Order for Enforcement of the Consumption Tax Act

A corporation in a special relationship specified by Cabinet Order with the other person that was the basis of the determination that a newly founded corporation prescribed in Article 12-3, paragraph (1) of the Act falls under the specified requirement is, among the following corporations, a corporation other than a non-controlled specially related corporation.

in the case where that other person (limited to a person who holds the issued shares, etc. prescribed in Article 25-2, paragraph (1), item (i) of the newly founded corporation or the voting rights set out in Article 25-2, paragraph (1), item (iii), (a) through (d) (excluding voting rights that that other person cannot exercise), or who is a shareholder, etc. of the newly founded corporation prescribed in Article 25-2, paragraph (1), item (iv), and including, where that other person is an individual, the relatives, etc. of that other person set out in Article 25-2, paragraph (1), item (ii), (a); the same applies hereinafter in this paragraph) completely controls another corporation, that other corporation;

in the case where that other person and a corporation having the relationship prescribed in the preceding item with that other person completely control another corporation, that other corporation;

in the case where that other person and corporations having the relationships prescribed in the preceding two items with that other person completely control another corporation, that other corporation.

The non-controlled specially related corporation prescribed in the preceding paragraph means the following corporation:

in the case where the relatives, etc. of that other person set out in Article 25-2, paragraph (1), item (ii), (a) who do not share a livelihood with that other person (that other person being limited to a person who holds the issued shares, etc. prescribed in Article 25-2, paragraph (1), item (i) of the newly founded corporation or the voting rights set out in Article 25-2, paragraph (1), item (iii), (a) through (d) (excluding voting rights that that other person cannot exercise), or who is a shareholder, etc. of the newly founded corporation prescribed in Article 25-2, paragraph (1), item (iv)) (hereinafter in this paragraph referred to as "relatives, etc. in a separate household") completely control another corporation, that other corporation;

in the case where relatives, etc. in a separate household and a corporation having the relationship prescribed in the preceding item with them completely control another corporation, that other corporation;

in the case where relatives, etc. in a separate household and corporations having the relationships prescribed in the preceding two items with them completely control another corporation, that other corporation.

The case of completely controlling another corporation prescribed in the items of paragraph (1) and the items of the preceding paragraph means a case that falls under any of the cases set out in the items of paragraph (3) of the preceding Article.

The amount calculated as specified by Cabinet Order as the taxable sales prescribed in Article 12-3, paragraph (1) of the Act is to be the taxable sales of the person subject to determination (meaning any one of the other person prescribed in Article 25-3, paragraph (2), item (i) and the corporations in the special relationship specified by Cabinet Order prescribed in Article 25-3, paragraph (1) with that other person; the same applies hereinafter through paragraph (3)) in the period corresponding to the base period (meaning the remainder after deducting, from the total amount of consideration for taxable transfers, etc. of assets in Japan in that period corresponding to the base period, the total of the amounts obtained by deducting the amount set out in item (ii) from the amount set out in item (i) (where the period corresponding to the base period of that person subject to determination falls under the period specified in paragraph (3), item (ii), (a) or (b), the amount calculated by dividing that remainder by the number of months in that period corresponding to the base period and multiplying the result by twelve)).

the amount of refunds, etc. of consideration for sales prescribed in Article 38, paragraph (1) of the Act made in that period corresponding to the base period (including the amount of refunds, etc. of consideration for export transactions, etc. prescribed in Article 19 made in that period corresponding to the base period);

the amount calculated by multiplying the consumption tax on refunds, etc. of consideration for sales prescribed in Article 38, paragraph (1) of the Act made in that period corresponding to the base period by 100/78.

The amount calculated as specified by Cabinet Order as the gross revenue prescribed in Article 12-3, paragraph (1) of the Act is to be the gross revenue of the person subject to determination in the period corresponding to the base period (meaning the total of the amount of sales, the amount of revenue and other amounts of income in that period corresponding to the base period (where the period corresponding to the base period of that person subject to determination falls under the period specified in item (ii), (a) or (b) of the following paragraph, the amount calculated by dividing that total by the number of months in that period corresponding to the base period and multiplying the result by twelve)).

The period corresponding to the base period prescribed in the preceding two paragraphs means the period specified in the relevant item according to the category of cases set out in the following items:

where that person subject to determination is an individual: the period specified below according to the category of cases set out below:

where that person subject to determination was an individual business operator in a year in which December 31 arrives during the period from the day preceding the day two years before the start date of a newly founded corporation (meaning the new establishment start date prescribed in Article 12-3, paragraph (1) of the Act; the same applies hereinafter in this paragraph) to the day on which one year has elapsed from that day: the year that includes that December 31;

where that person subject to determination was an individual business operator in a year in which December 31 arrives during the period from the day preceding the day one year before the start date of a newly founded corporation to the day preceding that new establishment start date (excluding a year for which the period from the day following that December 31 to the day preceding that new establishment start date is less than two months) (excluding the case where the case falls under that set out in (a) and the taxable sales in the period corresponding to the base period prescribed in paragraph (1) relating to the period specified in (a) exceed 500 million yen, or the gross revenue in the period corresponding to the base period prescribed in the preceding paragraph relating to the period specified in (a) exceeds 5 billion yen): the year that includes that December 31;

where that person subject to determination was an individual business operator in a year in which June 30 arrives during the period from the day preceding the day one year before the start date of a newly founded corporation to the day preceding that new establishment start date (excluding a year for which the period from the day following that June 30 to the day preceding that new establishment start date is less than two months) (excluding the case where the case falls under that set out in (a) or (b) and the taxable sales in the period corresponding to the base period prescribed in paragraph (1) relating to the period specified in (a) or (b) exceed 500 million yen, or the gross revenue in the period corresponding to the base period prescribed in the preceding paragraph relating to the period specified in (a) or (b) exceeds 5 billion yen): the period from January 1 to June 30 of the year that includes that June 30;

where that person subject to determination is a corporation: the period specified below according to the category of cases set out below:

where there are business years of that person subject to determination that ended during the period from the day preceding the day two years before the start date of a newly founded corporation to the day on which one year has elapsed from that day: the period combining those business years;

where there are business years of that person subject to determination that ended during the period from the day preceding the day one year before the start date of a newly founded corporation to the day preceding that new establishment start date (excluding a business year for which the period from the day following the day on which it ends to the day preceding that new establishment start date is less than two months) (excluding the case where the case falls under that set out in (a) and the taxable sales in the period corresponding to the base period prescribed in paragraph (1) relating to the period specified in (a) exceed 500 million yen, or the gross revenue in the period corresponding to the base period prescribed in the preceding paragraph relating to the period specified in (a) exceeds 5 billion yen): the period combining those business years;

where the last day of the six-month period from the first day of a business year of that person subject to determination (where that person subject to determination falls under the case set out in (a) or (b), excluding each business year included in the period specified in (a) or (b)) (excluding a six-month period for which the period from the day following the last day of that six-month period to the day preceding that new establishment start date is less than two months) arrives during the period from the day preceding the day one year before the start date of a newly founded corporation to the day preceding that new establishment start date (excluding the case where the case falls under that set out in (a) or (b) and the taxable sales in the period corresponding to the base period prescribed in paragraph (1) relating to the period specified in (a) or (b) exceed 500 million yen, or the gross revenue in the period corresponding to the base period prescribed in the preceding paragraph relating to the period specified in (a) or (b) exceeds 5 billion yen): that six-month period.

The provisions of Article 20-6, paragraph (1) apply mutatis mutandis to the case where the last day of the period specified in item (ii), (c) of the preceding paragraph is not the last day of a month or the case where the last day of that period is not the corresponding end day of the business year in the month that includes that day (meaning the day of each month belonging to that business year that corresponds to the day on which that business year ends). In this case, the phrase "Article 9-2, paragraph (4), item (ii) of the Act" in paragraph (1) of that Article is deemed to be replaced with "Article 25-4, paragraph (3), item (ii), (c)", the phrase "item (ii) of that paragraph" with "item (ii), (c) of that paragraph", and the phrase "previous business year" with "business year".

The number of months in paragraphs (1) and (2) is to be calculated according to the calendar, and where a fraction of less than one month arises, it is to be counted as one month.

The assets specified by Cabinet Order prescribed in Article 12-4, paragraph (1) of the Act are, according to the category of inventory and adjustment-target fixed assets set out in the following items (hereinafter in this paragraph referred to as "covered assets"), those for which the amount specified in the relevant item is 10 million yen or more:

covered assets (excluding those that fall under the self-constructed assets set out in the following item): an amount equivalent to 100/110 (100/108 where that taxable purchase relates to a taxable transfer, etc. of assets subject to the reduced rate received from another person) of the amount of consideration paid for taxable purchases per unit of one transaction of those covered assets (for those ordinarily treated as a unit of transaction by a set or a complete set, per set or complete set) (meaning the amount of consideration paid for taxable purchases prescribed in Article 30, paragraph (8), item (i), (d) of the Act; the same applies hereinafter in this Article), the amount of consideration paid for specified taxable purchases (meaning the amount of consideration paid for specified taxable purchases prescribed in Article 30, paragraph (1) of the Act; the same applies in the following item and paragraph (3)), or the amount that is the tax base of those covered assets taken from a bonded area;

self-constructed assets (meaning, among covered assets, those that a business operator has itself constructed, etc. (meaning construction, etc. prescribed in Article 12-4, paragraph (1) of the Act; the same applies hereinafter through paragraph (3)) under a contract with another person or as inventory or an adjustment-target fixed asset of the business operator): the total of an amount equivalent to 100/110 (100/108 where that taxable purchase relates to a taxable transfer, etc. of assets subject to the reduced rate received from another person) of the amount of consideration paid for taxable purchases required for the construction, etc. of those self-constructed assets, the amount of consideration paid for specified taxable purchases, and the amount that is the tax base of taxable goods taken from a bonded area (limited to those relating to the cost of raw materials and expenses required for the construction, etc. of those self-constructed assets, and excluding those relating to taxable purchases made in Japan and taxable goods taken from a bonded area during a taxable period for which the business operator that carried out that construction, etc. is exempted from the obligation to pay consumption tax under the main clause of Article 9, paragraph (1) of the Act or a taxable period to which Article 37, paragraph (1) of the Act applies; hereinafter in the following paragraph referred to as the "amount of consideration paid for purchases, etc.").

The amount of expenses specified by Cabinet Order prescribed in Article 12-4, paragraph (1) of the Act is to be the cumulative total of the amount of consideration paid for purchases, etc. required for the construction, etc. of the self-constructed high-value specified asset prescribed in that paragraph, and the amount specified by Cabinet Order prescribed in that paragraph is to be 10 million yen.

The amount of expenses specified by Cabinet Order prescribed in Article 12-4, paragraph (2) of the Act is to be the cumulative total of an amount equivalent to 100/110 (100/108 where that taxable purchase relates to a taxable transfer, etc. of assets subject to the reduced rate received from another person) of the amount of consideration paid for taxable purchases required for the construction, etc. of the adjustment-target self-constructed high-value asset prescribed in that paragraph, the amount of consideration paid for specified taxable purchases, and the amount that is the tax base of taxable goods taken from a bonded area (limited to those relating to the cost of raw materials and expenses required for the construction, etc. of that adjustment-target self-constructed high-value asset), and the amount specified by Cabinet Order prescribed in that paragraph is to be 10 million yen.

The cases specified by Cabinet Order prescribed in Article 12-4, paragraph (3) of the Act are the cases where, as regards a purchase, etc. of gold bullion and similar items (meaning a purchase, etc. of gold bullion and similar items prescribed in that paragraph; the same applies hereinafter in this paragraph and paragraph (2) of the following Article) made by a business operator, the total of an amount equivalent to 100/110 of the amount of consideration paid for taxable purchases relating to that purchase, etc. of gold bullion and similar items during the taxable period in which that purchase, etc. was made and the amount that is the tax base of taxable goods relating to that purchase, etc. of gold bullion and similar items taken from a bonded area (where that taxable period is less than one year, the amount calculated by dividing that total by the number of months in that taxable period (that number of months is to be calculated according to the calendar, and where a fraction of less than one month arises, it is to be counted as one month) and multiplying the result by twelve) is 2 million yen or more.