are respectively
held directly or indirectly by the same person (where said person is an individual, said individual and an
individual who has a special relationship specified by Cabinet Order
prescribed in Article 2, item (x) of the Corporation Tax Act to said individual;
the same shall apply in item (v)), the relationship between said two corporations (excluding relationships falling under the category
or relationships listed in the preceding item)
(iii) A relationship whereby the existence of the facts listed as follows or any
other facts equivalent thereto (referred to as a "specified fact" in the
following item and item (v)) enables either of two corporations to determine substantially the whole or a part of the other corporation's
business policies (excluding relationships falling under the category of relationships listed in the preceding two items):
(a) The fact that 50 percent or more of the officers or officers with the
representative authority of one corporation are persons who double as officers or employees of a second corporation or who were formerly
officers or employees of said second corporation
(b) The fact that one corporation depends on transactions with a second corporation for a considerable part of its business activities
(c) The fact that one corporation has borrowed a considerable part of the
funds necessary for its business activities from a second corporation or has procured a considerable part of the funds necessary for
its business
activities by obtaining guarantees from said second corporation
(iv) The relationship between a single corporation and any of the corporations listed as follows (excluding relationships falling
under the category of
relationships listed in the preceding three items):
(a) A corporation in a relationship whereby 50 percent or more of the number or the amount of its issued shares, etc. are held directly
or indirectly by the single corporation or the whole or a part of its business policies can be
substantially determined by said single corporation due to the existence of
a specified fact
(b) A corporation in a relationship whereby 50 percent or more of the number or the amount of its issued shares, etc. are held directly
or indirectly by a corporation listed in (a) or (c) or the whole or a part of its business policies
can be substantially determined by said corporation due to the existence of a specified fact
(c) A corporation in a relationship whereby 50 percent or more of the number or the amount of its issued shares, etc. are held directly
or indirectly by a corporation listed in (b) or the whole or a part of its business policies can
be substantially determined by said corporation due to the existence of a
specified fact
(v) The relationship between two corporations whereby both corporations fall under the category of any of the corporations listed
as follows (limited to the
case where a single person prescribed in (a) is the same person and excluding relationships falling under the category of relationships
listed in the
preceding items):
(a) A corporation in a relationship whereby 50 percent or more of the number or the amount of its issued shares, etc. are held directly
or indirectly by a
single person or the whole or a part of its business policies can be
substantially determined by said person due to the existence of a specified fact
(b) A corporation in a relationship whereby 50 percent or more of the number or the amount of its issued shares, etc. are held directly
or indirectly by a corporation listed in (a) or (c) or the whole or a part of its business policies
can be substantially determined by said corporation due to the existence of
a specified fact
(c) A corporation in a relationship whereby 50 percent or more of the number or the amount of its issued shares, etc. are held directly
or indirectly by a corporation listed in (b) or the whole or a part of its business policies can
be substantially determined by said corporation due to the existence of a
specified fact.
(2) In the case referred to in item (i) of the preceding paragraph, whether or not the first corporation directly or indirectly holds
50 percent or more of the
number or the amount of the second corporation's issued shares, etc. shall be determined according to the ratio obtained by adding
the ownership ratio for the shares, etc. in said second corporation held directly by said first
corporation (meaning the ratio of the number or the amount of the second
corporation's shares or capital contributions held by the first corporation out of the total issued shares, etc. of the second
corporation) and the ownership ratio
for the shares, etc. in the second corporation held indirectly by the first corporation.
(3) The ownership ratio for the shares, etc. held indirectly that is prescribed in the preceding paragraph shall be the ratio specified
respectively in the
following items for the category of cases listed in the relevant items (where this falls under both of the following cases, the sum
of the ratios specified
respectively as follows):
(i) Where 50 percent or more of the number or the amount of the issued shares, etc. of a corporation which is a shareholder, etc.
(meaning a shareholder, etc. prescribed in Article 2, item (xiv) of the Corporation Tax Act; the same shall
apply in the following item) of the second corporation set forth in the
preceding paragraph are held by the first corporation set forth in the
preceding paragraph: The ratio of the number or the amount of shares or
capital contributions of the second corporation held by the corporation which is a shareholder, etc. out of the total issued shares,
etc. of said second
corporation (where there are two or more such corporations which are shareholders, etc., the sum of the ratios calculated for each
of them)
(ii) Where a single corporation or two or more corporations are interposed
between a corporation which is a shareholder, etc. of the second corporation set forth in the preceding paragraph (excluding a corporation
which is a
shareholder, etc. set forth in the preceding item falling under the case listed in said item) and the first corporation set forth
in the preceding paragraph and have a link with them through the holding of issued shares, etc.
(hereinafter such interposed corporations shall be referred to as
"corporations related through capital contribution" in this item) (limited to
the case where 50 percent or more of the number or the amount of the issued shares, etc. of both the corporations related through
capital contribution and the corporation which is a shareholder, etc. are held by the first corporation
or by a corporation related through capital contribution (this shall be limited
to those for whom 50 percent or more of the number or the amount of the
issued shares, etc. are held by the first corporation or by another corporation related through capital contribution)): The ratio
of the number or the amount of shares or capital contributions of the second corporation held by the
corporation which is a shareholder, etc. out of the total issued shares, etc. of said second corporation (where there are two or more
such corporations
which are shareholders, etc., the sum of the ratios calculated for each of them).
(4) The provisions of paragraph (2) shall apply mutatis mutandis to the
determination of a relationship whereby the shares, etc. are directly or
indirectly held as set forth in item (ii), item (iv) and item (v) of paragraph (1).
(5) The normal profit margin specified by Cabinet Order prescribed in Article 68-
88, paragraph (2), item (i), (b) of the Act shall be the ratio of the amount of
gross profits gained by a person who purchased the same or similar inventory
assets as those for a transaction with a foreign affiliated person prescribed in paragraph (1) of said Article (hereinafter referred
to as a "transaction with a
foreign affiliated person" in this Article) from a person with no special relationship thereto (meaning a special relationship
as prescribed in said
paragraph) (hereinafter a person with no special relationship to the relevant person shall be referred to as a "non-affiliated
person" through to paragraph
(7) and the person who purchased such inventory assets shall be referred to as a "reseller" in this paragraph and paragraph
(7), item (ii)) through a
transaction to sell said same or similar inventory assets to a non-affiliated
person (hereinafter referred to as a "comparable transaction" in this
paragraph) (such gross profits shall mean the amount obtained by deducting
the sum of the costs of said inventory assets for a comparable transaction from the total revenue arising from the sale of said inventory
assets for a
comparable transaction) against the sum of said revenue; provided, however,
that where functions performed by the selling side or any other matters differ between a comparable transaction and a transaction
in which the purchasing side of said inventory assets for a transaction with a foreign affiliated person
sold the inventory assets to a non-affiliated person, such normal profit margin
shall be the ratio after making the necessary adjustment for the differences in ratios caused by such disparity.
(6) The normal profit margin specified by Cabinet Order prescribed in Article 68-
88, paragraph (2), item (i), (c) of the Act shall be the ratio of the amount of
gross profits gained by a person who acquired the same or similar inventory assets as those for a transaction with a foreign affiliated
person through the
purchase (limited to a purchase from a non-affiliated person), manufacture or
any other acts (hereinafter such person shall be referred to as a "seller" in this paragraph and item (iii) of the following
paragraph) through a transaction to
sell said same or similar inventory assets to a non-affiliated person
(hereinafter referred to as a "comparable transaction" in this paragraph) (such gross profits shall mean the amount obtained
by deducting the sum of the costs of said inventory assets for a comparable transaction from the total revenue
arising from the sale of said inventory assets for a comparable transaction)
against the sum of said costs; provided, however, that where functions
performed by the selling side or any other matters differ between a comparable transaction and said transaction with a foreign affiliated
person, such normal
profit margin shall be the ratio after making a necessary adjustment for the
differences in ratios caused by such disparity.
(7) The method specified by Cabinet Order prescribed in Article 68-88, paragraph
(2), item (i), (d) of the Act shall be the method listed as follows:
(i) The method which uses, as the amount of consideration for a transaction
with a foreign affiliated person, the amount calculated by deeming that the
income, which arises from the purchase, manufacture, sale or any other acts conducted with regard to inventory assets for said transaction
with a foreign affiliated person by a consolidated corporation set forth in Article 68-88,
paragraph (1) of the Act or a foreign affiliated person prescribed in said paragraph who is the foreign affiliated person of said
consolidated
corporation, is to be attributed to said consolidated corporation or foreign
affiliated person, in accordance with the factors sufficient to estimate the amount of expenses or the value of fixed assets that
such persons have spent or used for conducting such acts or any other levels of such persons'
contribution to said income
(ii) The method which uses, as the amount of consideration for a transaction with a foreign affiliated person, the remaining amount
of consideration
gained by the purchasing side of inventory assets for a transaction with a foreign affiliated person for having sold said inventory
assets to a non- affiliated person (hereinafter such amount of consideration shall be referred to as the "resale price"
in this item) after deducting the amount obtained by multiplying said resale price by the ratio of the amount listed in (a) against
the amount listed in (b) (where functions performed by the selling side or any
other matters differ between a transaction in which a reseller has sold the same or similar inventory assets as said inventory assets
to a non-affiliated person (hereinafter referred to as a "comparable transaction" in this item) and a transaction in which
the purchasing side of said inventory assets for a transaction with a foreign affiliated person sold the inventory assets to a
non-affiliated person, by the ratio after making a necessary adjustment for
the differences in ratios caused by such disparity) and then adding the
selling expenses and general administrative expenses needed for the sale of said inventory assets for a transaction with a foreign
affiliated person:
(a) The sum of the operating profits arising from the sale of said inventory assets for a comparable transaction
(b) The total revenue arising from the sale of said inventory assets for a
comparable transaction
(iii) The method which uses, as the amount of consideration for a transaction with a foreign affiliated person, the amount obtained
by adding the amount of the costs spent by the selling side of inventory assets for a transaction
with a foreign affiliated person for acquiring the inventory assets through
the purchase, manufacture or any other acts (hereinafter referred to as the
"amount of acquisition costs" in this item), the amount obtained by
multiplying the amount listed in (a) by the ratio of the amount listed in (b)
against the amount listed in (c) (where functions performed by the selling
side or any other matters differ between a transaction in which a seller sold the same or similar inventory assets as said inventory
assets to a non-
affiliated person (hereinafter referred to as a "comparable transaction" in
this item) and said transaction with a foreign affiliated person, by the ratio after making a necessary adjustment for the differences
in ratios caused by such disparity), and the sum of the amounts listed in (a), 2.:
(a) The sum of the amounts listed as follows:
1. The amount of said acquisition costs
2. The amount of the selling expenses and general administrative expenses needed for the sale of said inventory assets for a transaction
with a
foreign affiliated person
(b) The sum of the operating profits arising from the sale of said inventory assets for a comparable transaction
(c) The amount obtained by deducting the amount listed in (b) from the total
revenue arising from the sale of said inventory assets for a comparable transaction
(iv) The method equivalent to those listed in the preceding two items.
(8) The case specified by Cabinet Order prescribed in Article 68-88, paragraph (5)
of the Act shall be the case where it has been determined in advance at the time of a transaction between a consolidated corporation
set forth in said
paragraph and a non-affiliated person set forth in said paragraph (hereinafter referred to as a "non-affiliated person"
in this paragraph and the following
paragraph) under a contract, etc. that the assets for said transaction are to be
sold, transferred, lent or provided to the foreign affiliated person of said
consolidated corporation set forth in paragraph (5) of said Article and where the amount of consideration for said sale, transfer,
lending or provision is deemed to have been substantially determined between said consolidated
corporation and said foreign affiliated person, and the case where it has been determined in advance at the time of a transaction
between the foreign
affiliated person of said consolidated corporation set forth in said paragraph and a non-affiliated person, under a contract, etc.
that the assets for said
transaction are to be sold, transferred, lent or provided to a consolidated
corporation set forth in said paragraph and where the amount of consideration for said sale, transfer, lending or provision is deemed
to have been
substantially determined between said consolidated corporation and said
foreign affiliated person.
(9) Notwithstanding the provisions of Article 68-88, paragraph (2) of the Act, the arm's length price prescribed in paragraph
(1) of said Article for a transaction
that was deemed to be a transaction with a foreign affiliated person under the provisions of paragraph (5) of said Article shall be
the amount calculated by
applying the provisions of paragraph (2) of said Article by deeming that said
transaction has been conducted between a consolidated corporation set forth in the preceding paragraph and its foreign affiliated
person and by making a
necessary adjustment with regard to the differences in the amount of
consideration caused when a transaction between said consolidated corporation and said foreign affiliated person is conducted via
a non-affiliated person.
(10) The gross profit margin prescribed in Article 68-88, paragraph (6), item (i) of the Act or any other ratio specified by Cabinet
Order as a ratio equivalent
thereto shall be the ratio of the amount of gross profits gained by a corporation
which is engaged in the same type of business and whose size and other details are similar as prescribed in said item through said
business for a business year including the day on which a transaction with a foreign affiliated person set
forth in said item was conducted or for any other period equivalent thereto
(such amount of gross profits shall mean the amount obtained by deducting the sum of the costs of inventory assets for the relevant
business year or any other period equivalent thereto (where said business is other than that pertaining to
the sale of inventory assets, the sum of equivalent costs or expenses;
hereinafter referred to as the "amount of gross costs" in this paragraph) from the total revenue arising from the sale of
said inventory assets (where said
business is other than that pertaining to the sale of inventory assets, the total revenue from said business; hereinafter referred
to as the "amount of gross
revenue" in this paragraph)) against the amount of gross revenue or gross costs. (11) The method specified by Cabinet Order as
the method similar to the method
specified by Cabinet Order prescribed in Article 68-88, paragraph (2), item (i),
(d) of the Act or the method listed in paragraph (2), item (ii), (b) of said Article
(limited to the method equal to that specified by said Cabinet Order) as
prescribed in paragraph (6), item (ii) of said Article shall be the method listed in items (i) to (iv), in the case where a transaction
with a foreign affiliated
person is for the sale or purchase of inventory assets, and the method listed in item (i) or item (v), in the case where a transaction
with a foreign affiliated
person is for other than the sale or purchase of inventory assets:
(i) The method which uses, as the amount of consideration for a transaction
with a foreign affiliated person, the amount calculated by deeming that the income, which arises from a business pertaining to a transaction
with a
foreign affiliated person set forth in Article 68-88, paragraph (6) of the Act for the business year including the date on which said
transaction with a foreign affiliated person was conducted, based on financial statements
containing the consolidated status of property and profits and losses of a corporate group which includes said consolidated corporation
and a foreign affiliated person (meaning a foreign affiliated person prescribed in paragraph (1) of said Article) pertaining to said
transaction with a foreign affiliated
person conducted by said consolidated corporation (where the income arising
from said business is not recorded separately from the income arising from other businesses in said financial statements, the income
arising from
businesses including said business; hereinafter the same shall apply in this item), or for any other period equivalent thereto, is
to be attributed to such persons, in accordance with the factors sufficient to estimate the amount of
expenses or the value of fixed assets that such persons have spent or used for conducting said transaction with a foreign affiliated
person (where the
amount of expenses or the value of fixed assets spent or used for said
business is not recorded separately from the amount of expenses or the value
of fixed assets spent or used for other businesses in said financial statements, the amount of expenses or the value of fixed assets
spent or used for
businesses including said business) or any other levels of such persons' contribution to said income
(ii) The method which uses, as the amount of consideration for a transaction
with a foreign affiliated person, the remaining amount of consideration
gained by the purchasing side of inventory assets for a transaction with a foreign affiliated person for having sold said inventory
assets to a non- affiliated person (meaning a person with no special relationship thereto as prescribed in Article 68-88, paragraph
(1) of the Act) (hereinafter such
amount of consideration shall be referred to as the "resale price" in this item)
after deducting the amount obtained by multiplying said resale price by the ratio of the amount listed in (a) against the amount listed
in (b) and then adding the selling expenses and general administrative expenses needed for the sale of said inventory assets for
a transaction with a foreign affiliated
person:
(a) The sum of the operating profits gained by a corporation which is engaged in the same or similar type of business as those pertaining
to said
transaction with a foreign affiliated person and whose size and other
details are similar (hereinafter referred to as a "comparable business" in this item) through the sale of inventory assets
for said comparable business for a business year including the day on which said transaction with a foreign affiliated person was
conducted or for any other period
equivalent thereto (hereinafter referred to as a "comparable business year"
in this item)
(b) The total revenue arising from the sale of said inventory assets for a comparable business for said comparable business year
(iii) The method which uses, as the amount of consideration for a transaction with a foreign affiliated person, the amount obtained
by adding the amount of the costs spent by the selling side of inventory assets for the transaction with a foreign affiliated person
for acquiring the inventory assets through
the purchase, manufacture or any other acts (hereinafter referred to as the
"amount of acquisition costs" in this item), the amount obtained by
multiplying the amount listed in (a) by the ratio of the amount listed in (b)
against the amount listed in (c), and the sum of the amounts listed in (a), 2.: (a) The sum of the amounts listed as follows:
1. The amount of said acquisition costs
2. The amount of the selling expenses and general administrative expenses needed for the sale of said inventory assets for the transaction
with a
foreign affiliated person
(b) The sum of the operating profits gained by a corporation which is engaged in the same or similar type of business as those pertaining
to said
transaction with a foreign affiliated person and whose size and other
details are similar (hereinafter referred to as a "comparable business" in this item) through the sale of inventory assets
for said comparable business for a business year including the day on which said transaction with a foreign affiliated person was
conducted or for any other period
equivalent thereto (hereinafter referred to as a "comparable business year" in this item)
(c) The amount obtained by deducting the amount listed in (b) from the total revenue arising from the sale of said inventory assets
for the comparable
business for said comparable business year
(iv) The method equivalent to those listed in the preceding two items
(v) The method equal to those listed in the preceding three items
(12) The requirements specified by Cabinet Order prescribed in Article 68-88, paragraph (19) of the Act shall be the requirements
listed as follows:
(i) With regard to the arm's length price prescribed in Article 68-88, paragraph
(19) of the Act which pertains to a transaction with a foreign affiliated
person prescribed in said paragraph, the Minister of Finance has reached an agreement, under a tax convention prescribed in said paragraph,
with the competent authority of a contracting state other than Japan of said tax
convention
(ii) The contracting state other than Japan set forth in the preceding item reduces a tax for a foreign affiliated person prescribed
in Article 68-88,
paragraph (19) of the Act, based on the agreement set forth in the preceding item, and does not add to the amount to be refunded due
to said tax
reduction, the part of the amount equivalent to the interest on refund that
corresponds to the base period for the calculation for which the Minister of Finance has reached an agreement with the competent authority
of said contracting state other than Japan.
(13) The delinquent tax imposed with regard to the corporation tax payable as
prescribed in Article 68-88, paragraph (19) of the Act shall be the delinquent
tax to be imposed on the amount obtained by deducting the amount equivalent to the corporation tax payable where the provisions of
paragraph (1) of said
Article do not apply from the corporation tax payable where the provisions of
said paragraph apply.
(14) Where the provisions of Article 68-88, paragraph (1), paragraph (2), item (i), (a) or (b), or paragraph (5) of the Act or the
provisions of paragraph (5) shall
apply, the existence of any special relationship prescribed in these provisions
or lack thereof shall be determined according to its status at the time when the relevant transactions were conducted.
(15) With respect to the application of Article 155-16 of the Order for
Enforcement of the Corporation Tax Act where the provisions of Article 68-88, paragraph (3) of the Act shall apply, the term "Article
81-6, paragraph (1) or
paragraph (2) (Calculation of the Amount of Contributions Expended by
Consolidated Corporations to be Excluded from Deductible Expenses) of the
Act" in said Article shall be deemed to be replaced with "Article 81-6,
paragraph (1) or paragraph (2) (Calculation of the Amount of Contributions
Expended by Consolidated Corporations to be Excluded from Deductible
Expenses) of the Act or Article 68-88, paragraph (3) (Special Provisions on
Taxation of the Transactions of Consolidated Corporations with Their Foreign
Affiliated Persons) of the Act on Special Measures Concerning Taxation;" and
the term "Article 81-6, paragraph (2) of the Act" in item (ii) of said Article shall be deemed to be replaced with "Article
81-6, paragraph (2) of the Act or Article
68-88, paragraph (3) of the Act on Special Measures Concerning Taxation."
(Application Procedures, etc. for a Grace Period for Tax Payment under the
Special Provisions on Taxation of the Transactions of Consolidated
Corporations with Their Foreign Affiliated Persons)
Article 39-112-2 (1) The amount calculated as specified by Cabinet Order as the amount of corporation tax and additional tax for
said corporation tax
prescribed in Article 68-88-2, paragraph (1) of the Act shall be the sum of the
amounts listed as follows:
(i) The amount obtained by deducting the amount of corporation tax payable where the calculation has been made by deeming that the
reassessment or
determination for the objection prescribed in Article 68-88-2, paragraph (1) of the Act (meaning the reassessment or determination
listed in Article 68-88,
paragraph (16), item (i) of the Act; hereinafter the same shall apply in this
item and paragraph (3), item (ii)) does not cover the part pertaining to the corporation tax prescribed in Article 68-88-2, paragraph
(1) of the Act
(referred to as the "amount of corporation tax not under a grace period" in
the following item) from the amount of corporation tax payable based on said reassessment or determination (referred to as the "amount
of corporation tax based on the reassessment or determination" in the following item)
(ii) The amount obtained by deducting the amount of additional tax (meaning
additional tax prescribed in Article 69 of the Act on General Rules for
National Taxes; hereinafter the same shall apply in this item) to be imposed based on the amount of corporation tax not under a grace
period from the amount of additional tax to be imposed based on the amount of corporation
tax based on the reassessment or determination.
(2) The case where there is no agreement prescribed in Article 68-88-2,
paragraph (1) of the Act or any other case specified by Cabinet Order shall be the case listed respectively in the following items
and the date specified by
Cabinet Order prescribed in said paragraph shall be the date on which the Commissioner of the National Tax Agency notified the fact
that the case falls under any of those listed in the relevant items:
(i) Where the Commissioner of the National Tax Agency finds that an
agreement set forth in Article 68-88-2, paragraph (1) of the Act (referred to as an "agreement" in the following item and
item (iii)) cannot be reached
even if the consultation prescribed in said paragraph (hereinafter referred to as a "mutual consultation" in this paragraph)
is continued (excluding the
case listed in the items of Article 68-88-2, paragraph (5) of the Act), when
he/she has made a request for the termination of said mutual consultation to the competent authority of the other contracting state
pertaining to said
mutual consultation (meaning a contracting state other than Japan of a tax convention prescribed in Article 1-3, paragraph (1), item
(ii); the same shall apply in the following item) and has obtained consent from said competent
authority
(ii) Where the competent authority of the other contracting state pertaining to
a consultation finds that an agreement cannot be reached even if said mutual consultation were continued, when the Commissioner of
the National Tax
Agency has received a request for the termination of said mutual
consultation from said competent authority and has given his/her consent
(iii) Where an agreement has been reached on the amount of corporation tax
prescribed in Article 68-88-2, paragraph (1) of the Act, when said agreement is not to change said amount of corporation tax.
(3) A person intending to receive a grace period for tax payment under the
provisions of Article 68-88-2, paragraph (1) of the Act shall submit a written application containing the matters listed as follows
along with a document certifying that he/she has filed an objection set forth in said paragraph and
other documents specified by Ordinance of the Ministry of Finance to the district director, etc. prescribed in Article 46, paragraph
(1) of the Act on General Rules for National Taxes:
(i) The name and place for tax payment of a corporation intending to receive said grace period for tax payment (where the place for
tax payment and the location of its head office or principal office are different, the corporation's
name, place for tax payment and location of the head office or principal
office)
(ii) The business year, due date and the amount of payable corporation tax based on the reassessment or determination
(iii) The amount for which the corporation intends to receive a grace period for tax payment out of the amount set forth in the preceding
item
(iv) Where said amount for which the corporation intends to receive a grace
period for tax payment exceeds 500,000 yen, the type, amount, value and
location of the security listed in the items of Article 50 of the Act on General
Rules for National Taxes which it intends to provide at the time of filing the
application (when the security is a guarantee by a guarantor, the guarantor's name and the location, address or domicile of his/her
head office or principal
office) and any other matters for reference concerning the security (where
there is any special circumstance whereby the corporation cannot provide security, said circumstance).
(4) With respect to the application of the provisions of Article 23, paragraph (1) of
the Order for Enforcement of the Act on General Rules for National Taxes, regarding the corporation tax for which a grace period for
tax payment has been received pursuant to the provisions of Article 68-88-2, paragraph (1) of the Act, the term "or national
tax" in Article 23, paragraph (1) of said Order
shall be deemed to be replaced with "(including a grace period for tax payment under the provisions of Article 68-88-2, paragraph
(1) (Grace Period for Tax
Payment under the Special Provisions on Taxation of the Transactions of
Consolidated Corporations with Their Foreign Affiliated Persons) of the Act on
Special Measures Concerning Taxation) or national tax."
Section 26 Special Provisions on Taxation on Interest on Liabilities, etc.
Payable to a Consolidated Corporation's Foreign Controlling
Shareholders, etc.
(Special Provisions on Taxation on Interest on Liabilities, etc. Payable to a
Consolidated Corporation's Foreign Controlling Shareholders, etc.)
Article 39-113 (1) The amount calculated as specified by Cabinet Order as the amount equivalent to the excess part prescribed in
Article 68-89, paragraph (1) of the Act shall be the amount specified respectively in the following items for
the category of cases listed in the relevant items:
(i) Where the remaining amount after deducting the amount listed in (b) from
the amount listed in (a) is equivalent to or less than the amount listed in (c): The amount obtained by calculating the amount of
expenses listed in the
items of paragraph (14) which said consolidated corporation pays for the
relevant consolidated business year to its foreign controlling shareholder, etc. (meaning a foreign controlling shareholder, etc.
prescribed in Article 68-89,
paragraph (4), item (i) of the Act; hereinafter the same shall apply in this
Article) and fund provider, etc. (meaning a fund provider, etc. prescribed in item (ii) of said paragraph; hereinafter the same shall
apply in this Article) (such expense shall be limited to what is to be paid, in the case prescribed in item (ii) or item (iii) of
paragraph (13), when the interest on liabilities
pertaining to the funds set forth in those items is included in the taxable
income (meaning the taxable income prescribed in Article 68-89, paragraph
(4), item (ix) of the Act; the same shall apply in (b)) of the person who is to
receive payment of said interest; such amount of expenses shall be referred
to as the "amount of the guarantee charge, etc. related to taxable income" in the following item) and then multiplying said
amount of expenses by the
ratio obtained by dividing the remaining amount after deducting the amount
listed in (c) from the amount listed in (a) (such remaining amount shall be
referred to as the "amount exceeding the average balance of liabilities" in the following item and the following paragraph)
by the amount listed in (b):
(a) The average balance of liabilities (meaning the average balance of
liabilities prescribed in Article 68-89, paragraph (4), item (v) of the Act; hereinafter the same shall apply in this Article) regarding
the liabilities owed, for the relevant consolidated business year of said consolidated
corporation, to said foreign controlling shareholder, etc. and fund provider, etc. (meaning the liabilities owed to a foreign controlling
shareholder, etc. and a fund provider, etc. prescribed in item (iv) of said paragraph;
hereinafter the same shall apply in this Article)
(b) The average balance of liabilities regarding the liabilities specified by
Cabinet Order prescribed in Article 68-89, paragraph (4), item (iv) of the
Act owed to a fund provider, etc. (limited to the liabilities regarding those whose interest is included in the taxable income of
a person who is to
receive payment of said interest)
(c) The amount obtained by multiplying the equity interest held by a foreign controlling shareholder, etc. for the relevant consolidated
business year of said consolidated corporation (meaning the equity interest held by a
foreign controlling shareholder, etc. prescribed in Article 68-89, paragraph
(4), item (vi) of the Act; the same shall apply in paragraph (4) and
paragraph (7)) by three (where said consolidated corporation receives the application of the provisions of paragraph (3) of said Article,
by the
multiple number prescribed in said paragraph; the same shall apply in the
following paragraph)
(ii) Where the remaining amount after deducting the amount listed in (b) from the amount listed in (a) of the preceding item exceeds
the amount listed in
(c): The sum of the amounts listed as follows:
(a) The amount obtained by deducting the amount of the guarantee charge,
etc. related to taxable income from the amount of interest on liabilities, etc. (meaning the interest on liabilities, etc. prescribed
in Article 68-89,
paragraph (4), item (iii) of the Act; hereinafter the same shall apply in this
Article) that said consolidated corporation pays for the relevant
consolidated business year to said foreign controlling shareholder, etc. and fund provider, etc. and then multiplying the remaining
amount after
deduction by the ratio obtained by dividing the remaining amount after deducting the amount listed in (b) of the preceding item from
the amount
exceeding the average balance of liabilities by the remaining amount after
deducting the amount listed in (b) of said item from the amount listed in
(a) of said item
(b) The amount of guarantee charge, etc. for the taxable income.
(2) With respect to the application of the provisions of the preceding paragraph where the remaining amount after deducting the amount
obtained by
multiplying the amount of equity capital (meaning the amount of equity capital
prescribed in Article 68-89, paragraph (4), item (vii) of the Act; hereinafter the same shall apply in this Article) for the relevant
consolidated business year of said consolidated corporation by three from the average balance of liabilities regarding the total
liabilities prescribed in Article 68-89, paragraph (1) of the Act for the relevant consolidated business year of said consolidated
corporation is less than the amount exceeding the average balance of liabilities for the
relevant consolidated business year of said consolidated corporation, in item (i)
of the preceding paragraph, the term "the remaining amount after deducting the amount listed in (b) from the amount listed in
(a) is equivalent to or less
than the amount listed in (c)" shall be deemed to be replaced with "the
remaining amount after deducting the amount obtained by multiplying the
amount of equity capital prescribed in Article 68-89, paragraph (4), item (vii) of the Act for the relevant consolidated business
year of said consolidated
corporation by three from the average balance of liabilities regarding the total liabilities prescribed in Article 68-89, paragraph
(1) of the Act for the relevant consolidated business year of said consolidated corporation (hereinafter such remaining amount shall
be referred to as "the amount exceeding the average
balance of the total liabilities" in this paragraph) is equivalent to or less than
the amount listed in (b);" the term "Article 68-89, paragraph (4), item (i) of the
Act" shall be deemed to be replaced with "paragraph (4), item (i) of said
Article;" and the term "remaining amount after deducting the amount listed in
(c) from the amount listed in (a) (such remaining amount shall be referred to as the "amount exceeding the average balance of
liabilities" in the following item and the following paragraph)" shall be deemed to be replaced with "the amount exceeding
the average balance of the total liabilities;" and in item (ii) of said
paragraph, the term "the remaining amount after deducting the amount listed
in (b) from the amount listed in (a) of the preceding item exceeds the amount listed in (c)" shall be deemed to be replaced with
"the amount exceeding the
average balance of the total liabilities exceeds the amount listed in (b) of the preceding item;" and the term "the amount
exceeding the average balance of
liabilities" shall be deemed to be replaced with "the amount exceeding the average balance of the total liabilities."
(3) Where the provisions of Article 68-89, paragraph (1) of the Act shall apply, the amount of interest on liabilities, etc. to be
paid by a consolidated
corporation prescribed in said paragraph to said foreign controlling
shareholder, etc. and fund provider, etc. for the relevant consolidated business year shall be based on the amount posted by said
consolidated corporation as an expense for the relevant consolidated business year.
(4) With respect to the application of the provisions of Article 68-89, paragraph
(1) of the Act where there are two or more foreign controlling shareholders, etc. of a consolidated corporation, the average balance
of liabilities regarding the
liabilities owed to foreign controlling shareholders, etc. and fund providers, etc., equity interest held by foreign controlling shareholders,
etc. and the amount of interest on liabilities, etc. to be paid to foreign controlling shareholders, etc.
and fund providers, etc. shall be based on the sum of the average balance of
liabilities regarding the liabilities owed to foreign controlling shareholders, etc. and fund providers, etc., equity interest held
by foreign controlling
shareholders, etc. and the amount of interest on liabilities, etc. to be paid to foreign controlling shareholders, etc. and fund providers,
etc., respectively.
(5) The average balance of liabilities pertaining to a specified bond transaction
with a repurchase/resale agreement, etc. which is calculated as specified by Cabinet Order and is to be deducted from the average
balance of liabilities regarding the liabilities owed to a foreign controlling shareholder, etc. and a
fund provider, etc. prescribed in Article 68-89, paragraph (2) of the Act shall be
the average balance of liabilities regarding the liabilities owed to the foreign controlling shareholder, etc. and fund provider,
etc. of the consolidated
corporation which pertain to a specified bond transaction with a
repurchase/resale agreement, etc. (meaning a specified bond transaction with a repurchase/resale agreement, etc. prescribed in Article
68-89, paragraph (4),
item (viii) of the Act; the same shall apply in the following paragraph and
paragraph (8)) (where said average balance of liabilities exceeds the average balance of assets regarding assets pertaining to a specified
bond transaction with a repurchase/resale agreement, etc. (the average balance of assets shall
mean the amount calculated by a reasonable method as the average balance of said assets' book value for the relevant consolidated
business year; the same shall apply in the following paragraph), such calculated average balance of
liabilities shall be said average balance of assets; such average balance of
assets shall be referred to as the "average balance of liabilities after adjustment" in paragraph (8)).
(6) The average balance of liabilities pertaining to a specified bond transaction with a repurchase/resale agreement, etc. which is
calculated as specified by
Cabinet Order and is to be deducted from the average balance of liabilities regarding the total liabilities for the relevant consolidated
business year
prescribed in Article 68-89, paragraph (2) of the Act shall be the average
balance of liabilities regarding the total liabilities for the relevant consolidated business year (limited to those which are to
be the cause of payment of interest on liabilities, etc.; the same shall apply in paragraph (10)) which pertain to a specified bond
transaction with a repurchase/resale agreement, etc. (where
said average balance of liabilities exceeds the average balance of assets
regarding assets pertaining to a specified bond transaction with a
repurchase/resale agreement, etc., such calculated average balance of liabilities shall be said average balance of assets).
(7) The multiple number applicable to the equity interest held by a foreign
controlling shareholder, etc. which is calculated as specified by Cabinet Order prescribed in Article 68-89, paragraph (2) of the
Act shall be the multiple
number obtained by calculating the average balance of liabilities by deducting the average balance of liabilities pertaining to a
specified bond transaction
with a repurchase/resale agreement, etc. calculated as specified by Cabinet
Order prescribed in said paragraph from the average balance of liabilities regarding the liabilities owed to a foreign controlling
shareholder, etc. and a fund provider, etc. prescribed in said paragraph and then dividing the
calculated average balance of liabilities by the equity interest held by the
foreign controlling shareholder, etc. of the consolidated corporation; and the multiple number applicable to the amount of equity
capital which is calculated as specified by Cabinet Order prescribed in said paragraph shall be the
multiple number obtained by calculating the average balance of liabilities by deducting the average balance of liabilities pertaining
to a specified bond
transaction with a repurchase/resale agreement, etc. calculated as specified by
Cabinet Order prescribed in said paragraph from the average balance of liabilities regarding the total liabilities for the relevant
consolidated business year prescribed in said paragraph and then dividing the calculated average balance of liabilities by the amount
of equity capital of said consolidated
corporation.
(8) The amount of interest on liabilities, etc. pertaining to a specified bond
transaction with a repurchase/resale agreement, etc. which is calculated as specified by Cabinet Order and is to be deducted from
the amount of interest on liabilities, etc. to be paid to a foreign controlling shareholder, etc. and a
fund provider, etc. prescribed in Article 68-89, paragraph (2) of the Act shall be
the amount obtained by multiplying the amount of interest on liabilities, etc. to be paid to the foreign controlling shareholder,
etc. and fund provider, etc. of
the consolidated corporation which pertain to a specified bond transaction with a repurchase/resale agreement, etc. by the ratio obtained
by dividing the
average balance of liabilities after adjustment by the average balance of
liabilities regarding the liabilities pertaining to said specified bond transaction with a repurchase/resale agreement, etc.
(9) With respect to the application of the provisions of paragraphs (1) to (4) in the case where the provisions of Article 68-89,
paragraph (2) of the Act is applied,
the term "and then multiplying said amount of expenses by the ratio" in
paragraph (1), item (i) shall be deemed to be replaced with ", then deducting
the amount obtained by multiplying the part of said amount of expenses that pertains to a specified bond transaction with a repurchase/resale
agreement,
etc. (meaning a specified bond transaction with a repurchase/resale agreement, etc. prescribed in Article 68-89, paragraph (4), item
(viii) of the Act; hereinafter the same shall apply in this item) by the ratio obtained by dividing the average balance of liabilities
after adjustment (meaning the average balance of
liabilities after adjustment prescribed in paragraph (5); hereinafter the same
shall apply in this item) regarding the liabilities for said amount by the average balance of liabilities (meaning the average balance
of liabilities
prescribed in paragraph (4), item (v) of said Article; hereinafter the same shall
apply in this Article) regarding the liabilities for said amount which pertains to a specified bond transaction with a repurchase/resale
agreement, etc., and then multiplying the remaining amount after deduction by the ratio;" the term "The
average balance of liabilities (meaning the average balance of liabilities
prescribed in item (v) of said paragraph; hereinafter the same shall apply in this Article)" in (a) of paragraph (1), item (i)
shall be deemed to be replaced
with "The remaining amount after deducting the average balance of liabilities after adjustment from the average balance of liabilities;"
the term "The
average balance of liabilities" in (b) of said item shall be deemed to be replaced
with "The remaining amount after deducting the average balance of liabilities after adjustment regarding said liabilities from
the average balance of
liabilities;" the term "three" in (c) of said item shall be deemed to be replaced
with "two;" the term "The amount obtained by deducting the amount of the
guarantee charge, etc. related to taxable income" in (a) of paragraph (1), item (ii) shall be deemed to be replaced with "The
amount obtained by deducting the sum of the amount of interest on liabilities, etc. pertaining to a specified bond
transaction with a repurchase/resale agreement, etc. prescribed in paragraph
(2) of said Article and the amount of the guarantee charge, etc. related to
taxable income;" the term "where the remaining amount after deducting the amount" in paragraph (2) shall be deemed
to be replaced with "where the
remaining amount after deducting the sum of the average balance of liabilities regarding the average balance of liabilities which
pertain to a specified bond
transaction with a repurchase/resale agreement, etc. prescribed in paragraph
(6) and the amount;" and the term "by three" in said paragraph shall be deemed to be replaced with "by two."
(10) The percentage specified by Cabinet Order prescribed in Article 68-89,
paragraph (3) of the Act shall be the percentage of the amount of the total
liabilities of a domestic corporation whose business size set forth in paragraph
(3) of said Article and other details are similar to those of a consolidated
corporation which seeks the application of the provisions of said paragraph
(hereinafter referred to as an "applicable corporation" in this paragraph) on the final day of any of said domestic corporation's
relevant business years or
consolidated business years that ended within three years until the final day of the applicable corporation's relevant consolidated
business year (where said
applicable corporation receives the application of the provisions of paragraph
(2) of said Article, the percentage of the remaining amount of the total
liabilities after deducting the amount specified by Ordinance of the Ministry of
Finance) against the sum of the amounts of stated capital, statutory reserve,
and surplus on the same day. In this case, where there are any fractions after two decimal places, they shall be rounded up.
(11) The special relationship specified by Cabinet Order prescribed in Article 68-
89, paragraph (4), item (i) of the Act shall be a relationship listed as follows: (i) A relationship whereby out of the total number
or total amount of issued
shares or capital contributions of said consolidated corporation (excluding
shares it holds in itself or capital contributions held thereby) (hereinafter referred to as the "issued shares, etc." in
this Article), 50 percent or more of shares or capital contributions (hereinafter referred to as the "shares, etc." in
this Article) are held directly or indirectly by a foreign controlling
shareholder, etc.
(ii) Where 50 percent or more of the issued shares, etc. of said consolidated corporation and a foreign corporation are respectively
held directly or
indirectly by the same person (where said person is an individual, including an individual who has a special relationship prescribed
in Article 4,
paragraph (1) of the Order for Enforcement of the Corporation Tax Act to
said individual), the relationship between said consolidated corporation and said foreign corporation (excluding any relationship
falling under that listed in the preceding item)
(iii) A relationship whereby the existence of the facts listed as follows or any other facts equivalent thereto between said consolidated
corporation and a nonresident (meaning a nonresident prescribed in Article 2, paragraph (1), item (i)-2 of the Act) or a foreign
corporation (hereinafter such nonresident or
foreign corporation shall be referred to as a "nonresident, etc." in this item)
enables said nonresident, etc. to determine substantially the whole or a part of said consolidated corporation's business policies
(excluding any
relationship falling under that listed in the preceding two items):
(a) The fact that said consolidated corporation depends on transactions with said nonresident, etc. for a considerable part of its
business activities
(b) The fact that said consolidated corporation has borrowed a considerable
part of the funds necessary for its business activities from said nonresident, etc. or has procured a considerable part of the funds
necessary for its business activities by obtaining guarantees from said nonresident, etc.
(c) The fact that 50 percent or more of the officers or officers with the
representative authority of said consolidated corporation are persons who are officers or have status as officers and employees of
said foreign
corporation or who were formerly said foreign corporation's officers or employees.
(12) The provisions of Article 39-112, paragraph (2) and paragraph (3) shall apply mutatis mutandis to the determination as to whether
or not 50 percent or more of the issued shares, etc. set forth in item (i) and item (ii) of the preceding
paragraph are held directly or indirectly.
(13) A person who provides a consolidated corporation with funds and a person specified by Cabinet Order as being related to such
provision of funds as
prescribed in Article 68-89, paragraph (4), item (ii) of the Act shall be any of the following:
(i) Where it is found that the foreign controlling shareholder, etc. of the
consolidated corporation has provided said consolidated corporation with funds via a third party: Said third party
(ii) Where it is found that a foreign controlling shareholder, etc. of the
consolidated corporation has offered guarantees for said consolidated
corporation's liabilities to a third party and thereby said third party has provided said consolidated corporation with funds:
Said third party
(iii) Where it is found that bonds that the foreign controlling shareholder, etc. of the consolidated corporation has lent to said
consolidated corporation
(including bonds lent by a third party to said consolidated corporation based
on guarantees for said consolidated corporation's liabilities offered by said foreign controlling shareholder, etc.) have been
provided to any other third party as security and have been transferred in a bond transaction with a repurchase/resale agreement
(meaning a bond transaction with a
repurchase/resale agreement prescribed in Article 42-2, paragraph (1) of the
Act) or lent in a cash-secured bond lending transaction (meaning a cash-
secured bond lending transaction prescribed in Article 66-5, paragraph (4), item (viii) of the Act) and thereby said other third party
has provided said
consolidated corporation with funds: Said third party and other third party. (14) The expense specified by Cabinet Order prescribed
in Article 68-89,
paragraph (4), item (iii) of the Act shall be the expense listed as follows:
(i) In the case prescribed in item (ii) of the preceding paragraph, the guarantee charge for the liabilities set forth in said item
which a consolidated
corporation set forth in said item pays its foreign controlling shareholder, etc.
(ii) In the case prescribed in item (iii) of the preceding paragraph, the charge for bonds set forth in said item or guarantee charge
for the liabilities set
forth in said item which a consolidated corporation set forth in said item
pays to its foreign controlling shareholder, etc. or the charge for bonds set forth in said item which said consolidated corporation
pays to a third party set forth in said item.
(15) The liabilities specified by Cabinet Order prescribed in Article 68-89,
paragraph (4), item (iv) of the Act shall be the liabilities set forth in the items of paragraph (13) in the cases prescribed in the
relevant items.
(16) The amount calculated as specified by Cabinet Order as the average amount of liabilities prescribed in Article 68-89, paragraph
(4), item (v) of the Act shall be the amount calculated by a reasonable method as the average balance of the book value of the liabilities
for the relevant consolidated business year.
(17) The amount calculated as specified by Cabinet Order as the interest on a
consolidated corporation's net assets held by a foreign controlling shareholder, etc. as prescribed in Article 68-89, paragraph
(4), item (vi) of the Act shall be
the amount obtained by multiplying the amount of equity capital for the
relevant consolidated business year of said consolidated corporation by the
ratio of the shares, etc. regarding said consolidated corporation held directly or indirectly by a foreign controlling shareholder,
etc. on the final day of the
relevant consolidated business year out of said consolidated corporation's
issued shares, etc.
(18) The shares, etc. held directly or indirectly as prescribed in the preceding
paragraph shall be the total number or the sum of a consolidated corporation's shares, etc. that are held directly by its foreign
controlling shareholder, etc. and the consolidated corporation's shares, etc. that are held indirectly by said foreign controlling
shareholder, etc. (meaning the shares, etc. calculated by multiplying said consolidated corporation's issued shares, etc. by
the ratio
specified respectively in the following items for the category of cases listed in
the relevant items (where this falls under both of the following cases, the sum of the ratios specified respectively as follows)):
(i) Where the whole or a part of the issued shares, etc. of any other domestic corporation which is a shareholder, etc. (meaning a
shareholder, etc.
prescribed in Article 2, item (xiv) of the Corporation Tax Act; hereinafter the same shall apply in this item and paragraph (22))
of a consolidated
corporation are held by said consolidated corporation's foreign controlling
shareholder, etc.: The ratio obtained by multiplying said foreign controlling shareholder, etc.'s ratio of shareholding (meaning
the ratio of the shares, etc. held by a shareholder, etc. out of the total issued shares, etc.; hereinafter the same shall apply
in this paragraph and paragraph (22)) pertaining to said
other domestic corporation by said other domestic corporation's ratio of
shareholding pertaining to said consolidated corporation (where there are
two or more other domestic corporations, the sum of the ratios calculated for each of them)
(ii) Where a single domestic corporation or two or more domestic corporations are interposed between the consolidated corporation
and any other domestic corporation, the whole or a part of whose issued shares, etc. are held by said consolidated corporation's
foreign controlling shareholder, etc. (hereinafter
such interposed domestic corporation shall be referred to as "domestic
corporations related through capital contribution" in this paragraph) and
said foreign controlling shareholder, etc., said other domestic corporation, domestic corporations related through capital contribution
and said
consolidated corporation have a link through the holding of the shares, etc.:
The ratio obtained by multiplying said foreign controlling shareholder, etc.'s ratio of shareholding in said other domestic corporation
sequentially by said other domestic corporation's ratio of shareholding in the domestic
corporation related through capital contribution, by the domestic corporation
related through capital contribution's ratio of shareholding in the other domestic corporation related through capital contribution,
and by the
domestic corporation related through capital contribution's ratio of
shareholding in said consolidated corporation (where there are two or more links, the sum of the ratios calculated for each of them).
(19) Where a consolidated corporation and its foreign controlling shareholder, etc. have a relationship as listed in paragraph (11),
item (ii), when the same person
prescribed in said item is a resident or any other domestic corporation
prescribed in Article 2, paragraph (1), item (i)-2 of the Act, the provisions of
the preceding two paragraphs shall apply by deeming said same person to be a foreign controlling shareholder, etc. related to said
consolidated corporation.
(20) The amount calculated as specified by Cabinet Order as the amount of net
assets prescribed in Article 68-89, paragraph (4), item (vii) of the Act shall be the remaining amount after deducting the amount
listed in item (ii) from the amount listed in item (i) (where said remaining amount is less than the
amount of consolidated individual stated capital, etc. prescribed in Article 2, item (xvii)-2 of the Corporation Tax Act on the final
day of the relevant
consolidated business year of said consolidated corporation (where said amount of consolidated individual stated capital, etc. is
less than the amount of stated
capital or capital contributions, said amount of stated capital or capital
contributions; hereinafter referred to as the "amount of consolidated individual stated capital, etc." in this paragraph
and paragraph (22)), such calculated
amount shall be said amount of consolidated individual stated capital, etc.):
(i) The amount calculated by a reasonable method as the average balance of the book value of the total assets for the relevant consolidated
business year of
said consolidated corporation (such book value shall mean the remaining amount after deducting the amount set aside as reserve funds
by the
appropriation of surplus and the amount set aside as reserves for special
depreciation pursuant to the provisions of Article 52-3 or Article 68-41 of the Act (limited to the amount set aside as reserve funds
by the appropriation of surplus) in lieu of reducing the book value of fixed assets by accounting for
the amount as a loss)
(ii) The amount calculated by a reasonable method as the average balance of the book value of the total liabilities for the relevant
consolidated business year of said consolidated corporation.
(21) The book value set forth in paragraph (5) and paragraph (16) and the
preceding paragraph shall be based on the amount of assets or liabilities that said domestic corporation entered in its accounting
books.
(22) Where any other domestic corporation which is a shareholder, etc. of a consolidated corporation or where domestic corporations
related through
capital contribution (meaning a single domestic corporation or two or more domestic corporations which have a link with said consolidated
corporation and said other domestic corporation through the holding of shares, etc.; the same shall apply in the following paragraph)
are interposed between said
consolidated corporation and its foreign controlling shareholder, etc., when the amount obtained by multiplying the amount of consolidated
individual stated
capital, etc. on the final day of the relevant consolidated business year of said consolidated corporation by the ratio of said consolidated
corporation's
shareholding in said other domestic corporation or domestic corporation related
through capital contribution exceeds the amount of stated capital, etc.
prescribed in Article 39-13, paragraph (22) of said other domestic corporation or domestic corporation related through capital contribution
on the same day (for a corporation falling under the category of a corporation subject to
corporation tax on consolidated income prescribed in Article 2, item (xvi) of the Corporation Tax Act, when such amount exceeds the
amount of consolidated individual stated capital, etc.), the amount of equity capital pertaining to said consolidated corporation
shall be the remaining amount after deducting from said amount of equity capital, the smaller amount of either said excess amount
or the amount of the liabilities owed by said other domestic corporation or
domestic corporation related through capital contribution to the consolidated
corporation's foreign controlling shareholder, etc. and fund provider, etc. on the same day (referred to as the "deductible
amount" in the following paragraph).
(23) In the case prescribed in the preceding paragraph, when deeming a domestic corporation related through capital contribution set
forth in said paragraph to be the consolidated corporation set forth in said paragraph and if there is any deductible amount pertaining
to said domestic corporation related through
capital contribution, the amount of stated capital, etc. set forth in said
paragraph of said domestic corporation related through capital contribution shall be the remaining amount after deducting said deductible
amount from said amount of stated capital, etc.; and the amount of the liabilities owed by said domestic corporation related through
capital contribution to a foreign controlling shareholder, etc. and a fund provider, etc. set forth in said
paragraph shall be the amount obtained by adding the amount of the liabilities
owed to said foreign controlling shareholder, etc. and fund provider, etc. and said deductible amount.
(24) With respect to the application of the provisions of Article 155-8 of the Order for Enforcement of the Corporation Tax Act in
the case where the provisions of Article 68-89, paragraph (1) of the Act apply, the term "the sum of the amount
of interest on liabilities prescribed in said paragraph to be paid for the relevant
business year" in Article 155-8, paragraph (1) of said Order shall be deemed to be replaced with "the sum of the amount
of interest on liabilities prescribed in said paragraph to be paid for the relevant business year (where there is any amount that
shall not be included in deductible expenses pursuant to the
provisions of Article 68-89, paragraph (1) (Special Provisions on Taxation on
Interest on Liabilities, etc. Payable to a Consolidated Corporation's Foreign
Controlling Shareholders, etc.) of the Act on Special Measures Concerning Taxation, such sum shall be the remaining amount after deducting
said amount);" the term "the sum of the amount of interest on liabilities that a
domestic corporation set forth in said paragraph pays for the business year set forth in said paragraph" in paragraph (2) of
said Article shall be deemed to be replaced with "the sum of the amount of interest on liabilities that a domestic corporation
set forth in said paragraph pays for the business year set forth in said paragraph (where there is any amount that shall not be included
in
deductible expenses pursuant to the provisions of Article 68-89, paragraph (1)
(Special Provisions on Taxation on Interest on Liabilities, etc. Payable to a Consolidated Corporation's Foreign Controlling Shareholders,
etc.) of the Act on Special Measures Concerning Taxation, such sum shall be the remaining
amount after deducting said amount);" the term "the amount listed in item (i)" in paragraph (1) and paragraph (2) of
said Article shall be deemed to be
replaced with "the amount listed in item (i) (where there is any amount that shall not be included in deductible expenses pursuant
to the provisions of
Article 68-89, paragraph (1) of the Act on Special Measures Concerning
Taxation, such amount shall be the remaining amount after deducting the amount equivalent to the amount exceeding the average balance
of liabilities
prescribed in Article 39-113, paragraph (1), item (i) (Calculation of the Amount of Interest on Liabilities, etc. Payable by Consolidated
Corporations to Foreign Controlling Shareholders, etc. to be Excluded from Deductible Expenses) of the Order for Enforcement of the
Act on Special Measures Concerning Taxation
(including the cases where it is applied by replacing the terms under the
provisions of paragraph (9) of said Article) (in the case where the provisions of paragraph (1) of said Article are applied by replacing
the terms under the
provisions of paragraph (2) of said Article, after deducting the amount
equivalent to the amount exceeding the average balance of the total liabilities prescribed in said item which is applied by replacing
the terms under the
provisions of paragraph (2) of said Article))."
Section 27 Special Provisions on Taxation on Income of a Consolidated
Corporation's Specified Foreign Subsidiaries
(Scope of the Specified Foreign Subsidiary, etc. of a Consolidated Corporation) Article 39-114 (1) The foreign affiliated person
specified by Cabinet Order
prescribed in Article 68-90, paragraph (1) of the Act shall be any of the
following:
(i) A foreign affiliated person that has its head office or principal office in a state or territory where there are no taxes imposed
on corporate income (meaning a foreign affiliated person prescribed in Article 68-90, paragraph (2), item (i) of the Act; hereinafter
the same shall apply in this Section)
(ii) A foreign affiliated person whose tax imposed on its income for the relevant
business year is 25 percent or less of said income.
(2) Whether or not a foreign affiliated person falls under the category of a foreign affiliated person set forth in item (ii) of the
preceding paragraph shall be
determined as specified as follows:
(i) The amount of income set forth in item (ii) of the preceding paragraph shall be the amount obtained by adding the amount of income
calculated pursuant to the provisions of the laws and regulations concerning foreign corporation
taxes (meaning foreign corporation taxes prescribed in Article 69, paragraph
(1) of the Corporation Tax Act; hereinafter the same shall apply in this
Section) of the state or territory where said foreign affiliated person's head
office or principal office is located (hereinafter referred to as the "state of the head office" in this Section) (where
there are two or more laws and
regulations concerning said foreign corporation taxes, pursuant to the provisions of the principal ones; hereinafter referred to as
the "laws and
regulations of the state of the head office" in this paragraph) with regard to said foreign affiliated person's income in
its settlement of accounts for the relevant business year and the sum of the amounts listed in (a) to (e)
pertaining to said calculated amount of income and then deducting therefrom the amount listed in (f) pertaining to said calculated
amount of income:
(a) The amount of income which shall not be included in the foreign
corporation tax base under the laws and regulations of the state of the head office (excluding the amounts listed as follows):
1. The amount of a dividend of surplus, dividend of profit or distribution of
surplus prescribed in Article 23, paragraph (1), item (i) of the
Corporation Tax Act (hereinafter referred to as a "dividend of surplus, etc." in this Section) to be received from a corporation
located in the
state of the head office (including the amount specified in Article 68-92, paragraph (1), item (ii) of the Act; hereinafter referred
to as the
"amount of a dividend, etc." in this paragraph)
2. The amount of a dividend, etc. to be received from a corporation located in a state or territory other than the state of the head
office, which shall not be included in the foreign corporation tax base on condition
that the ratio of the shares, etc. (meaning shares or capital
contributions; hereinafter the same shall apply in this Section) held by the foreign affiliated person out of the total number or
total amount of said corporation's issued shares or capital contributions (excluding
shares that said corporation holds in itself) (hereinafter referred to as the "issued shares, etc." in this Section) is
not less than the ratio
specified by said laws and regulations of the state of the head office
(b) The amount of a dividend, etc. that the foreign affiliated person shall pay and which is included in deductible expenses
(c) The amount of foreign corporation tax that the foreign affiliated person shall pay and which is included in deductible expenses
(d) The amount equivalent to the amount of reserves among the casualty
reserves set forth in Article 57-5, paragraph (1) or Article 57-6, paragraph
(1) of the Act (hereinafter referred to as the "insurance reserves" in this paragraph and paragraph (2) of the following
Article) that the foreign affiliated person has saved, which are included in deductible expenses,
which are not to be included in deductible expenses when the provisions of
Article 57-5 or Article 57-6 of the Act apply
(e) Where the amount of the insurance reserves that has been set aside by
the foreign affiliated person and has been included in gross profits (limited to the insurance reserves that are set aside when the
provisions of Article
57-5 or Article 57-6 of the Act apply) does not reach the amount that should be included in gross profits when these provisions apply,
the
amount of said shortfall
(f) The amount of foreign corporation tax that shall be refunded to the foreign affiliated person and which is included in gross profits
(ii) The amount of tax set forth in item (ii) of the preceding paragraph shall be the sum of the amounts listed as follows:
(a) The amount of foreign corporation tax to be imposed on the amount of the
foreign affiliated person's income in its settlement of accounts for the relevant business year in the state of the head office
or in a state or
territory other than the state of the head office (including the amount to be
deducted from the foreign corporation tax in the state of the head office by deeming that said foreign affiliated person has paid
said amount under the laws and regulations of the state of the head office and excluding the
amount of foreign corporation tax to be imposed on the amount listed in (a),
2. of the preceding item)
(b) The amount of foreign corporation tax reduced or exempted for the foreign affiliated person for the relevant business year in
the state of the head
office and which is deemed to have been paid by said foreign affiliated
person pursuant to the provisions of a tax convention prescribed in Article
1-3, paragraph (1), item (ii) in the case where the affiliated foreign
company's domestic corporation is subject to the provisions of Article 69, paragraph (8) or Article 81-15, paragraph (8) of the
Corporation Tax Act
(iii) Where foreign corporation tax rates of the state of the head office increase in accordance with the amount of income, the amount
of foreign corporation
tax set forth in (a) of the preceding item shall be the amount calculated
based on the highest rates out of such tax rates
(iv) Where the amount of income set forth in item (ii) of the preceding
paragraph proves to be a loss, the amount of foreign corporation tax shall be determined based on the foreign corporation tax rate
to be applied in the
state of the head office to any income that arises from revenue from the
foreign affiliated person's principal business (in the case where said revenue falls under the category of the amount listed in
1. or 2. of item (i), (a),
revenue other than said revenue)
(Calculation of the Undistributed Income of the Specified Foreign Subsidiary, etc. of a Consolidated Corporation)
Article 39-115 (1) The amount of undistributed income calculated in accordance
with the standards specified by Cabinet Order prescribed in Article 68-90, paragraph (2), item (ii) of the Act shall be the remaining
amount after
deducting the amount listed in item (iii) pertaining to the income of a specified
foreign subsidiary, etc. prescribed in paragraph (1) of said Article (hereinafter referred to as a "specified foreign subsidiary,
etc." in this Article and
paragraphs (1) to (3) of the following Article) in its settlement of accounts for the relevant business year from the sum of the amount
listed in item (i) and
the amount listed in item (ii) pertaining to said income (where the amount listed in item (i) pertaining to said income is a loss,
said amount of
undistributed income shall be the remaining amount after deducting the sum of said amount of loss and the amount listed in item (iii)
pertaining to said income from the amount listed in item (ii) pertaining to said income):
(i) The amount of income or loss calculated, with regard to the income of a
specified foreign subsidiary, etc. in its settlement of accounts for the relevant business year, in accordance with the provisions
of Part II, Chapter I,
Section 1, Subsection 2 to Subsection 9 (excluding Article 23, Article 26,
paragraphs (1) to (4), Article 28, Articles 38 to 41, Article 55, paragraph (3), Article 57, Article 58, Article 59, and Articles
61-11 to 61-13 of the
Corporation Tax Act), and Subsection 11 of said Act, and the provisions of
Article 43, Article 45-2, Article 52-2, Article 57-5, Article 57-6, Article 57-8, Article 57-10, Article 61-4, Articles 65-7 to 65-9
(limited to the part
pertaining to item (xix) of the table in Article 65-7, paragraph (1) of the Act), Article 66-4, paragraph (3), Article 67-12 and Article
67-13 of the Act
(hereinafter referred to as the "provisions of the laws and regulations of
Japan" in this item) (where the provisions of Article 68-88, paragraph (1) or
Article 66-4, paragraph (1) of the Act is applied to a transaction with a
consolidated corporation listed in the items of Article 68-90, paragraph (1) of the Act (including other consolidated corporations
which have the
consolidated full controlling interest with said consolidated corporation) or a
domestic corporation listed in the items of Article 66-6, paragraph (1) of the Act that is the domestic corporation of said specified
foreign subsidiary, etc., the amount of income or loss calculated in accordance with the provisions of
the laws and regulations of Japan by deeming that the transaction was
carried out at the arm's length price prescribed in these provisions)
(ii) The amount of corporate income tax payable in the relevant business year (meaning taxes to be imposed based on the amount of
the corporation's income in the state of the head office or in a state or territory other than the
state of the head office or by local entities in such state or territory including
the state of the head office (including taxes listed in the items of Article 141, paragraph (2) of the Order for Enforcement of the
Corporation Tax Act to be imposed in such state or territory or by local entities in such state or
territory) and taxes equivalent to incidental taxes to be imposed incidentally
as prescribed in Article 2, item (xlv) of the Corporation Tax Act (excluding
interest tax) and other taxes similar to the tax equivalent to said incidental taxes; hereinafter the same shall apply in this Section)
(iii) The amount of corporate income tax to be refunded in the relevant
business year.
(2) Notwithstanding the provisions of the preceding paragraph, a consolidated corporation listed in the items of Article 68-90, paragraph
(1) of the Act may deem that the amount obtained by adding the amount of income calculated, with regard to the income of a specified
foreign subsidiary, etc. in its
settlement of accounts for the relevant business year, pursuant to the
provisions of the laws and regulations concerning corporate income taxes of the state of the head office of said specified foreign
subsidiary, etc. (where there
are two or more laws and regulations concerning said corporate income taxes,
pursuant to the provisions of the principal ones; hereinafter referred to as the "laws and regulations of the state of the head
office" in this paragraph), (where the provisions of Article 68-88, paragraph (1) or Article 66-4, paragraph (1) of
the Act is applied to a transaction between said specified foreign subsidiary,
etc. and said consolidated corporation (including other consolidated
corporations which have the consolidated full controlling interest with said
consolidated corporation) or domestic corporation listed in the items of Article
66-6, paragraph (1) of the Act, the amount of income calculated pursuant to the provisions of the laws and regulations of the state
of the head office by deeming that the transaction was carried out at the arm's length price prescribed in
said paragraph), and the sum of the amount listed in items (i) to (xiii)
pertaining to said calculated amount of income and then deducting therefrom
the amount listed in items (xiv) to (xvi) pertaining to said calculated amount of income (where the amount calculated pursuant to
the provisions of the laws and regulations of the state of the head office proves to be a loss, said amount shall be the remaining
amount after deducting the sum of said amount of loss and the amount listed in items (xiv) to (xvi) pertaining to said calculated
amount from the sum of the amounts listed in items (i) to (xiii) pertaining to
said calculated amount) shall be the amount calculated in accordance with the
standards specified by Cabinet Order prescribed in Article 68-90, paragraph (2), item (ii) of the Act; provided, however, that this
shall apply only when said
other consolidated corporations are not subject to the provisions of the
preceding paragraph with regard to said calculated amount pertaining to said specified foreign subsidiary, etc.:
(i) The amount of income which shall not be included in the corporate income
tax base for the relevant business year under the laws and regulations of the state of the head office
(ii) The amount of a dividend of surplus, etc. (including the amount specified in Article 68-92, paragraph (1), item (ii) of the Act;
referred to as the "amount of a dividend, etc." in the following paragraph) that the specified foreign
subsidiary, etc. shall pay and which is included in deductible expenses for
the relevant business year
(iii) The excess amount that exceeds the amount equivalent to that to be included in deductible expenses, when the provisions of Article
31 of the Corporation Tax Act apply, out of the amount included in deductible
expenses for the relevant business year as the depreciation allowance for the depreciable assets that the specified foreign subsidiary,
etc. holds (excluding goodwill obtained on or before March 31, 1998) (such inclusive amount shall
be limited to the amount calculated, with the acquisition costs of said
depreciable assets (where there is any amount of past depreciation already included in deductible expenses for the relevant business
year, the amount after deducting said amount) as the limit of the amount to be included in deductible expenses for the relevant business
year)
(iv) The amount equivalent to that included in deductible expenses for the
relevant business year due to changes in the valuation of the assets that the specified foreign subsidiary, etc. holds, which is not
to be included in
deductible expenses when the provisions of Article 33 of the Corporation Tax
Act apply
(v) The amount equivalent to the amount of remuneration to be paid to the officers (meaning the officers prescribed in Article 2,
item (xv) of the
Corporation Tax Act; the same shall apply in paragraph (5) of the following
Article) of the specified foreign subsidiary, etc. included in deductible expenses for the relevant business year, which is not to
be included in
deductible expenses when the provisions of Article 34 or Article 35 of said
Act apply
(vi) The amount equivalent to the amount of remuneration to be paid to
employees of the specified foreign subsidiary, etc. included in deductible expenses for the relevant business year, which is not to
be included in
deductible expenses when the provisions of Article 36 of the Corporation Tax
Act apply
(vii) The amount equivalent to the amount of a contribution that the specified foreign subsidiary, etc. shall make (excluding a contribution
to the state of
the head office or local entities in such state which is equivalent to that
prescribed in Article 37, paragraph (3), item (i) of the Corporation Tax Act) and which is included in deductible expenses for the
relevant business year, which is not to be included in deductible expenses when the provisions of
paragraph (1) of said Article and Article 66-4, paragraph (3) of the Act apply
(viii) The amount of corporate income tax that the specified foreign subsidiary, etc. shall pay and which is included in deductible
expenses for the relevant
business year
(ix) The amount of a loss incurred in business years preceding said relevant
business year, pursuant to the provisions of the laws and regulations of the state of the head office that are equivalent to those
of Article 57, Article 58
or Article 59 of the Corporation Tax Act, which is included in deductible expenses for the relevant business year
(x) The amount equivalent to the amount of insurance reserves that the specified foreign subsidiary, etc. has set aside, which is
included in
deductible expenses for the relevant business year and which is not to be included in deductible expenses when the provisions of Article
57-5 or Article
57-6 of the Act apply
(xi) Where the amount that has been included in gross profits for the relevant business year regarding the insurance reserves set
aside by the specified
foreign subsidiary, etc. (limited to the insurance reserves that can be set aside when the provisions of Article 57-5 or Article 57-6
of the Act apply) does not reach the amount that should be included in gross profits when
these provisions apply, the amount of said shortfall
(xii) The amount equivalent to the amount of expenses equivalent to
entertainment and social expenses prescribed in Article 61-4, paragraph (1)
of the Act that the specified foreign subsidiary, etc. shall pay and which is
included in deductible expenses for the relevant business year, which is not to be included in deductible expenses when the provisions
of said Article
apply
(xiii) The amount equivalent to the amount of a loss of the specified foreign subsidiary, etc. (meaning the amount of a loss related
to a partnership, etc. prescribed in Article 67-12, paragraph (1) of the Act or the amount of a loss prescribed in Article 67-13,
paragraph (1) of the Act incurred due to a
partnership business prescribed in said paragraph), which is not to be
included in deductible expenses when the provisions of Article 67-12, paragraph (1) or Article 67-13, paragraph (1) of the Act apply
(xiv) The amount equivalent to the amount which is to be included in
deductible expenses when the provisions of Article 67-12, paragraph (2) or
Article 67-13, paragraph (2) of the Act apply
(xv) The amount of corporate income tax to be refunded to the specified foreign subsidiary, etc. which is included in gross profits
for the relevant business
year
(xvi) The amount equivalent to that included in gross profits for the relevant business year due to changes in the valuation of the
assets that the specified foreign subsidiary, etc. holds, which is not to be included in gross profits
when the provisions of Article 25 of the Corporation Tax Act apply.
(3) Where there is any amount of a deductible dividend, etc. (meaning the
amount equivalent to the amount specified respectively in the following items
for the category of cases listed in the relevant items; hereinafter the same shall apply in this paragraph) for the relevant business
year of the specified foreign subsidiary, etc. of a consolidated corporation listed in the items of Article 68-90,
paragraph (1) of the Act, the amount calculated in accordance with the
standards specified by Cabinet Order prescribed in Article 68-90, paragraph (2), item (ii) of the Act shall be the remaining amount
after deducting said amount
of a deductible dividend, etc. from the amount calculated pursuant to these
provisions, notwithstanding the provisions of paragraph (1) or the preceding paragraph:
(i) Where the amount of a dividend, etc. that the specified foreign subsidiary,
etc. receives from any other of its consolidated corporation's specified foreign subsidiaries, etc. (including a specified foreign
subsidiary, etc. prescribed in Article 66-6, paragraph (1) of the Act; hereinafter referred to as the "other specified foreign
subsidiary, etc." in this paragraph) in the relevant business year does not exceed the amount of a dividend payable corresponding
to the
capital contributions by said specified foreign subsidiary, etc. out of the total
amount of a dividend payable by said other specified foreign subsidiary, etc. in the business year including the base date for paying
said dividend, etc. (hereinafter referred to as the "base business year" in this paragraph) and said base business year
is the business year during which the individually
taxable retained income prescribed in Article 68-90, paragraph (1) of the Act
(hereinafter referred to as the "individually taxable retained income" in this Section) or taxable retained income prescribed
in Article 66-6, paragraph (1) of the Act (hereinafter referred to as the "taxable retained income" in this Section) arises:
The amount of said dividend, etc.
(ii) Where the amount of a dividend, etc. that the specified foreign subsidiary, etc. receives from any other of its consolidated
corporation's specified foreign subsidiaries, etc. in the relevant business year exceeds the amount of a
dividend payable corresponding to the capital contributions for the base business year pertaining to said amount of a dividend, etc.:
Where the
amount of a dividend payable corresponding to the capital contributions for the relevant business year preceding the base business
year of said other specified foreign subsidiary, etc. is to be appropriated to said amount of a dividend, etc. in reverse chronological
order and said amount of a dividend, etc. has been categorized for the relevant business year in accordance with
said amount of a dividend payable corresponding to the capital contributions
for the relevant business year, the sum of the amount of a dividend, etc. to be appropriated with the amount of a dividend payable
corresponding to the
capital contributions for the business year during which the individually
taxable retained income or taxable retained income arises.
(4) In the preceding paragraph and this paragraph, the meanings of the terms
listed respectively in the following items shall be as specified respectively in the relevant items:
(i) The amount of a dividend payable: The remaining amount after deducting
the sum of the amounts listed as follows from the amount of undistributed income prescribed in Article 68-90, paragraph (2), item
(ii) of the Act for the relevant business year of a specified foreign subsidiary, etc. (where there is any amount of a deductible
dividend, etc. prescribed in the preceding
paragraph, or where the provisions of Article 68-88, paragraph (1) or Article
66-4, paragraph (1) of the Act are applied to a transaction with a
consolidated corporation listed in the items of Article 68-90, paragraph (1) of
the Act pertaining to said specified foreign subsidiary, etc. and the amount of income to be reduced pursuant to the provisions of
paragraph (1) or
paragraph (2) contains any amount that shall not be paid to said
consolidated corporation, the amount obtained by adding together those amounts to such amount of undistributed income) (where the
amount of
corporate income tax to be refunded as prescribed in (a) exceeds the amount of corporate income tax payable as prescribed in (a),
the amount obtained by adding said amount of undistributed income and said excess amount and
then deducting therefrom the sum of the amounts listed in (b) and (c)):
(a) The amount of corporate income tax payable in the relevant business year
(where there is any amount of corporate income tax to be refunded in the relevant business year, the remaining amount after deducting
said amount of corporate income tax to be refunded)
(b) The amount payable due to the appropriation of surplus for the relevant
business year (excluding the amount of corporate income tax and the amount of a dividend of surplus, etc.)
(c) The amount paid as the expenses for the relevant business year
(excluding the amount of corporate income tax and the amount of a dividend of surplus, etc.) which was included in the amount of
undistributed income prescribed in Article 68-90, paragraph (2), item (ii) of
the Act for the relevant business year, because said amount was not included in deductible expenses for calculating the amount of
income pursuant to the provisions of paragraph (1) or paragraph (2) or was
included in the amount of income pursuant to the provisions of said
paragraph
(ii) The amount of a dividend payable corresponding to the capital
contributions: The amount obtained by multiplying the amount of a dividend payable by a specified foreign subsidiary, etc. by the
ratio of the number or
the amount of the shares, etc. of said specified foreign subsidiary, etc. that
any other specified foreign subsidiary, etc. (hereinafter referred to as the "other specified foreign subsidiary, etc."
in this item) holds out of the total issued shares, etc. of said specified foreign subsidiary, etc. (where said
specified foreign subsidiary, etc. holds the issued shares, etc. in which claims
prescribed in Article 66-6, paragraph (1) of the Act (hereinafter referred to as
the "claims" in this item and paragraph (3) of the following Article) with different contents are vested, or the shares,
etc. in which claims with
different contents are deemed to be substantially vested (referred to as the
"shares, etc. in which different claims are vested" in paragraph (3) of the
following Article), the ratio of the amount of a dividend of surplus, etc. that said other specified foreign subsidiary, etc. can
receive based on said claims out of the total amount of a dividend of surplus, etc.).
(5) The amount obtained as a result of an adjustment for the amount of a loss prescribed in Article 68-90, paragraph (2), item (ii)
of the Act shall be the amount obtained by calculating the amount of income, pursuant to the
provisions of paragraph (1), paragraph (2) or paragraph (3), with regard to the income of a specified foreign subsidiary, etc. in
its settlement of accounts for
the relevant business year (hereinafter referred to as the "amount of adjusted income" in this paragraph and paragraph (7))
and then deducting therefrom
the amount equivalent to the sum of the loss incurred in business years that
commenced within seven years before the first day of the relevant business year (excluding business years during which the company
did not fall under
the category of a specified foreign subsidiary, etc. (including specified foreign
Subsidiaries, etc. prescribed in Article 40-4, paragraph (1) or Article 66-6, paragraph (1) of the Act)) (such loss shall exclude
the amount deducted in business years preceding said relevant business year pursuant to the
provisions of this paragraph or Article 39-15, paragraph (5)) (where said sum of
the loss exceeds the amount of adjusted income for the relevant business year, said amount of adjusted income).
(6) A loss prescribed in the preceding paragraph shall be a loss calculated where the provisions of paragraph (1), paragraph (2) or
paragraph (3) are applied to
the amount of income of a specified foreign subsidiary, etc. in its settlement of
accounts for the relevant business year.
(7) When making a calculation set forth in paragraph (1), item (i), if there is any amount to be included in deductible expenses in
the relevant business year,
pursuant to the provisions of Article 33 and Articles 42 to 53 of the Corporation Tax Act, and the provisions of Article 43, Article
45-2, Article 52-2, Article 57-5, Article 57-6, Article 57-8, Articles 65-7 to 65-9 (limited to the part pertaining
to item (xix) of the table in Article 65-7, paragraph (1) of the Act), Article 67-12,
paragraph (2) and Article 67-13, paragraph (2) of the Act, whose provisions are to apply under the provisions of said item, said amount
shall be included in
deductible expenses for calculating the amount of adjusted income for the
relevant business year, only when detailed statements concerning the inclusion of said amount in deductible expenses are attached
to a consolidated final
return form for the relevant business year set forth in Article 68-90, paragraph
(5) of the Act; provided, however, that this shall not apply when the competent
district director with jurisdiction over the consolidated parent corporation's place for tax payment finds that there was unavoidable
reason for the failure to attach detailed statements and said detailed statements have been
submitted.
(8) Where a consolidated corporation, which was subject to the provisions of paragraph (1) for calculating the amount of income of
the specified foreign subsidiary, etc. in its settlement of accounts for the relevant business year, seeks the application of paragraph
(2) for calculating the amount of income of the specified foreign subsidiary, etc. in its settlement of accounts for the
relevant business year in consolidated business years following the one to
which the provisions of paragraph (1) have been applied; or where a
consolidated corporation, which was subject to the provisions of paragraph (2) for calculating the amount of income of the specified
foreign subsidiary, etc. in its settlement of accounts for the relevant business year, seeks the application of paragraph (1) for
calculating the amount of income of the specified foreign subsidiary, etc. in its settlement of accounts for the relevant business
year in consolidated business years following the one to which the provisions of
paragraph (2) have been applied, it shall receive approval from the competent
district director with jurisdiction over the consolidated parent corporation's place for tax payment, in advance.
(Calculation, etc. of the Amount of Individually Taxable Retained Income of the
Specified Foreign Subsidiaries, etc. of a Consolidated Corporation)
Article 39-116 (1) The amount obtained as a result of an adjustment to the
amount of undistributed income set forth in Article 68-90, paragraph (1) of the
Act for the amount of taxes and a dividend of surplus, etc. on said
undistributed income shall be the remaining amount after deducting the sum of the amounts listed as follows from the amount of undistributed
income
prescribed in Article 68-90, paragraph (2), item (ii) (hereinafter referred to as the "amount of undistributed income" in
this paragraph) for the relevant
business year of a specified foreign subsidiary, etc. (where the amount of corporate income tax to be refunded as prescribed in item
(i) exceeds the amount of corporate income tax payable as prescribed in said item, such remaining amount shall be the amount obtained
by adding the amount of
undistributed income and said excess amount and then deducting therefrom
the amount listed in item (ii)). In this case, when the sum of the amounts listed in item (i) and item (ii) exceeds said amount of
undistributed income, the
amount listed in item (i) shall be deducted first and then the amount listed in item (ii) shall be deducted:
(i) The amount of corporate income tax payable in the relevant business year
(where there is any amount of corporate income tax to be refunded in the
relevant business year, the remaining amount after deducting said amount of corporate income tax to be refunded)
(ii) The sum of the amount of a dividend of surplus, etc. by deeming the
relevant business year to be the base business year (meaning the business year including the base day for paying a dividend of surplus,
etc.; hereinafter the same shall apply in this item) (such amount of a dividend of surplus, etc. shall be limited to that for which
the payment obligation was fixed by the final day of the consolidated business year of the consolidated corporation of
the specified foreign subsidiary, etc., which includes the day on which two
months have elapsed after the day following the final day of the relevant business year; hereinafter the same shall apply in this
item) (where the
whole or a part of the amount of a dividend of surplus, etc. by deeming the
relevant business year to be the base business year has been paid to any person listed as follows, said sum shall be deemed to be
zero):
(a) Affiliated foreign companies of a consolidated corporation (excluding the
specified foreign subsidiary, etc. (including a specified foreign subsidiary, etc. prescribed in Article 66-6, paragraph (1) of the
Act) of said
consolidated corporation) whose tax burden imposed, in the state of the
head office, on the amount of the dividend of surplus, etc. that it receives is not more than the tax-burden base specified by Ordinance
of the Ministry
of Finance as being extremely low, compared with that imposed on
corporate income in Japan (referred to as the "low tax-burden base" in
Article 39-119, paragraph (2))
(b) Other specified foreign subsidiaries, etc. (including a specified foreign subsidiary, etc. prescribed in Article 66-6, paragraph
(1) of the Act; the same shall apply in item (iii) of the following paragraph) of the
consolidated corporation.
(2) The amount calculated as specified by Cabinet Order prescribed in Article 68-
90, paragraph (1) of the Act shall be the amount obtained by multiplying the
eligible retained income prescribed in said paragraph for the relevant business year of the specified foreign subsidiary, etc. of
a consolidated corporation listed in the items of said paragraph (hereinafter referred to as the "eligible retained
income" in this Section) by the ratio of the shares, etc. for considering the
claims held by said consolidated corporation out of the total issued shares, etc. of said specified foreign subsidiary, etc. at the
end of the relevant business
year of said specified foreign subsidiary, etc. (where any of the events listed in
item (i) or item (ii) occurred with regard to said specified foreign subsidiary,
etc. or an event listed in item (iii) occurred with regard to an affiliated foreign company of said consolidated corporation (limited
to those that hold the taxed amount of a dividend, etc. before deduction pertaining to said specified foreign
subsidiary, etc.) in the relevant consolidated business year of said consolidated
corporation related to the application of the provisions of said paragraph, such amount shall be the remaining amount after deducting
the amount specified respectively in these items from said calculated amount):
(i) An event listed in Article 68-92, paragraph (1), item (i) of the Act (limited to the payment of a dividend of surplus, etc. which
has not been deducted for
calculating the amount of eligible retained income of the specified foreign
subsidiary, etc.): The amount obtained by multiplying the amount of a
dividend of surplus, etc. (where said amount of a dividend of surplus, etc.
exceeds the eligible retained income, the amount equivalent to said eligible retained income) by the ratio of the shares, etc. for
considering the claims held by the consolidated corporation out of the total issued shares, etc. of
said specified foreign subsidiary, etc. at the end of the relevant business year
pertaining to said eligible retained income (excluding the shares, etc. for
considering the claims indirectly held via a person listed in item (ii), (a) and
(b) of the preceding paragraph with a relationship to said consolidated corporation)
(ii) an event listed in Article 68-92, paragraph (1), item (ii) of the Act: The amount obtained by multiplying the amount specified
in said item by the
ratio of the shares, etc. for considering the claims held by said consolidated corporation at the time when said event occurred out
of the total issued
shares, etc. of said specified foreign subsidiary, etc. at the time when said
event occurred (where the amount specified in said item has been delivered to a person listed in item (ii), (a) and (b) of the preceding
paragraph who is a person with a relationship to said consolidated corporation, excluding the
shares, etc. for considering the claims indirectly held via such person)
(iii) An event listed in Article 68-92, paragraph (1), item (iii) of the Act: The amount specified in said item (where said amount
has been received from an affiliated foreign company that falls under the category of any other specified foreign subsidiary, etc.
of the consolidated corporation, the remaining
amount after deducting from said amount, the amount equivalent to the sum
of the amount to be deducted for calculating the eligible retained income, individually taxable retained income or taxable retained
income of said other specified foreign subsidiary, etc. and the amount to be included in deductible expenses due to an event under
the provisions of said paragraph or Article
66-8, paragraph (1) of the Act), with the taxed amount of a dividend, etc. before deduction as the upper limit.
(3) In the preceding paragraph and this paragraph, the meanings of the terms
listed respectively in the following items shall be as specified respectively in the relevant items:
(i) The shares, etc. for considering the claims held: The number or the amount adding together the number or the amount of the shares,
etc. of a foreign
corporation directly held by a consolidated corporation (where said foreign
corporation holds the issued shares, etc. in which different claims are vested, the number or the amount obtained by multiplying the
issued shares, etc. of said foreign corporation by the ratio of the amount of a dividend of surplus,
etc. that said consolidated corporation can receive based on said claims out of the total amount) and the shares, etc. for considering
the claims indirectly
held
(ii) The shares, etc. for considering the claims indirectly held: The number or
the amount of the shares, etc. obtained by multiplying the issued shares, etc. of a foreign corporation by the ratio specified respectively
in the following
items for the category of cases listed in the relevant items (where this falls under both of the following cases, the sum of the ratios
specified respectively as follows):
(a) Where a consolidated corporation holds the whole or a part of the issued shares, etc. of a second foreign corporation which is
the shareholder, etc.
(meaning shareholders, etc. prescribed in Article 2, item (xiv) of the
Corporation Tax Act; hereinafter the same shall apply in this Article) of a
first foreign corporation (hereinafter such second foreign corporation shall be simply referred to as the "second foreign corporation"
in (a)): The ratio
obtained by multiplying said consolidated corporation's ratio of
shareholding (meaning the ratio of the number or the amount of the shares, etc. held by the shareholders, etc. out of the total issued
shares, etc. of the corporation that issues said shares, etc. (where said issuing corporation
holds the issued shares, etc. in which different claims are vested, the ratio
of the amount of a dividend of surplus, etc. that said shareholder, etc. can
receive based on said claims out of the total amount); hereinafter the same shall apply in this item) in said second foreign corporation
by said second foreign corporation's ratio of shareholding in said first foreign corporation
(where there are two or more such second foreign corporations, the sum of the ratios calculated for each of them)
(b) Where a single foreign corporation or two or more foreign corporations are interposed between a first foreign corporation and
a second foreign
corporation (limited to a second foreign corporation for which the whole or
a part of the issued shares, etc. are held by a consolidated corporation; hereinafter referred to as the "second foreign corporation"
in this item) (hereinafter such interposed foreign corporations shall be referred to as a "foreign corporations related through
capital contribution" in this item)
and said consolidated corporation, said second foreign corporation, foreign corporations related through capital contribution and
said first foreign
corporation have a link through the holding of shares, etc.: The ratio obtained by multiplying said consolidated corporation's
ratio of
shareholding in said second foreign corporation sequentially by said second foreign corporation's ratio of shareholding in the
foreign corporation
related through capital contribution, by the foreign corporation related through capital contribution's ratio of shareholding
in any other foreign corporations related through capital contribution, and by the foreign
corporation related through capital contribution's ratio of shareholding in
said first foreign corporation (where there are two or more links, the sum of the ratios calculated for each of them)
(iii) The taxed amount of a dividend, etc. before deduction: Out of the amount
of a dividend of surplus, etc. which an affiliated foreign company of the
consolidated corporation received from the specified foreign subsidiary, etc. of said consolidated corporation during a period of
two years or less
preceding the day on which an event listed in item (iii) of the preceding
paragraph occurred (such amount of a dividend of surplus, etc. shall include
the amount specified in Article 68-92, paragraph (1), item (ii) of the Act) and which shall not be deducted for calculating the amount
of individually
taxable retained income pertaining to said specified foreign subsidiary, etc., under the provisions of the preceding paragraph (including
the amount that shall not be included in the amount calculated as specified by Cabinet Order prescribed in Article 68-92, paragraph
(1) of the Act pertaining to said
specified foreign subsidiary, etc., as calculated under the provisions of Article
39-119, paragraph (2) or paragraph (3)), the part which corresponds to the
shares, etc. for considering the claims of said specified foreign subsidiary, etc. indirectly held by said consolidated corporation
via said affiliated foreign
company (such part shall exclude the amount already appropriated for the application of the provisions of the preceding paragraph,
paragraph (1) of
said Article, and Article 39-16, paragraph (2), and the provisions of Article
66-8, paragraph (1) of the Act).
(4) The deduction of the amount specified in the items of paragraph (2) under the provisions of said paragraph shall be made first
with the amount specified in
item (i) of said paragraph and then sequentially with the amount specified in item (ii) of said paragraph and the amount specified
in item (iii) of said
paragraph.
(5) The amount of expenses specified by Cabinet Order set forth in Article 68-90, paragraph (1) of the Act which is applied by replacing
the terms pursuant to
the provisions of paragraph (3) of said Article shall be the sum of personnel
expense for officers and employees of a specified foreign subsidiary, etc.
engaged in the business at said specified foreign subsidiary, etc. prescribed in paragraph (3) of said Article (limited to the amount
of income calculated in
accordance with the provisions of the laws and regulations of Japan prescribed in paragraph (1), item (i) of the preceding Article
or pursuant to the provisions
of paragraph (2) of said Article or the amount to be included in deductible
expenses for calculating the amount of a loss for the relevant business year of said specified foreign subsidiary, etc.).
(Determination, etc. of the Business of the Specified Foreign Subsidiary, etc. of a Consolidated Corporation)
Article 39-117 (1) The person specified by Cabinet Order prescribed in Article
68-90, paragraph (4), item (i) of the Act shall be any of the following:
(i) Other consolidated corporations which have the consolidated full controlling interest with a consolidated corporation listed in
the items of Article 68-90,
paragraph (1) of the Act which pertains to a specified foreign subsidiary, etc. prescribed in Article 68-90, paragraph (4) of the
Act (hereinafter referred to as a "specified foreign subsidiary, etc." in this paragraph) that is mainly
engaged in business listed in item (i) of said paragraph
(ii) A person who holds over 50 percent of the total number or total amount of the issued shares, etc. of a consolidated corporation
listed in the items of
Article 68-90, paragraph (1) of the Act (where said consolidated corporation
is a consolidated subsidiary corporation, the consolidated parent corporation of said consolidated corporation) which pertains to
a specified foreign
subsidiary, etc. that is mainly engaged in business listed in Article 68-90, paragraph (4), item (i) of the Act (excluding a person
falling under any of
those listed in the items of Article 40-4, paragraph (1), items of Article 66-6, paragraph (1), items of Article 68-90, paragraph
(1) of the Act and the
preceding item who is a person with a relationship to said specified foreign
subsidiary, etc.)
(iii) A person who holds over 50 percent of the total number or total amount of the issued shares, etc. of a domestic corporation
listed in the items of Article
66-6, paragraph (1) of the Act which pertains to a specified foreign subsidiary, etc. that is mainly engaged in business listed in
Article 68-90, paragraph (4), item (i) of the Act (excluding a person falling under any of those listed in the
items of Article 40-4, paragraph (1), items of Article 66-6, paragraph (1),
items of Article 68-90, paragraph (1) of the Act and the preceding two items who is a person with a relationship to said specified
foreign subsidiary, etc.)
(iv) Where a person listed in the items of Article 40-4, paragraph (1), items of
Article 66-6, paragraph (1) or items of Article 68-90, paragraph (1) of the Act with a relationship to a specified foreign subsidiary,
etc. that is mainly
engaged in business listed in Article 68-90, paragraph (4), item (i) of the Act holds the shares, etc. indirectly pertaining to said
specified foreign
subsidiary, etc. (such shares, etc. shall mean the number of shares or the
amount of capital contributions of a foreign corporation specified by Cabinet
Order as being held through indirect ownership as prescribed in Article 66-6,
paragraph (2), item (iii) of the Act), the second foreign corporation prescribed in paragraph Article 39-16, paragraph (5), item (i)
or the second foreign
corporation and foreign corporations related through capital contribution prescribed in item (ii) of said paragraph which pertain
to said shares, etc. held indirectly
(v) A person who has a special relationship specified by Cabinet Order
prescribed in Article 66-6, paragraph (2), item (vi) of the Act to any of the persons listed as follows (excluding a person who falls
under the category of
a person listed in the items of Article 40-4, paragraph (1), items of Article 66-
6, paragraph (1), items of Article 68-90, paragraph (1) of the Act and the preceding items who is a person with a relationship to
a specified foreign subsidiary, etc. that is mainly engaged in business listed in Article 68-90, paragraph (4), item (i) of the Act):
(a) A specified foreign subsidiary, etc. that is mainly engaged in business listed in Article 68-90, paragraph (4), item (i) of the
Act
(b) A person listed in the items of Article 40-4, paragraph (1), items of Article
66-6, paragraph (1) or items of Article 68-90, paragraph (1) of the Act with a relationship to a specified foreign subsidiary, etc.
that is mainly engaged in business listed in Article 68-90, paragraph (4), item (i) of the Act
(c) A person listed in the preceding items.
(2) The case specified by Cabinet Order prescribed in Article 68-90, paragraph (4), item (i) of the Act shall be any of the cases
specified respectively in the
following items, in accordance with the category of the principal business to be conducted for the relevant business year of a specified
foreign subsidiary, etc.
prescribed in said paragraph:
(i) Wholesale business: Where, out of the total revenue from selling inventory assets for the relevant business year (where there
are any commissions to be received for agent or intermediary services for the buying or selling of
inventory assets for the relevant business year, such revenues shall include the amount from the transactions for which said commissions
were
generated; hereinafter referred to as the "amount of sales transactions" in this item), the ratio of the sum of the amount
of sales transactions with a
person other than affiliated persons (meaning those listed in the items of
Article 40-4, paragraph (1), items of Article 66-6, paragraph (1), items of
Article 68-90, paragraph (1) of the Act and the items of the preceding
paragraph who are affiliated persons of the specified foreign subsidiary, etc.;
hereinafter the same shall apply in this paragraph and the following
paragraph) exceeds 50 percent, or out of the sum of the acquisition costs for acquiring inventory assets for the relevant business
year (where there are
any commissions to be received for agent or intermediary services for the buying or selling of inventory assets for the relevant business
year, such
acquisition costs shall include the amount from the transactions for which
said commissions were generated; hereinafter referred to as the "amount of purchase transactions" in this item), the ratio
of the sum of the amount of
purchase transactions with a person other than affiliated persons exceeds 50 percent
(ii) Banking business: Where, out of the sum of the total interest received for
the relevant business year, the ratio of the sum of said interest to be received from a person other than affiliated persons exceeds
50 percent, or out of the
sum of the total interest paid for the relevant business year, the ratio of the
sum of said interest to be paid to a person other than affiliated persons exceeds 50 percent
(iii) Trust business: Where, out of the sum of the total trust charge for the
relevant business year, the ratio of the sum of said trust charge to be received from a person other than affiliated persons exceeds
50 percent
(iv) Financial instruments business: Where, out of the sum of the total
commissions received (including profits from the buying and selling of securities) for the relevant business year, the ratio of the
sum of said commissions to be received from a person other than affiliated persons exceeds 50 percent
(v) Insurance business: Where, out of the sum of the total premium income for the relevant business year, the ratio of the sum of
said premium income to be received from a person other than affiliated persons (where said premium
income pertains to reinsurance, limited to premium income from insurance for assets held by a person other than affiliated persons
or damages incurred by a person other than affiliated persons) exceeds 50 percent
(vi) Water transportation business or air transportation business: Where, out of the total revenue from the operation or rental of
vessels or operation or rental of aircraft for the relevant business year, the ratio of the sum of said
revenue to be received from a person other than affiliated persons exceeds 50 percent.
(3) Where transactions prescribed in the preceding paragraph between a specified foreign subsidiary, etc. and its affiliated person
are conducted
indirectly via a person other than affiliated persons of said specified foreign
subsidiary, etc. (hereinafter referred to as a "non-affiliated person" in this
paragraph), transactions between said specified foreign subsidiary, etc. and said non-affiliated person shall be deemed to have been
conducted directly between said specified foreign subsidiary, etc. and said affiliated person and the provisions of the items of
the preceding paragraph shall apply, except in the case where there are reasonable grounds for having said non-affiliated
person intervene in such transactions.
(4) The case specified by Cabinet Order prescribed in Article 68-90, paragraph (4),
item (ii) of the Act shall be any of the cases specified respectively in the
following items, in accordance with the category of the principal business to be conducted for the relevant business year of a specified
foreign subsidiary, etc.
prescribed in said paragraph:
(i) Real estate business: Where conducting a buying and selling or rental
business of real estate (including acts to let others use said real estate) (real estate shall include the rights thereon; hereinafter
the same shall apply in
this item) mainly located in the state of the head office, providing agent or intermediary services for the buying and selling or
rental business of said real estate, and managing said real estate
(ii) Rental and leasing business: Where conducting a rental business for goods to be provided for use mainly in the state of the head
office
(iii) Business other than those listed in paragraph (2) and the preceding two items: Where conducting a business mainly in the state
of the head office.
(Calculation, etc. of Foreign Corporation Tax on the Individually Taxable
Retained Income of a Specified Foreign Subsidiary, etc.)
Article 39-118 (1) The amount calculated as specified by Cabinet Order
prescribed in Article 68-91, paragraph (1) of the Act shall be the amount
obtained by multiplying the amount of foreign corporation tax to be imposed on a specified foreign subsidiary, etc. prescribed in
said paragraph (hereinafter
referred to as a "specified foreign subsidiary, etc." in this Article) on its income for a business year containing eligible
retained income (hereinafter referred to as a "taxable business year" through to paragraph (4)) by the ratio of the
individually taxable retained income pertaining to a consolidated corporation
prescribed in Article 68-91, paragraph (1) of the Act out of the sum of the
eligible retained income for the relevant taxable business year (where there is any amount of a deductible dividend, etc. prescribed
in Article 39-115,
paragraph (3), the amount obtained by adding said amount) and the amount of a dividend of surplus, etc. to be deducted for calculating
the amount of said
eligible retained income (where said amount exceeds said individually taxable retained income, the amount equivalent to said individually
taxable retained
income).
(2) In the case where a specified foreign subsidiary, etc. has been subject to two or more foreign corporation taxes or to a foreign
corporation tax twice or more
on its income for a taxable business year, when the consolidated corporation of
said specified foreign subsidiary, etc. seeks the application of the provisions of Article 68-91, paragraph (1) (including the cases
where it is applied pursuant to the provisions of paragraph (2) of said Article by deeming the amount to be
as specified therein; hereinafter the same shall apply in this Article) or Article
66-7, paragraph (1) (including the cases where it is applied pursuant to the
provisions of paragraph (2) of said Article by deeming the amount to be as
specified therein; hereinafter the same shall apply in this Article) of the Act in two or more business years or consolidated business
years; with respect to the application of the provisions of Article 68-91, paragraph (1) of the Act for a
consolidated business year following the first one of said two or more consolidated business years or business years, the amount obtained
by
deducting the amount listed in item (ii) (the amount listed in item (iii), when seeking the application of the provisions of Article
68-91, paragraph (1) of the Act for the first time after receiving the application of the provisions of Article
66-7, paragraph (1) of the Act) from the amount listed in item (i) shall be
deemed to be the calculated amount prescribed in the preceding paragraph: (i) The amount calculated pursuant to the provisions of
the preceding
paragraph regarding the sum of the amount of foreign corporation taxes that were imposed on income for the relevant taxable business
year by the final
day of a consolidated business year subject to the provisions of Article 68-91,
paragraph (1) of the Act (hereinafter referred to as the "applicable
consolidated business year" in this paragraph) (such amount of foreign
corporation taxes shall be limited to those to which the provisions of Article
68-91, paragraph (1) or Article 66-7, paragraph (1) of the Act were chosen to apply, pursuant to the provisions of paragraph (4) or
Article 39-18,
paragraph (4); hereinafter the same shall apply in this paragraph)
(ii) The amount calculated pursuant to the provisions of the preceding
paragraph regarding the sum of the amount of foreign corporation taxes that were imposed on income for the relevant taxable business
year by the day
preceding the first day of the applicable consolidated business year
(iii) The amount calculated pursuant to the provisions of Article 39-18,
paragraph (1) regarding the sum of the amount of foreign corporation taxes that were imposed on income for the relevant taxable business
year by the
day preceding the first day of the applicable consolidated business year
(3) Out of the amount of foreign corporation taxes that were imposed on a
specified foreign subsidiary, etc. on its income for a taxable business year, the amount deemed to be the amount of individually creditable
foreign corporation taxes prescribed in Article 68-91, paragraph (1) of the Act that shall be paid by the consolidated corporation
of said specified foreign subsidiary, etc., pursuant to the provisions of said paragraph, (hereinafter referred to as the "amount
of individually creditable foreign corporation taxes" in this Article) shall be
deemed to be payable by the consolidated corporation in a consolidated
business year specified respectively in the following items for the category of foreign corporation taxes listed in the relevant item:
(i) The foreign corporation tax that was imposed on the consolidated
corporation on its income for the relevant taxable business year of said
specified foreign subsidiary, etc. on or prior to the final day of the consolidated business year for which the provisions of Article
68-90,
paragraph (1) of the Act are applied regarding the amount equivalent to the individually taxable retained income for the relevant
taxable business year: The consolidated business year subject to the provisions of Article 68-90,
paragraph (1) of the Act
(ii) The foreign corporation tax that was imposed on the consolidated
corporation on its income for the relevant taxable business year of said specified foreign subsidiary, etc. after the final day of
the consolidated business year for which the provisions of Article 68-90, paragraph (1) of the Act are applied regarding the amount
equivalent to the individually taxable retained income for the relevant taxable business year (where the provisions of Article 68-91,
paragraph (2) of the Act are applied, after the final day of
the business year for which the provisions of Article 66-6, paragraph (1) of the Act were applied regarding the amount equivalent
to the taxable
retained income for the relevant taxable business year): Said consolidated business year involving the day on which the tax was imposed.
(4) Where a specified foreign subsidiary, etc. has been subject to two or more
foreign corporation taxes or to a foreign corporation tax twice or more on its income for a taxable business year, a consolidated
corporation to which the
provisions of Article 68-90, paragraph (1) of the Act are applied, regarding the
amount equivalent to the individually taxable retained income for the relevant taxable business year of said specified foreign subsidiary,
etc., shall choose
whether or not it will seek the application of the provisions of Article 68-91,
paragraph (1) of the Act regarding the amount of respective foreign corporation taxes on the individually taxable retained income
subject to the provisions of
Article 68-90, paragraph (1) of the Act.
(5) In the case where a consolidated corporation was subject to the provisions of
Article 68-91, paragraph (1) of the Act, regarding the amount of foreign
corporation tax imposed on the income of its specified foreign subsidiary, etc., when said amount of foreign corporation tax was reduced
in a consolidated business year after the consolidated business year subject to the provisions of said paragraph (hereinafter referred
to as the "applicable consolidated
business year" in this paragraph), it shall be deemed that the remaining
amount after deducting the amount listed in item (ii) from the amount listed in item (i) has been reduced from the part of said amount
of foreign corporation
tax that was deemed to be the amount of individually creditable foreign corporation tax payable by the consolidated corporation, pursuant
to the
provisions of paragraph (1) of said Article, as on the day of the reduction of
said foreign corporation tax:
(i) The part of said amount of foreign corporation tax that was deemed to be
the amount of individually creditable foreign corporation tax payable by the consolidated corporation in the applicable consolidated
business year
(ii) The part that is deemed to be the amount of individually creditable foreign corporation tax payable by the consolidated corporation
when the provisions of Article 68-91, paragraph (1) of the Act are applied in the applicable
consolidated business year to said amount of foreign corporation tax after the
reduction.
(6) In the case where a consolidated corporation was subject to the provisions of
Article 66-7, paragraph (1) of the Act, regarding the amount of foreign
corporation tax imposed on the income of its specified foreign subsidiary, etc., when said amount of foreign corporation tax was reduced
in a consolidated business year after the business year subject to the provisions of said
paragraph (hereinafter referred to as the "applicable business year" in this
paragraph), it shall be deemed that the remaining amount after deducting the amount listed in item (ii) from the amount listed in
item (i) has been reduced
from the part of said amount of foreign corporation tax that was deemed to be the amount of creditable foreign corporation tax payable
by the consolidated corporation, pursuant to the provisions of paragraph (1) of said Article
(hereinafter referred to as the "amount of creditable foreign corporation tax" in
this Article), as on the day of the reduction of said foreign corporation tax: (i) The part of said amount of foreign corporation
tax that was deemed to be
the amount of creditable foreign corporation tax payable by the consolidated corporation in the applicable business year
(ii) The part that is deemed to be the amount of creditable foreign corporation
tax payable by the consolidated corporation when the provisions of Article
66-7, paragraph (1) of the Act are applied in the applicable business year to said amount of foreign corporation tax after the reduction.
(7) Where the amount of individually creditable foreign corporation tax or
creditable foreign corporation tax has been deemed to have been reduced,
pursuant to the provisions of paragraph (5) or the preceding paragraph, the provisions of Article 81-15, paragraph (10) of the Corporation
Tax Act shall
apply as specified in Article 155-39 (excluding paragraph (2)) of the Order for Enforcement of the Corporation Tax Act. In this case,
in paragraph (1) of said Article, the term "Article 81-15, paragraph (8) of the Act (including the cases where it is applied
pursuant to the provisions of paragraph (9) of said Article by deeming the amount to be as specified therein)" shall be deemed
to be
replaced with "Article 81-15, paragraph (8) of the Act (including the cases
where it is applied pursuant to the provisions of paragraph (9) of said Article
by deeming the amount to be as specified therein) and Article 68-91, paragraph (1) (Credit for Foreign Tax on the Individually Taxable
Retained Income of the Specified Foreign Subsidiary, etc. of a Consolidated Corporation) of the Act on
Special Measures Concerning Taxation (including the cases where it is applied pursuant to the provisions of paragraph (2) of said
Article by deeming the
amount to be as specified therein);" and the term "the amount of individually
reduced creditable foreign corporation tax" shall be deemed to be replaced with
"the amount of individually reduced creditable foreign corporation tax
(including the amount of individually creditable foreign corporation tax or creditable foreign corporation tax that is deemed to have
been reduced
pursuant to the provisions of Article 39-118, paragraph (5) or paragraph (6)
(Reduction of Foreign Corporation Tax on the Individually Taxable Retained
Income of a Specified Foreign Subsidiary, etc.) of the Order for Enforcement of the Act on Special Measures Concerning Taxation)."
(8) Where there is any amount included in the gross profits pursuant to the
provisions of Article 68-90, paragraph (1) of the Act for calculating the amount of consolidated income for the relevant consolidated
business year of a
consolidated corporation listed in the items of said paragraph, said amount
included in gross profits shall be included in the consolidated foreign income
prescribed in the main clause of Article 155-28, paragraph (3) of the Order for Enforcement of the Corporation Tax Act for calculating
the maximum amount of consolidated deduction prescribed in paragraph (1) of said Article for the
relevant consolidated business year of said consolidated corporation; provided, however, that in the case where the state of the head
office of the consolidated corporation's specified foreign subsidiary, etc. is a state or territory that does not impose any
foreign corporation taxes prescribed in Article 141, paragraph (1) of said Order on the income of said specified foreign subsidiary,
etc., the
amount to be included in said consolidated foreign income shall be the amount
equivalent to one-third of said amount included in the gross profits.
(9) The part of the amount of foreign corporation taxes listed in the items of paragraph (3) that is deemed to be the amount of individually
creditable
foreign corporation tax payable by the consolidated corporation of a specified foreign subsidiary, etc., pursuant to the provisions
of Article 68-91, paragraph (1) of the Act, shall be included in consolidated foreign income prescribed in the main clause of Article
155-28, paragraph (3) of the Order for Enforcement of
the Corporation Tax Act for calculating the maximum amount of consolidated
deduction prescribed in paragraph (1) of said Article for a consolidated business year specified respectively in the relevant items
of the consolidated corporation.
(10) Out of the amount deemed to have been reduced from the amount of
individually creditable foreign corporation tax or creditable foreign corporation tax, pursuant to the provisions of paragraph (5)
or paragraph (6), the amount
equivalent to the amount to be appropriated, pursuant to the provisions of
paragraph (7), for deduction from the amount of individually creditable foreign
corporation tax to be paid prescribed in Article 155-39, paragraph (1) of the
Order for Enforcement of the Corporation Tax Act under the provisions of said paragraph or for deduction from the amount exceeding
the maximum amount
of individual deduction prescribed in paragraph (3) of said Article under the provisions of said paragraph shall be included in deductible
expenses for
calculating the amount of consolidated income for a consolidated business year
of a consolidated corporation prescribed in paragraph (5) or paragraph (6) for making such deduction. In this case, said amount to
be included in deductible expenses shall be allocated as the amount of deductible expenses for
calculating the amount of consolidated foreign income prescribed in the main
clause of Article 155-28, paragraph (3) of said Order.
(11) The consolidated business year specified by Cabinet Order prescribed in
Article 68-91, paragraph (3) of the Act shall be the consolidated business year specified respectively in the items of paragraph (3),
in accordance with the
category of the amount of foreign corporation tax imposed on the income of a
specified foreign subsidiary, etc.
(12) In the case where there is any individually taxed amount of retained income prescribed in Article 68-92, paragraph (1) of the
Act (including the amount
deemed to be the individually taxed amount of retained income pursuant to the provisions of paragraph (2) or paragraph (3) of said
Article) that was included
in deductible expenses for calculating the amount of consolidated income for
the relevant consolidated business year of a consolidated corporation
prescribed in Article 68-92, paragraph (1) of the Act, pursuant to the provisions of said paragraph, in the consolidated business
year of the consolidated
corporation including the day on which any of the events listed in the items of said paragraph occurred with regard to the specified
foreign subsidiary, etc. of the domestic corporation, or an affiliated foreign company of said consolidated corporation, when said
individually taxed amount of retained income included
in deductible expenses includes the amount of foreign corporation tax on said specified foreign subsidiary, etc. that was deemed to
be the amount of
individually creditable foreign corporation tax payable by said consolidated corporation, pursuant to the provisions of Article 68-91,
paragraph (1) of the Act, and which consists of individually taxable retained income pertaining to
what was the basis for calculating the amount for which a deduction under the
provisions of Article 81-15, paragraphs (1) to (3) of the Corporation Tax Act shall be made, pursuant to the provisions of Article
68-91, paragraph (1) of the Act, or that was deemed to be the amount of creditable foreign corporation tax payable by said consolidated
corporation, pursuant to the provisions of Article
66-7, paragraph (1) of the Act, and which consists of taxable retained income
pertaining to what was the basis for calculating the amount for which a deduction under the provisions of Article 69, paragraphs (1)
to (3) of the
Corporation Tax Act shall be made, pursuant to the provisions of Article 66-7, paragraph (1) of the Act, the part of the amount corresponding
to the amount of foreign corporation tax on the specified foreign subsidiary, etc. that was
deemed to be the amount of individually creditable foreign corporation tax payable by said consolidated corporation, which was the
basis for said
calculation, and which consists of said individually taxable retained income or
the part of the amount corresponding to the amount of foreign corporation tax on the specified foreign subsidiary, etc. that was deemed
to be the amount of
creditable foreign corporation tax payable by said consolidated corporation,
which was the basis for said calculation, and which consists of said taxable
retained income shall be deemed to have been reduced on the final day of the relevant consolidated business year. In this case, the
provisions of Article 81-
15, paragraph (10) of said Act shall apply by replacing the terms in said
paragraph as follows: the term "the part of the amount deemed to be payable by said consolidated corporation pursuant to the
provisions of paragraph (8)" shall be deemed to be replaced with "the part of the amount deemed to be
payable by said consolidated corporation pursuant to the provisions of
paragraph (8), and out of the amount of foreign corporation tax to be imposed
on the income of a specified foreign subsidiary, etc. prescribed in Article 68-91, paragraph (1) (Credit for Foreign Tax on the Individually
Taxable Retained Income of the Specified Foreign Subsidiaries, etc. of a Consolidated
Corporation) of the Act on Special Measures Concerning Taxation, the part of
the amount deemed to be payable by said consolidated corporation pursuant to the provisions of said paragraph;" the term "in
the case where said amount of
foreign corporation tax was reduced (" shall be deemed to be replaced with "in
the case where said amount of foreign corporation tax was reduced (in the case where the reduction is deemed to have been made pursuant
to the provisions of Article 39-118, paragraph (12) (Calculation, etc. of Foreign Corporation Tax on
the Individually Taxable Retained Income of a Specified Foreign Subsidiary,
etc.) of the Order for Enforcement of the Act on Special Measures Concerning Taxation, or;" the term "the part of the amount
deemed to be payable by said consolidated corporation pursuant to the provisions of paragraph (8) of said
Article" shall be deemed to be replaced with "the part of the amount deemed to
be payable by said consolidated corporation pursuant to the provisions of
paragraph (8) of said Article, and out of the amount of foreign corporation tax to be imposed on the income of a specified foreign
subsidiary, etc. prescribed in Article 66-7, paragraph (1) (Credit for Foreign Tax on Taxable Retained Income of Specified Foreign
Subsidiaries, etc. of Domestic Corporations) of said Act,
the part of the amount deemed to be payable by said consolidated corporation
pursuant to the provisions of said paragraph;" and the term "paragraphs (1) to
(3) of said Article" shall be deemed to be replaced with "Article 69, paragraphs
(1) to (3)."
(13) The provisions of paragraph (7) shall apply mutatis mutandis where the amount of individually creditable foreign corporation
tax or creditable foreign corporation tax is deemed to have been reduced pursuant to the provisions of
the preceding paragraph.
(14) The amount of foreign corporation tax that was deemed to be the amount of individually creditable foreign corporation tax payable
by a consolidated
corporation prescribed in paragraph (12), pursuant to the provisions of Article
68-91, paragraph (1) of the Act, which is deemed to have been reduced
pursuant to the provisions of paragraph (12) shall be included in deductible expenses for calculating the amount of consolidated income
for a consolidated
business year prescribed in said paragraph of said consolidated corporation. In
this case, said amount to be included in deductible expenses shall be allocated as the amount of deductible expenses for calculating
the amount of
consolidated foreign income prescribed in the main clause of Article 155-28,
paragraph (3) of the Order for Enforcement of the Corporation Tax Act.
(15) With respect to the application of the provisions of Article 155-13 of the
Order for Enforcement of the Corporation Tax Act in the consolidated business year subject to the provisions of the preceding paragraph
of a consolidated
corporation prescribed in said paragraph, the term "(Inclusion in Gross Profits of the Amount of Foreign Tax of Specified Foreign
Subsidiaries, etc. to be
Deducted from Corporation Tax)" in paragraph (2), item (viii) of said Article shall be deemed to be replaced with "(Inclusion
in Gross Profits of the Amount of Foreign Tax of Specified Foreign Subsidiaries, etc. to be Deducted from
Corporation Tax) and Article 39-118, paragraph (14) (Calculation, etc. of
Foreign Corporation Tax on the Individually Taxable Retained Income of a
Specified Foreign Subsidiary, etc.) of the Order for Enforcement of the Act on
Special Measures Concerning Taxation."
(16) The provisions of Article 68-92, paragraph (5) and paragraph (6) of the Act shall apply mutatis mutandis where the provisions
of paragraph (14) shall
apply.
(17) In the case where there is any amount to be included in deductible expenses for calculating the amount of consolidated income
for the relevant consolidated business year of a consolidated corporation prescribed in Article 68-92,
paragraph (1) of the Act, pursuant to the provisions of said paragraph, in the consolidated business year of said consolidated corporation
including the day on which any of the events listed in the items of said paragraph occurred, with regard to the specified foreign
subsidiary, etc. of said consolidated corporation, or an affiliated foreign company of said consolidated corporation; with regard
to the calculation of the maximum amount of individual deduction prescribed
in Article 155-28, paragraph (1) of the Order for Enforcement of the
Corporation Tax Act for the relevant consolidated business year of said
consolidated corporation, said amount included in deductible expenses shall be allocated as the amount of deductible expenses for
calculating the amount of consolidated foreign income prescribed in the main clause of paragraph (3) of said Article; provided however,
that in the case where the state of the head
office of the specified foreign subsidiary, etc. is a state or territory that does
not impose any foreign corporation taxes prescribed in Article 141, paragraph
(1) of said Order on the income of said specified foreign subsidiary, etc., the
amount to be allocated as the amount of deductible expenses for calculating the amount of said consolidated foreign income shall be
the amount equivalent to
one-third of said amount included in the deductible expenses.
(Calculation of the Taxed Amount of Dividend, etc. of Specified Foreign
Subsidiaries, etc.)
Article 39-119 (1) Affiliated foreign companies prescribed in Article 68-92, paragraph (1) of the Act which are specified by Cabinet
Order shall be
affiliated foreign companies that hold the taxed amount of a dividend, etc. before deduction prescribed in Article 39-116, paragraph
(3), item (iii) (referred to as the "taxed amount of a dividend, etc. before deduction" in the following
paragraph) pertaining to a specified foreign subsidiary, etc. prescribed in
Article 68-92, paragraph (1) of the Act (hereinafter referred to as a "specified foreign subsidiary, etc." in this Article).
(2) The amount calculated as specified by Cabinet Order prescribed in Article 68-
92, paragraph (1) of the Act shall be the amount specified respectively in the
following items for the category of cases listed in the relevant items (excluding the amount to be deducted for calculating the amount
of individually taxable retained income, pursuant to the provisions of Article 39-116, paragraph (2), pertaining to a specified foreign
subsidiary, etc.):
(i) Where an event listed in Article 68-92, paragraph (1), item (i) of the Act has
occurred with regard to the specified foreign subsidiary, etc. of a consolidated corporation prescribed in said paragraph (excluding
the case where said
event occurred during the consolidated business year or business year
preceding the consolidated business year of the consolidated corporation
including the day on which two months had elapsed after the day following the final day of the business year of the specified foreign
subsidiary, etc.
including the base day for the payment of a dividend of surplus, etc. specified
in Article 68-92, paragraph (1), item (i) of the Act (hereinafter the business year including such base day shall be referred to as
the "base business year" in this item and the following paragraph, and such consolidated business
year of the consolidated corporation shall be referred to as the "applicable
consolidated business year" in the following paragraph)), when said amount
of a dividend of surplus, etc. proves to exceed the amount of a dividend of
surplus, etc. to be deducted for calculating the amount of eligible retained income prescribed in Article 68-90, paragraph (1) of
the Act for the relevant base business year of the specified foreign subsidiary, etc.: The amount
obtained by multiplying said excess amount by the ratio of the shares, etc. for considering the claims held by said consolidated corporation
that are
prescribed in Article 39-116, paragraph (3), item (i) out of the total issued shares, etc. of said specified foreign subsidiary, etc.
at the end of said base business year (in the case where the dividend of surplus, etc. has been paid
to an affiliated foreign company of the consolidated corporation (excluding a
specified foreign subsidiary, etc. related to the consolidated corporation and
a specified foreign subsidiary, etc. prescribed in Article 66-6, paragraph (1) of the Act; hereinafter the same shall apply in this
paragraph) whose tax
burden imposed in the state of the head office on the amount of the dividend
of surplus, etc. that it receives is not more than the low tax-burden base or to any other specified foreign subsidiary, etc. of the
consolidated corporation
(including a specified foreign subsidiary, etc. prescribed in Article 66-6,
paragraph (1) of the Act; hereinafter the same shall apply in this paragraph); excluding the shares, etc. for considering the claims
indirectly held (meaning the shares, etc. for considering the claims indirectly held prescribed in
Article 39-116, paragraph (3), item (ii); the same shall apply in the following
item) via said affiliated foreign company and said other specified foreign subsidiary, etc.)
(ii) Where an event listed in Article 68-92, paragraph (1), item (ii) of the Act
has occurred with regard to the specified foreign subsidiary, etc. of a
consolidated corporation prescribed in said paragraph: The amount obtained by multiplying the amount specified in said item by the
ratio of the shares,
etc. for considering the claims held by said consolidated corporation that are prescribed in Article 39-116, paragraph (3), item (i)
out of the total issued
shares, etc. of said specified foreign subsidiary, etc. at the time when said
event occurred (in the case where money or any other assets have been delivered to an affiliated foreign company of the consolidated
corporation
whose tax burden imposed in the state of the head office on the amount that
it receives as specified in Article 68-92, paragraph (1), item (ii) of the Act is not more than the low tax-burden base or to any
other specified foreign
subsidiary, etc. of the consolidated corporation; excluding the shares, etc. for
considering the claims indirectly held via said affiliated foreign company and said other specified foreign subsidiary, etc.)
(iii) Where an event listed in Article 68-92, paragraph (1), item (iii) of the Act
has occurred with regard to an affiliated foreign company of a consolidated corporation prescribed in said paragraph: The amount specified
in said item
(where said amount has been received from an affiliated foreign company
that falls under the category of any other specified foreign subsidiary, etc., the remaining amount after deducting from said amount,
the amount
equivalent to the sum of the amount to be deducted for calculating the
amount of eligible retained income, individually taxable retained income or
taxable retained income pertaining to said other specified foreign subsidiary, etc. and the amount to be included in deductible expenses
due to said event, under the provisions of said paragraph or Article 66-8, paragraph (1) of the
Act), with the taxed amount of a dividend, etc. before deduction as the upper
limit.
(3) With respect to the application of the provisions of item (i) of the preceding paragraph, in the case where payment has been made
for two or more
dividends of surplus, etc. whose base dates for the payment are included in the base business year, with regard to the specified foreign
subsidiary, etc. of a
consolidated corporation prescribed in Article 68-92, paragraph (1) of the Act
(where payment was made for said two or more dividends of surplus, etc. on a day within a consolidated business year or business year
preceding the
applicable consolidated business year pertaining to the base business year for
said dividends of surplus, etc. (hereinafter such paid dividends of surplus, etc. shall be referred to as "specified dividends
of surplus, etc." in this paragraph), excluding said two or more dividends of surplus) (including the cases where
payment has been made for specified dividends of surplus, etc. and payment
has not been made for dividends of surplus, etc. whose base dates for the
payment are included in said base business year, up to the day on which six months have elapsed after the final day of the base business
year for said specified dividends of surplus, etc.); the amount specified in item (i) of the
preceding paragraph shall be the amount obtained by multiplying the excess
amount when the amount listed in item (i) exceeds the amount listed in item
(ii) by the ratio prescribed in item (i) of said paragraph and then deducting therefrom the amounts listed in item (iii) and item
(iv):
(i) The sum of dividends of surplus, etc. (limited to that whose base date for payment is included in said base business year) that
said specified foreign subsidiary, etc. has paid, up to the final day of the consolidated business year of the consolidated corporation
including the day on which an event listed in
Article 68-92, paragraph (1), item (i) of the Act occurred (where no dividend
of surplus, etc. other than specified dividends of surplus, etc. was paid, up to
the final day of the consolidated business year including the day on which six months have elapsed after the final day of the base
business year for said
specified dividends of surplus, etc.)
(ii) The sum of the amounts to be deducted for calculating the amount of
eligible retained income for said base business year of said specified foreign
subsidiary, etc., with regard to the sum of dividends of surplus, etc. set forth in the preceding item
(iii) The sum of the amounts to be deducted for calculating the amount of individually taxable retained income for said base business
year of said specified foreign subsidiary, etc., with regard to the sum of dividends of surplus, etc. set forth in item (i)
(iv) The sum of the amounts included in deductible expenses, pursuant to the
provisions of said paragraph or Article 66-8, paragraph (1) of the Act, in a consolidated business year or business year preceding
the consolidated
business year of said consolidated corporation that includes the day on which an event listed in Article 68-92, paragraph (1), item
(i) of the Act occurred,
with regard to the sum of dividends of surplus, etc. set forth in item (i).
(4) In the case where a consolidated corporation prescribed in Article 68-92, paragraph (1) of the Act holds the individually taxed
amount of retained income prescribed in said paragraph that pertains to its specified foreign subsidiary, etc., and the individually
taxed amount of retained income
prescribed in Article 68-93-8, paragraph (1) of the Act that pertains to its
specified foreign corporation prescribed in Article 68-93-6, paragraph (1) of the Act (limited to a foreign corporation that is the
same as said specified foreign subsidiary, etc.), the amount calculated as specified by Cabinet Order
prescribed in Article 68-92, paragraph (1) of the Act shall not exceed the
amount calculated pursuant to the provisions of the preceding two paragraphs based on the remaining amount after deducting the amount
to be included in deductible expenses pursuant to the provisions of Article 68-93-8, paragraph (1) of the Act from the amount specified
in the items of Article 68-92,
paragraph (1) of the Act.
(5) With respect to the application of the provisions of Article 68-92, paragraph (1) of the Act in or after the consolidated business
year including the day of a qualified merger prescribed in paragraph (3) of said Article (referred to as a
"qualified merger, etc." in the following paragraph) of a consolidated
corporation set forth in said paragraph, in the case where the provisions of said paragraph apply, the individually taxed amount of
retained income specified in the items of said paragraph (meaning the individually taxed amount of
retained income prescribed in paragraph (1) of said Article; hereinafter the
same shall apply in this Article) or the taxed amount of retained income
(meaning the taxed amount of retained income prescribed in Article 66-8,
paragraph (1) of the Act; hereinafter the same shall apply in this Article) shall be deemed to be the individually taxed amount of
retained income for a
consolidated business year of said consolidated corporation specified
respectively in the following items for the category of consolidated business years or business years listed in the relevant items
of a merged corporation,
split corporation, corporation making a capital contribution in kind, or
corporation effecting a post-formation acquisition of assets and/or liabilities
(referred to as a "merged corporation, etc." in the following paragraph):
(i) A business year within ten years prior to the merger prescribed in Article
68-92, paragraph (3), item (i) of the Act (hereinafter referred to as a
"business year within ten years prior to the merger" in this paragraph and the following paragraph) of a merged corporation
pertaining to a qualified merger or a business year within ten years prior to the company split
prescribed in paragraph (3), item (ii) of said Article (hereinafter referred to
as a "business year within ten years prior to the company split" through to paragraph (7)) of a split corporation pertaining
to a qualified split-off-type company split (excluding a business year within ten years prior to the
merger or business year within ten years prior to the company split listed in
the following item): The relevant consolidated business year of said
consolidated corporation including the first day of a business year within ten years prior to the merger of said merged corporation
or the relevant
consolidated business year of said consolidated corporation including the first day of a business year within ten years prior to the
company split of said split corporation
(ii) A business year within ten years prior to the merger of a merged
corporation pertaining to a qualified merger that started on or after the first day of the consolidated business year including the
day of said qualified
merger of the consolidated corporation (hereinafter referred to as the
"consolidated business year of the merger" in this item) or a business year
within ten years prior to the company split of a split corporation pertaining to a qualified split-off-type company split that started
on or after the first
day of the consolidated business year including the day of said qualified
split-off-type company split of the consolidated corporation (hereinafter
referred to as the "consolidated business year of the split succession" in this item): The consolidated business year including
the day preceding the first
day of the consolidated business year of the merger or consolidated business year of the split succession of said consolidated corporation
(iii) A business year within ten years prior to the company split, etc. prescribed
in Article 68-92, paragraph (3), item (iii) of the Act (hereinafter referred to as a "business year within ten years prior to
the company split, etc." in this
Article) of a split corporation, etc. (meaning a split corporation, corporation
making a capital contribution-in-kind, or corporation effecting a post-
formation acquisition of assets and/or liabilities; hereinafter the same shall
apply in this paragraph and paragraph (8)) pertaining to a qualified spin-off-
type company split, etc. (meaning a qualified spin-off-type company split, etc. prescribed in Article 68-92, paragraph (3), item (iii)
of the Act; hereinafter
the same shall apply in this paragraph and paragraph (8)) (excluding a
business year within ten years prior to the company split when falling under the case listed in the following item and a business
year within ten years
prior to the company split, etc. listed in item (v)): The relevant consolidated business year of said consolidated corporation including
the first day of a business year within ten years prior to the company split, etc. of said split corporation, etc.
(iv) A consolidated business year of a split corporation, etc. pertaining to a qualified spin-off-type company split, etc. that includes
the day of said
qualified spin-off-type company split, etc. or a business year within ten years prior to the company split, etc. prescribed in said
item of the split
corporation, etc. where the first day of the business year falls before the first
day of the consolidated business year of said consolidated corporation that includes the day of said qualified spin-off-type company
split, etc.: The
relevant consolidated business year of said consolidated corporation
including the final day of a business year within ten years prior to the company split, etc. of said split corporation, etc.
(v) A business year within ten years prior to the company split, etc. of a split
corporation, etc. pertaining to a qualified spin-off-type company split, etc.
that started on or after the first day of a consolidated business year of said consolidated corporation including the day of said
qualified spin-off-type
company split, etc. (hereinafter referred to as the "consolidated business year of the split succession, etc." in this item):
The relevant consolidated business year of said consolidated corporation including the day preceding the first
day of the consolidated business year of the split succession, etc.
(6) In the case where the first day of the oldest consolidated business year or business year out of the relevant consolidated business
years or business years that started within ten years prior to the first day of the consolidated business year including the day
of a qualified merger, etc. of a consolidated corporation set forth in Article 68-92, paragraph (3) of the Act (hereinafter referred
to as
the "first day of the business year of the consolidated corporation ten years
before" in this paragraph) falls after the first day of the oldest consolidated
business year or business year out of a business year within ten years prior to the merger, business year within ten years prior to
the company split or business year within ten years prior to the company split, etc. of a merged
corporation(s), etc. pertaining to said qualified merger, etc. (hereinafter
referred to as a "business year of the merged corporation(s), etc. within the
preceding ten years" in this paragraph) (in the case of a qualified merger, etc. made among two or more merged corporations,
etc., after the first day of the relevant consolidated business year or business year of the merged
corporations, etc. whichever started the earliest; hereinafter referred to as the
"first day of the business year of the merged corporations, etc. ten years before" in this paragraph), the provisions of
the preceding paragraph shall apply by
deeming respective periods classifying the period between said first day of the business year of the merged corporations, etc. ten
years before and the day
preceding said first day of the business year of the consolidated corporation ten years before (in the case where said consolidated
corporation is to be
established through said qualified merger, etc., the day preceding the first day of the consolidated business year of the consolidated
corporation including the day of the qualified merger, etc.; hereinafter the same shall apply in this
paragraph) by the corresponding business year of the merged corporation(s),
etc. within the preceding ten years pertaining to said first day of the business year of the merged corporations, etc. ten years before
(for the period including said preceding day, the period between the first day of the consolidated business year or business year
of said merged corporation, etc. including said
preceding day and the day preceding said first day of the business year of the
consolidated corporation ten years before) to be the relevant consolidated business year of said consolidated corporation.
(7) The amount calculated as specified by Cabinet Order prescribed in Article 68-
92, paragraph (3), item (ii) of the Act shall be the amount specified respectively in the following items for the category of the
individually taxed amount of
retained income or taxed amount of retained income listed in the relevant
items:
(i) The individually taxed amount of retained income: The amount obtained by multiplying respectively the individually taxed amount
of retained income for a business year within ten years prior to the company split of a split
corporation pertaining to a qualified split-off-type company split by the ratio
of the shares, etc. for considering the claims held prescribed in Article 39-116, paragraph (3), item (i) (hereinafter referred to
as the "shares, etc. for
considering the claims held" in this Article) that are listed in (b) out of the shares, etc. for considering the claims held
that are listed in (a):
(a) Said specified foreign subsidiary, etc.'s shares, etc. for considering the claims held which the split corporation held immediately
prior to said
qualified split-off-type company split
(b) Said specified foreign subsidiary, etc.'s shares, etc. for considering the claims held which are to be transferred from the
split corporation to a
consolidated corporation set forth in Article 68-92, paragraph (3) of the Act
through said qualified split-off-type company split
(ii) The taxed amount of retained income: The amount obtained by multiplying respectively the taxed amount of retained income for
a business year within
ten years prior to the company split of a split corporation pertaining to a qualified split-off-type company split by the ratio of
the shares, etc. for
considering the claims held that are listed in (b) out of the shares, etc. for considering the claims held that are listed in (a):
(a) Said specified foreign subsidiary, etc.'s shares, etc. for considering the claims held which the split corporation held immediately
prior to said
qualified split-off-type company split
(b) Said specified foreign subsidiary, etc.'s shares, etc. for considering the claims held which are to be transferred from the
split corporation to a
consolidated corporation set forth in Article 68-92, paragraph (3) of the Act through said qualified split-off-type company split.
(8) The amount calculated as specified by Cabinet Order prescribed in Article 68-
92, paragraph (3), item (iii) of the Act shall be the amount specified
respectively in the following items for the category of the individually taxed amount of retained income or taxed amount of retained
income listed in the relevant items:
(i) The individually taxed amount of retained income: The amount obtained by
multiplying respectively the individually taxed amount of retained income for a business year within ten years prior to the company
split, etc. of a split corporation, etc. pertaining to a qualified spin-off-type company split, etc. by the ratio of the shares,
etc. for considering the claims held that are listed in
(b) out of the shares, etc. for considering the claims held that are listed in
(a):
(a) Said specified foreign subsidiary, etc.'s shares, etc. for considering the
claims held which the split corporation, etc. held immediately prior to said qualified spin-off-type company split, etc.
(b) Said specified foreign subsidiary, etc.'s shares, etc. for considering the claims held which are to be transferred from the
split corporation, etc. to a consolidated corporation set forth in Article 68-92, paragraph (3) of the Act through said qualified
spin-off-type company split
(ii) The taxed amount of retained income: The amount obtained by multiplying respectively the taxed amount of retained income for
a business year within
ten years prior to the company split, etc. of a split corporation, etc.
pertaining to a qualified spin-off-type company split, etc. by the ratio of the shares, etc. for considering the claims held that
are listed in (b) out of the
shares, etc. for considering the claims held that are listed in (a):
(a) Said specified foreign subsidiary, etc.'s shares, etc. for considering the
claims held which the split corporation, etc. held immediately prior to said qualified spin-off-type company split, etc.
(b) Said specified foreign subsidiary, etc.'s shares, etc. for considering the claims held which are to be transferred from the
split corporation, etc. to a consolidated corporation set forth in Article 68-92, paragraph (3) of the Act through said qualified
spin-off-type company split.
(9) The amount included in deductible expenses pursuant to the provisions of Article 68-92, paragraph (1) of the Act shall be included
in the amount of individual income prescribed in Article 9-2, paragraph (1), item (i), (a) of the
Order for Enforcement of the Corporation Tax Act for calculating the amount of consolidated revenue reserves of a consolidated corporation
subject to the
provisions of Article 68-92, paragraph (1) of the Act.
(Determination, etc. of Affiliated Foreign Companies)
Article 39-120 (1) In the case referred to in Article 68-90, paragraph (1) of the
Act, whether or not a foreign corporation falls under the category of an
affiliated foreign company shall be determined according to its status at the end of its relevant business year, and whether or not
a consolidated
corporation falls under the category of a consolidated corporation listed in the items of said paragraph shall be determined according
to its status at the end of the relevant business year of the affiliated foreign company of such
consolidated corporation.
(2) Where a consolidated corporation listed in the items of Article 68-90,
paragraph (1) of the Act has been dissolved through a merger by the day on which two months have elapsed since the final day of the
relevant business year of said consolidated corporation's affiliated foreign company, the number
of the shares, etc. of said affiliated foreign company prescribed in Article 66-6,
paragraph (2), item (iii) of the Act which were directly and indirectly held by the consolidated corporation (hereinafter referred
to as the "number of the
shares, etc. directly and indirectly held" in this paragraph) and which have
been succeeded to by the merging corporation in the merger shall be deemed to be the number of the shares, etc. directly and indirectly
held by the merging
corporation on the final day of the relevant business year of said affiliated
foreign company.
(3) The amount included in the gross profits of a consolidated corporation subject to the provisions of Article 68-90, paragraph (1)
of the Act, pursuant to the
provisions of said paragraph, shall not be included in the amount of consolidated income, etc. prescribed in the provisions of Article
81-13,
paragraph (2) and paragraph (4) of the Corporation Tax Act for applying these
provisions.
(4) The amount included in the gross profits pursuant to the provisions of Article
68-90, paragraph (1) of the Act shall not be included in the amount of
individual income prescribed in Article 9-2, paragraph (1), item (i), (a) of the
Order for Enforcement of the Corporation Tax Act for calculating the amount of consolidated revenue reserves of a consolidated corporation
subject to the
provisions of Article 68-90, paragraph (1) of the Act.
(5) The provisions of Article 14-10, paragraphs (1) to (5) and paragraphs (7) to
(11) of the Order for Enforcement of the Corporation Tax Act shall apply
mutatis mutandis where the provisions of Article 68-90, paragraph (7) of the
Act shall apply under the provisions of said Article (excluding paragraph (3),
paragraph (4) and paragraph (6)) to Article 68-93 of the Act, Articles 39-114 to
39-116 (excluding paragraph (5)), and Article 39-118 to this Article.
(6) With regard to a trust corporation or a beneficiary of a trust subject to
corporation taxation prescribed in Article 4-7 of the Corporation Tax Act, in addition to what is specified in the preceding paragraph,
other necessary
matters concerning the application of the provisions of Article 68-90 (excluding
paragraph (3), paragraph (4) and paragraph (6)) to Article 68-93 of the Act, or
the provisions of Articles 39-114 to 39-116 (excluding paragraph (5)), or Article
39-118 to this Article shall be specified by Ordinance of the Ministry of Finance.
Section 28 Special Provisions on Taxation on Income of the Specified
Foreign Corporations of a Consolidated Corporation That Is a
Specially-Related Shareholder, etc.
(Scope, etc. of a Specially-Related Shareholder, etc.)
Article 39-120-8 (1) An individual who has a special relationship specified by
Cabinet Order prescribed in Article 68-93-6, paragraph (1) of the Act to a
person who falls under the category of specified shareholder, etc. shall be any of the following:
(i) An individual who has a special relationship prescribed in Article 4,
paragraph (1) of the Order for Enforcement of the Corporation Tax Act to a person who falls under the category of a specified shareholder,
etc. (meaning a specified shareholder, etc. prescribed in Article 68-93-6, paragraph (2),
item (i) of the Act; hereinafter the same shall apply in this paragraph and
the following paragraph)
(ii) An officer (meaning an officer prescribed in Article 2, item (xv) of the
Corporation Tax Act; hereinafter the same shall apply in this Section) of a corporation falling under the category of a specified
shareholder, etc. and a person listed in the items of Article 72-3 of the Order for Enforcement of the Corporation Tax Act with a
relationship to said officer (referred to as a
"specially-related person" in the following item)
(iii) An officer of a specially-related domestic corporation (meaning a specially- related domestic corporation prescribed in Article
68-93-6, paragraph (2),
item (ii) of the Act; hereinafter the same shall apply in this Section) and a specially-related person with a relationship to said
officer
(2) A corporation which has a special relationship specified by Cabinet Order
prescribed in Article 68-93-6, paragraph (1) of the Act to a person who falls under the category of specified shareholder, etc. shall
be any of the following:
(i) Where a specified shareholder, etc. (including an individual who has a special relationship thereto as prescribed in item (i)
or item (ii) of the
preceding paragraph) or an individual who has a special relationship to a specially-related domestic corporation as prescribed in
item (iii) of said
paragraph (hereinafter referred to as a "person determined to be a
shareholder, etc." in this paragraph) controls any other corporation, said other corporation
(ii) Where a person determined to be a shareholder, etc. and a corporation
which has a special relationship thereto as prescribed in the preceding item control any other corporation, said other corporation
(iii) Where a person determined to be a shareholder, etc. and a corporation
which has a special relationship thereto as prescribed in the preceding two items control any other corporation, said other corporation.
(3) The provisions of Article 4, paragraph (3) and paragraph (4) of the Order for
Enforcement of the Corporation Tax Act shall apply mutatis mutandis where the provisions of the preceding paragraph shall apply.
(4) The relationship specified by Cabinet Order prescribed in Article 68-93-6,
paragraph (1) of the Act shall be the relevant relationship in the case where a specially-related shareholder, etc. prescribed in
said paragraph (hereinafter
referred to as a "specially-related shareholder, etc." in this Section) and a
specially-related domestic corporation have a relationship where the ratio of
the shares, etc. indirectly held by the specially-related shareholder, etc. in the specially-related domestic corporation (meaning
the ratios specified
respectively in the following items for the category of cases listed in the
relevant items (where this falls under both of the following cases, the sum of the ratios specified respectively as follows)) is 80
percent or more:
(i) Where out of the total number or total amount of shares or capital
contributions issued by a foreign corporation (excluding one that falls under the category of a specially-related shareholder, etc.;
hereinafter the same shall apply in this item) which is a shareholder, etc. (meaning a shareholder, etc. prescribed in Article 2,
item (xiv) of the Corporation Tax Act; hereinafter the same shall apply in this Section) of a specially-related domestic
corporation (such issued shares or capital contributions shall exclude those
that said foreign corporation holds in itself and the total number or total amount of such issued shares or capital contributions
shall be referred to as the "issued shares, etc." in this Section), a specially-related shareholder, etc. holds 80 percent
or more of the number or the amount of such shares, etc.
(meaning shares or capital contributions; hereinafter the same shall apply in this Section): The ratio of the number or the amount
of shares, etc. in the
specially-related domestic corporation held by the foreign corporation which is a shareholder, etc. out of the total issued shares,
etc. of said specially-
related domestic corporation (where there are two or more such foreign
corporations which are shareholders, etc., the sum of the ratios calculated for each of them)
(ii) Where a single corporation or two or more corporations are interposed between a corporation which is a shareholder, etc. of a
specially-related
domestic corporation (excluding a foreign corporation which is a shareholder,
etc. set forth in the preceding item falling under the case listed in said item and a corporation falling under the category of a
specially-related
shareholder, etc.) and a specially-related shareholder, etc. and have a link
with them through the holding of shares, etc. (where said corporation which is a shareholder, etc. is a domestic corporation and said
interposed
corporations are domestic corporations, excluding said domestic corporations
and the corporation falling under the category of a specially-related
shareholder, etc.; hereinafter referred to as "corporations related through capital contribution" in this item) (limited
to the case where 80 percent or more of the number or the amount of the issued shares, etc. in both the
corporations related through capital contribution and in the corporation
which is a shareholder, etc. are held by the specially-related shareholder, etc. or by a corporation related through capital contribution
(such specially-
related shareholder, etc. or corporation related through capital contribution shall be limited to those for which 80 percent or more
of the number or the amount of the issued shares, etc. are held by a specially-related shareholder, etc. or by another corporation
related through capital contribution)): The
ratio of the number or the amount of the shares, etc. in the specially-related
domestic corporation held by said corporation which is a shareholder, etc. out of the total issued shares, etc. of said specially-related
domestic corporation
(where there are two or more such corporations which are shareholders, etc.,
the sum of the ratios calculated for each of them).
(5) A foreign corporation specified by Cabinet Order prescribed in Article 68-93-6, paragraph (1) of the Act shall be any of the following:
(i) A foreign corporation falling under the category of a foreign corporation
which is a shareholder, etc. prescribed in item (i) of the preceding paragraph, where the ratio of the shares, etc. held indirectly
as prescribed in said
paragraph is 80 percent or more
(ii) A foreign corporation falling under the category of a foreign corporation
which is a shareholder, etc. prescribed in item (ii) of the preceding paragraph where the ratio of the shares, etc. held indirectly
as prescribed in the
preceding paragraph is 80 percent or more and a foreign corporation falling under the category of a corporation related through capital
contribution
prescribed in said item
(iii) A foreign corporation for which over 50 percent of the number or the
amount of the issued shares, etc. are held directly or indirectly by a foreign corporation listed in the preceding two items (excluding
a foreign corporation falling under the category of a foreign corporation listed in the preceding two items and a foreign corporation
falling under the category of a specially-
related shareholder, etc.).
(6) In item (iii) of the preceding paragraph, whether or not a foreign corporation directly or indirectly holds over 50 percent of
the issued shares, etc. shall be determined based on the sum of the ratio of the shares, etc. held directly by a first foreign corporation
listed in item (i) and item (ii) of said paragraph
pertaining to a second foreign corporation (excluding a foreign corporation
falling under the category of a foreign corporation listed in item (i) or item (ii)
of said paragraph and a foreign corporation falling under the category of a specially-related shareholder, etc.; hereinafter the same
shall apply in this
paragraph) (such ratio of the shares, etc. held directly shall mean the ratio of the number or the amount of the shares, etc. of a
second foreign corporation
held by a first foreign corporation listed in item (i) and item (ii) of the
preceding paragraph out of the total issued shares, etc. of said second foreign corporation) and the ratio of the shares, etc. held
indirectly by a first foreign corporation listed in item (i) and item (ii) of said paragraph pertaining to said second foreign corporation
(such ratio of the shares, etc. held indirectly shall
mean the ratios specified respectively in the following items for the category of
cases listed in the relevant items (where this falls under both of the following cases, the sum of the ratios specified respectively
as follows)):
(i) Where a first foreign corporation listed in item (i) and item (ii) of the
preceding paragraph holds over 50 percent of the number or the amount of
the issued shares, etc. in a foreign corporation which is a shareholder, etc. of the second foreign corporation: The ratio of the
number or the amount of the shares, etc. in the second foreign corporation held by said foreign corporation which is a shareholder,
etc. out of the total issued shares, etc. of the second foreign corporation (where there are two or more such foreign corporations
which are shareholders, etc., the sum of the ratios calculated for each of
them)
(ii) Where a single foreign corporation or two or more foreign corporations are
interposed between the foreign corporation which is a shareholder, etc. of the second foreign corporation (excluding a foreign corporation
which is a
shareholder, etc. set forth in the preceding item falling under the case listed
in said item) and the first foreign corporation listed in item (i) and item (ii)
of the preceding paragraph and have a link with them through the holding of shares, etc. (hereinafter referred to as "foreign
corporations related through
capital contribution" in this item) (limited to the case where over 50 percent of the number or the amount of the issued shares,
etc. in both the foreign
corporation related through capital contribution and in said foreign corporation which is a shareholder, etc. are held by the first
foreign
corporation listed in item (i) and item (ii) of said paragraph or by a foreign corporation related through capital contribution (such
first foreign
corporation or foreign corporation related through capital contribution shall be limited to those for whom over 50 percent of the
number or the amount of the issued shares, etc. are held by the first foreign corporation listed in item (i) and item (ii) of said
paragraph or by another corporation related through capital contribution)): The ratio of the number or the amount of the shares,
etc. of the second foreign corporation held by the foreign corporation which is
a shareholder, etc. out of the total issued shares, etc. of the second foreign
corporation (where there are two or more such foreign corporations which are shareholders, etc., the sum of the ratios calculated
for each of them).
(7) An affiliated foreign corporation specified by Cabinet Order prescribed in
Article 68-93-6, paragraph (1) of the Act shall be any of the following:
(i) An affiliated foreign corporation (meaning an affiliated foreign corporation prescribed in Article 68-93-6, paragraph (1) of the
Act; hereinafter the same shall apply in this Section) which has its head office or principal office in a
state or territory where there are no taxes imposed on corporate income
(ii) An affiliated foreign corporation whose tax to be imposed on its income for the relevant business year is 25 percent or less
of said income.
(8) The provisions of Article 39-114, paragraph (2) shall apply mutatis mutandis
to the determination as to whether or not an affiliated foreign corporation falls under the category of an affiliated foreign corporation
set forth in item (ii) of
the preceding paragraph.
(Calculation of Undistributed Income of Specified Foreign Corporations) Article 39-120-9 (1) The amount of undistributed income calculated
in
accordance with the standards specified by Cabinet Order prescribed in Article
68-93-6, paragraph (2), item (iii) of the Act shall be the amount calculated,
pursuant to the provisions of Article 39-115, paragraph (1) or paragraph (2), or paragraph (3) of said Article with regard to the
income of a specified foreign
corporation prescribed in Article 68-93-6, paragraph (1) of the Act (hereinafter
referred to as a "specified foreign corporation" in this Article and paragraph (1) and paragraph (2) of the following Article)
in its settlement of accounts for the relevant business year.
(2) The amount obtained as a result of an adjustment for the amount of a loss
prescribed in Article 68-93-6, paragraph (2), item (iii) of the Act shall be the amount obtained by calculating the amount of income
pursuant to the
provisions of the preceding paragraph with regard to the income of a specified foreign corporation in its settlement of accounts for
the relevant business year
(hereinafter referred to as the "amount of adjusted income" in this paragraph)
and then deducting therefrom the amount equivalent to the sum of the loss
incurred in business years that commenced within seven years preceding the first day of the relevant business year (excluding a business
year that
commenced before October 1, 2007 and a business year during which the
corporation did not fall under the category of a specified foreign corporation
(including a specified foreign corporation prescribed in Article 40-10,
paragraph (1) or Article 66-9-6, paragraph (1) of the Act)) (such loss shall exclude the amount deducted in business years preceding
said relevant business year pursuant to the provisions of this paragraph or Article 39-20-9, paragraph (2)) (where said sum of the
loss exceeds the amount of adjusted
income for the relevant business year, said amount of adjusted income).
(3) A loss prescribed in the preceding paragraph shall be a loss calculated with regard to the amount of income of a specified foreign
corporation in its
settlement of accounts for the relevant business year, where the calculation
has been made pursuant to the provisions of paragraph (1).
(4) The provisions of Article 39-115, paragraph (7) and paragraph (8) shall apply mutatis mutandis where the amount of income of a
specified foreign
corporation in its settlement of accounts for the relevant business year is
calculated pursuant to the provisions of paragraph (1) or paragraph (2) of said
Article.
(Calculation, etc. of the Amount of Individually Taxable Retained Income of a
Specified Foreign Corporation)
Article 39-120-10 (1) The amount obtained as a result of an adjustment to the amount of undistributed income set forth in Article
68-93-6, paragraph (1) of the Act for the amount of taxes and a dividend of surplus, etc. on said
undistributed income shall be the amount calculated with regard to the
amount of undistributed income prescribed in Article 68-93-6, paragraph (2), item (iii) of the Act for the relevant business year
of a specified foreign
corporation, pursuant to the provisions of Article 39-116, paragraph (1).
(2) The amount calculated as specified by Cabinet Order prescribed in Article 68-
93-6, paragraph (1) of the Act shall be the amount calculated with regard to
the eligible retained income (meaning the eligible retained income prescribed in said paragraph; hereinafter the same shall apply
in this Section) for the
relevant business year of the specified foreign corporation of a consolidated
corporation which is a specially-related shareholder, etc., pursuant to the provisions of Article 39-116, paragraphs (2) to (4).
(3) The amount of expenses specified by Cabinet Order set forth in Article 68-93-
6, paragraph (1) of the Act which is applied by replacing the terms pursuant to the provisions of paragraph (3) of said Article shall
be the amount calculated
with regard to the sum of personnel expenses for officers and employees of a specified foreign corporation engaged in the business
of said specified foreign corporation prescribed in paragraph (3) of said Article, pursuant to the
provisions of Article 39-116, paragraph (5).
(Determination, etc. of Business of Specified Foreign Corporations)
Article 39-120-11 (1) The person specified by Cabinet Order prescribed in Article
68-93-6, paragraph (4), item (i) of the Act shall be any of the following:
(i) Other consolidated corporations which have the consolidated full controlling interest with a consolidated corporation falling
under the category of a
specially-related shareholder, etc. which pertains to a specified foreign
corporation prescribed in Article 68-93-6, paragraph (4), item (i) of the Act
(hereinafter referred to as a "specified foreign corporation" in this paragraph)
that is mainly engaged in business listed in item (i) of said paragraph (such
other consolidated corporations shall exclude those falling under the category of specially-related shareholders, etc. pertaining
to said specified foreign
corporation)
(ii) A person who holds over 50 percent of the number or the amount of the total issued shares, etc. of a corporation falling under
the category of a specially-related shareholder, etc. pertaining to a specified foreign
corporation that is mainly engaged in business listed in Article 68-93-6,
paragraph (4), item (i) of the Act (excluding a person falling under the
category of a specially-related shareholder, etc. pertaining to said specified foreign corporation and a person falling under the
category of persons listed in the preceding item)
(iii) A person who holds over 50 percent of the number or the amount of the total issued shares, etc. of a consolidated corporation
falling under the
category of a specially-related shareholder, etc. (where said consolidated
corporation is a consolidated subsidiary corporation, the consolidated parent corporation of said consolidated corporation) which
pertains to a specified foreign corporation that is mainly engaged in business listed in Article 68-93-
6, paragraph (4), item (i) of the Act (excluding a person falling under the category of a specially-related shareholder, etc. pertaining
to said specified foreign corporation and a person falling under the category of persons listed in the preceding two items)
(iv) An affiliated foreign corporation of a specially-related shareholder, etc.
pertaining to a specified foreign corporation that is mainly engaged in business listed in Article 68-93-6, paragraph (4), item (i)
of the Act
(v) A corporation which is a shareholder, etc. prescribed in Article 39-120-8,
paragraph (4), item (ii) or a corporation related through capital contribution which is interposed between a specially-related domestic
corporation and the
specially-related shareholder, etc. of a specified foreign corporation that is mainly engaged in business listed in Article 68-93-6,
paragraph (4), item (i) of the Act (excluding a person falling under the category of persons listed in item (i) or the preceding
item)
(vi) A person who has a special relationship specified by Cabinet Order
prescribed in Article 68-93-6, paragraph (1) of the Act to a person listed as follows (excluding a person who falls under the category
of the specially- related domestic corporation of a specified foreign corporation that is mainly engaged in business listed in Article
68-93-6, paragraph (4), item (i) of the
Act, a person who falls under the category of a specially-related shareholder,
etc., and a person who falls under the category of the persons listed in the preceding items):
(a) A specified foreign corporation that is mainly engaged in business listed in Article 68-93-6, paragraph (4), item (i) of the Act
(b) The specially-related domestic corporation of a specified foreign
corporation that is mainly engaged in business listed in Article 68-93-6, paragraph (4), item (i) of the Act
(c) An individual or corporation falling under the category of a specially-
related shareholder, etc. pertaining to a specified foreign corporation that is mainly engaged in business listed in Article 68-93-6,
paragraph (4), item (i) of the Act
(d) Those listed in the preceding items.
(2) The provisions of Article 39-117, paragraph (2) and paragraph (3) shall apply mutatis mutandis to the case specified by Cabinet
Order prescribed in Article
68-93-6, paragraph (4), item (i) of the Act. In this case, the term "those listed in the items of Article 40-4, paragraph (1),
items of Article 66-6, paragraph (1),
items of Article 68-90, paragraph (1) of the Act and the items of the preceding
paragraph" in Article 39-117, paragraph (2), item (i) shall be deemed to be
replaced with "a specially-related domestic corporation prescribed in Article
68-93-6, paragraph (2), item (ii) of the Act, specially-related shareholder, etc. prescribed in paragraph (1) of said Article and
those listed in the items of
Article 39-120-11, paragraph (1)."
(3) The provisions of Article 39-117, paragraph (4) shall apply mutatis mutandis to the case specified by Cabinet Order prescribed
in Article 68-93-6, paragraph (4), item (ii) of the Act.
(Calculation, etc. of Foreign Corporation Tax on the Individually Taxable
Retained Income of a Specified Foreign Corporation)
Article 39-120-12 (1) The amount calculated as specified by Cabinet Order
prescribed in Article 68-93-7, paragraph (1) of the Act shall be the amount
calculated, pursuant to the provisions of Article 39-118, paragraph (1), with
regard to the amount of foreign corporation tax (meaning foreign corporation tax prescribed in Article 69, paragraph (1) of the Corporation
Tax Act; the same shall apply in paragraph (3)) to be imposed on a specified foreign
corporation prescribed in Article 68-93-7, paragraph (1) of the Act (referred to as a "specified foreign corporation" in
paragraph (3)) on its income for a business year containing eligible retained income.
(2) In the case where the provisions of Article 81-15, paragraphs (1) to (7), (10)
and, paragraphs (15) to (17) of the Corporation Tax Act are applied by deeming the calculated amount to be the amount of individually
creditable foreign
corporation tax prescribed in paragraph (1) of said Article payable by a
consolidated corporation that is a specially-related shareholder, etc. pursuant to the provisions of Article 68-93-7, paragraph (1)
of the Act, the matters
concerning the application of these provisions shall be as prescribed in the
provisions of Article 39-118, paragraphs (2) to (10) and paragraphs (12) to (17). (3) The consolidated business year specified by
Cabinet Order prescribed in
Article 68-93-7, paragraph (3) of the Act shall be the business year specified respectively in the items of Article 39-118, paragraph
(3), in accordance with
the category of the amount of foreign corporation tax imposed on the income of
a specified foreign corporation.
(Calculation of Taxed Amount of Dividend, etc. of Specified Foreign
Corporations)
Article 39-120-13 (1) The affiliated foreign corporation prescribed in Article 68-
93-8, paragraph (1) of the Act which is specified by Cabinet Order shall be one of the affiliated foreign corporations which holds
the taxed amount of a
dividend, etc. before deduction pertaining to a specified foreign corporation
prescribed in Article 68-93-8, paragraph (1) of the Act (hereinafter referred to as a "specified foreign corporation" through
to paragraph (3)) (such taxed
amount of a dividend, etc. before deduction shall mean the taxed amount of a dividend, etc. before deduction prescribed in Article
39-116, paragraph (3),
item (iii), when calculating the amount of eligible retained income for the relevant business year of a specified foreign corporation
as prescribed in
Article 39-116, paragraphs (2) to (4), pursuant to the provisions of Article 39-
120-10, paragraph (2)).
(2) The amount calculated as specified by Cabinet Order prescribed in Article 68-
93-8, paragraph (1) of the Act shall be the amount obtained by calculating the amount specified in the items of said paragraph, where
an event listed in the
items of said paragraph has occurred, with regard to the specified foreign corporation of a consolidated corporation which is a specially-related
shareholder, etc. or the affiliated foreign corporation of said consolidated corporation as prescribed in said paragraph, pursuant
to the provisions of
Article 39-119, paragraph (2) and paragraph (3).
(3) In the case where a consolidated corporation, which is a specially-related
shareholder, etc. prescribed in Article 68-93-8, paragraph (1) of the Act, holds
the individually taxed amount of retained income prescribed in said paragraph that pertains to the specified foreign corporation of
said consolidated
corporation, and the individually taxed amount of retained income prescribed
in Article 68-92, paragraph (1) of the Act that pertains to a specified foreign
subsidiary, etc. prescribed in Article 68-90, paragraph (1) of the Act (limited to a foreign corporation that is the same as said
specified foreign corporation)
that is the specified foreign subsidiary, etc. of said consolidated corporation,
the amount calculated as specified by Cabinet Order prescribed in Article 68-
93-8, paragraph (1) of the Act shall not exceed the amount calculated pursuant to the provisions of the preceding paragraph based
on the remaining amount after deducting the amount to be included in deductible expenses pursuant to
the provisions of Article 68-92, paragraph (1) of the Act from the amount
specified in the items of Article 68-93-8, paragraph (1) of the Act.
(4) The matters concerning the application of the provisions of Article 68-92,
paragraphs (3) to (6) of the Act which are applied mutatis mutandis pursuant to Article 68-93-8, paragraph (3) of the Act shall be
as prescribed in the
provisions of Article 39-119, paragraphs (5) to (8).
(5) The provisions of Article 39-119, paragraph (9) shall apply mutatis mutandis to the calculation of the amount of consolidated
revenue reserves of a
consolidated corporation which is a specially-related shareholder, etc. subject to the provisions of Article 68-93-8, paragraph (1)
of the Act.
(Determination, etc. of Specified Relationship)
Article 39-120-14 (1) The provisions of Article 39-20-14, paragraph (1) and
paragraph (2) shall apply mutatis mutandis where the provisions of Article 68-
93-6, paragraph (1) of the Act shall apply.
(2) Where a consolidated corporation which is a specially-related shareholder, etc. pertaining to a specially-related domestic corporation
has been dissolved
through a merger by the day on which two months have elapsed after the final day of the relevant business year of the affiliated foreign
corporation of said consolidated corporation, the number of the shares, etc. of said affiliated
foreign corporation prescribed in Article 66-9-6, paragraph (2), item (iv) of the
Act which were directly and indirectly held by the consolidated corporation
(hereinafter referred to as the "number of the shares, etc. directly and indirectly held" in this paragraph) and which have
been transferred to the
merging corporation pertaining to the merger (such merging corporation shall
be limited to one falling under the category of a specially-related shareholder, etc. of said specially-related domestic corporation
and one that proves to fall
under the category of a specially-related shareholder, etc. of said specially- related domestic corporation by receiving the transfer
of the number of the
shares, etc. of said affiliated foreign corporation directly and indirectly held by said consolidated corporation through the merger;
hereinafter the same shall
apply in this paragraph) shall be deemed to be the number of the shares, etc. directly and indirectly held by the merging corporation
on the final day of the relevant business year of said affiliated foreign corporation.
(3) The provisions of Article 39-120, paragraph (3) and paragraph (4) shall apply mutatis mutandis to the application of the provisions
of Article 81-13,
paragraph (2) and paragraph (4) of the Corporation Tax Act and the calculation of the amount of consolidated revenue reserves of a
consolidated corporation
which is a specially-related shareholder, etc., where there is any amount
included in gross profits of said consolidated corporation pursuant to the provisions of Article 68-93-6, paragraph (1) of the Act.
(4) The provisions of Article 14-10, paragraphs (1) to (5) and paragraphs (7) to
(11) of the Order for Enforcement of the Corporation Tax Act shall apply
mutatis mutandis where the provisions of Article 68-93-6, paragraph (8) of the Act shall apply under the provisions of said Article
(excluding paragraph (3), paragraph (4) and paragraph (6)) to Article 68-93-9 of the Act, Articles 39-120-
8 to 39-120-10 (excluding paragraph (3)), and Article 39-120-12 to this Article. (5) With regard to a trust corporation or a beneficiary
of a trust subject to
corporation taxation prescribed in Article 4-7 of the Corporation Tax Act, in addition to what is specified in the preceding paragraph,
other necessary matters concerning the application of the provisions of Article 68-93-6
(excluding paragraph (3), paragraph (4) and paragraph (6)) to Article 68-93-9 of
the Act, Articles 39-120-8 to 39-120-10 (excluding paragraph (3)), or Article 39-
120-12 to this Article shall be specified by Ordinance of the Ministry of Finance.
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