Order for Enforcement of the Consumption Tax Act

The persons in a special relationship specified by Cabinet Order prescribed in Article 12, paragraph (3) of the Act are the persons set out in the following items (excluding, where such a person is a split-off subsidiary corporation referred to in that paragraph that holds its own shares or equity, that split-off subsidiary corporation):

one of the shareholders, etc. (meaning shareholders, or members of general partnership companies, limited partnership companies or limited liability companies, or other investors in a corporation, and excluding that split-off parent corporation where it holds its own shares or equity; the same applies hereinafter in this paragraph) of the split-off parent corporation prescribed in Article 12, paragraph (1) of the Act (hereinafter in this Article referred to as the "split-off parent corporation") (limited to a shareholder, etc. who is an individual, and including the persons set out below; the same applies hereinafter in this item), in the case where that shareholder, etc. controls the split-off parent corporation:

a relative of that shareholder, etc.;

a person who has not submitted a notification of marriage with that shareholder, etc. but is in circumstances equivalent to a marital relationship in fact;

an employee of that shareholder, etc.;

a person other than the persons set out in (a) through (c) who maintains a livelihood through money or other assets received from that shareholder, etc.;

a relative of the persons set out in (b) through (d) who shares a livelihood with those persons;

in the case where one of the shareholders, etc. of the split-off parent corporation (for a shareholder, etc. who is an individual, including an individual who has a relationship prescribed in (a) through (e) of the preceding item with that person; the same applies hereinafter in this item) and the companies set out below control the split-off parent corporation, that one of the shareholders, etc. and the companies set out below:

in the case where that one of the shareholders, etc. controls another company, that other company;

in the case where that one of the shareholders, etc. and a company that has the relationship prescribed in (a) with that shareholder, etc. control another company, that other company;

in the case where that one of the shareholders, etc. and companies that have the relationships prescribed in (a) and (b) with that shareholder, etc. control another company, that other company;

two or more shareholders, etc. of the split-off parent corporation (limited to companies that have the relationship prescribed in (a) through (c) of the preceding item with the same individual or corporation) and companies that each have the relationship prescribed in (a) through (c) of that item with those shareholders, etc., in the case where they control the split-off parent corporation: those two or more shareholders, etc. and those companies having that relationship;

the following companies:

in the case where the split-off parent corporation controls another company, that other company;

in the case where the split-off parent corporation and a company that has the relationship prescribed in (a) with it control another company, that other company;

in the case where the split-off parent corporation and companies that have the relationships prescribed in (a) and (b) with it control another company, that other company.

The case of controlling the split-off parent corporation prescribed in items (i) through (iii) of the preceding paragraph means a case that falls under any of the following:

where it holds shares or equity in a number or amount exceeding 50/100 of the total number or total amount of the issued shares or equity of the split-off parent corporation (excluding its own shares or equity that the corporation holds);

where it holds a number exceeding 50/100 of the total number (excluding the number of those voting rights held by shareholders, etc. (meaning shareholders, or members of general partnership companies, limited partnership companies or limited liability companies, or other investors in a corporation; the same applies in the following item and paragraphs (4) and (5)) who cannot exercise those voting rights) of any of the following voting rights of the split-off parent corporation:

voting rights relating to a resolution on the transfer of the whole or a material part of the business, dissolution, continuation, merger, company split, share exchange, share transfer, or contribution in kind;

voting rights relating to a resolution on the appointment and dismissal of officers (meaning officers prescribed in Article 2, item (xv) (Definitions) of the Corporation Tax Act; the same applies hereinafter in this item);

voting rights relating to a resolution on matters concerning remuneration, bonuses, and other financial benefits that a company provides as consideration for the performance of duties by officers;

voting rights relating to a resolution on a distribution of surplus or a distribution of profits;

where it accounts for a number exceeding half of the total number of shareholders, etc. of the split-off parent corporation (limited to members of general partnership companies, limited partnership companies or limited liability companies (where the split-off parent corporation has designated the members who execute the business, the members who execute the business)).

The case of controlling another company prescribed in paragraph (1), items (ii) and (iv) means a case that falls under any of the cases set out in the items of the preceding paragraph where the term "split-off parent corporation" in the provisions of those items is deemed to be replaced with "another company".

The cases specified by Cabinet Order prescribed in Article 12, paragraph (3) of the Act are the case where the split-off parent corporation, etc. (meaning the split-off parent corporation referred to in Article 12, paragraph (3) of the Act and a person in the special relationship specified by Cabinet Order prescribed in that paragraph with that split-off parent corporation; the same applies hereinafter in this paragraph) holds a number exceeding 50/100 of the total number (excluding the number of those voting rights held by shareholders, etc. who cannot exercise those voting rights) of any of the voting rights set out in paragraph (2), item (ii), (a) through (d) of the split-off subsidiary corporation referred to in Article 12, paragraph (3) of the Act, or the case where the split-off parent corporation, etc. accounts for a number exceeding half of the total number of shareholders, etc. of the split-off subsidiary corporation referred to in Article 12, paragraph (3) of the Act (limited to members of general partnership companies, limited partnership companies or limited liability companies (where that split-off subsidiary corporation has designated the members who execute the business, the members who execute the business)).

Where there is a person who has agreed with an individual or corporation to exercise voting rights with the same content as the intent of that individual or corporation, paragraphs (2) through (4) apply on the basis that the voting rights held by that person are deemed to be held by that individual or corporation, and that individual or corporation (excluding one that is a shareholder, etc. of the company concerned with those voting rights) is deemed to be a shareholder, etc. of the company concerned with those voting rights.

The corporations specified by Cabinet Order prescribed in Article 12-2, paragraph (1) and Article 12-3, paragraph (1) of the Act are social welfare corporations prescribed in Article 22 (Definitions) of the Social Welfare Act.

In the application of Article 12-2, paragraph (2) of the Act in the case where the purchase, etc. of an adjustment-target fixed asset prescribed in Article 12-2, paragraph (2) of the Act (including the case where it is applied mutatis mutandis pursuant to Article 12-3, paragraph (3) of the Act; the same applies hereinafter in this paragraph) is the taking of taxable goods from a bonded area in connection with the submission of a special return, or the taking of taxable goods from a bonded area in connection with a determination on a special return, the phrase "In the case where" in Article 12-2, paragraph (2) of the Act is deemed to be replaced with "In the case where (where that purchase, etc. of an adjustment-target fixed asset is the taking from a bonded area of taxable goods (excluding goods for which consumption tax is exempted under the provisions of another Act or a treaty; the same applies hereinafter in this paragraph) in connection with the submission of a special return, the case where that special return has been submitted, and where it is the taking from a bonded area of taxable goods in connection with a determination on a special return (meaning a determination (meaning a determination under Article 25 (Determination) of the Act on General Rules for National Taxes) on the amount set out in Article 47, paragraph (1), item (i) or (ii) that is to be stated in the special return), the case where notice of that determination on a special return has been received)".

The cases specified by Cabinet Order as cases where a newly founded corporation is controlled by another person as prescribed in Article 12-3, paragraph (1) of the Act are the cases that fall under any of the following:

where that other person holds shares or equity in a number or amount exceeding 50/100 of the total number or total amount of the issued shares or equity (excluding its own shares or equity that it holds; hereinafter in the following item referred to as "issued shares, etc.") of the newly founded corporation prescribed in Article 12-3, paragraph (1) of the Act (hereinafter in this paragraph and Article 25-4, paragraph (3) referred to as the "newly founded corporation");

where that other person and the persons set out below (excluding, where the newly founded corporation falls under a corporation set out in (b) through (d) below, that newly founded corporation) hold shares or equity in a number or amount exceeding 50/100 of the total number or total amount of the issued shares, etc. of the newly founded corporation:

a relative, etc. of that other person;

in the case where that other person (including, where that other person is an individual, the relatives, etc. of that other person set out in (a); the same applies hereinafter in this item) completely controls another corporation, that other corporation;

in the case where that other person and a corporation having the relationship prescribed in (b) 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 (b) and (c) with that other person completely control another corporation, that other corporation;

where that other person and persons having a relationship prescribed in (a) through (d) of the preceding item with that other person hold a number exceeding 50/100 of the total number (excluding the number of those voting rights held by shareholders, etc. (meaning shareholders, or members of general partnership companies, limited partnership companies or limited liability companies, or other investors in a corporation; the same applies in the following item and paragraphs (3) and (4)) who cannot exercise those voting rights) of any of the following voting rights of the newly founded corporation:

voting rights relating to a resolution on the transfer of the whole or a material part of the business, dissolution, continuation, merger, company split, share exchange, share transfer, or contribution in kind;

voting rights relating to a resolution on the appointment and dismissal of officers (meaning officers prescribed in Article 2, item (xv) (Definitions) of the Corporation Tax Act; the same applies hereinafter in this item);

voting rights relating to a resolution on matters concerning remuneration, bonuses, and other financial benefits that a corporation provides as consideration for the performance of duties by officers;

voting rights relating to a resolution on a distribution of surplus or a distribution of profits;

where that other person and persons having a relationship prescribed in item (ii), (a) through (d) with that other person account for a number exceeding half of the total number of shareholders, etc. of the newly founded corporation (limited to members of general partnership companies, limited partnership companies or limited liability companies (where that newly founded corporation has designated the members who execute the business, the members who execute the business)).

The relatives, etc. prescribed in paragraph (1), item (ii), (a) means the following persons:

a relative of that other person;

a person who has not submitted a notification of marriage with that other person but is in circumstances equivalent to a marital relationship in fact;

an employee of that other person (limited to where that other person is an individual; the same applies in the following item);

a person other than the persons set out in the preceding three items who maintains a livelihood through money or other assets received from that other person;

a relative of the persons set out in the preceding three items who shares a livelihood with those persons.

The case of completely controlling another corporation prescribed in paragraph (1), item (ii), (b) through (d) means a case that falls under any of the following:

where it holds all of the issued shares or equity of the other corporation (excluding its own shares or equity that the other corporation holds);

where it holds all of the total number (excluding the number of those voting rights held by shareholders, etc. who cannot exercise those voting rights) of any of the voting rights set out in paragraph (1), item (iii), (a) through (d) of the other corporation;

where it accounts for all of the shareholders, etc. of the other corporation (limited to members of general partnership companies, limited partnership companies or limited liability companies (where that other corporation has designated the members who execute the business, the members who execute the business)).

Where there is a person who has agreed with an individual or corporation to exercise voting rights with the same content as the intent of that individual or corporation, paragraph (1) and the preceding paragraph apply on the basis that the voting rights held by that person are deemed to be held by that individual or corporation, and that individual or corporation (excluding one that is a shareholder, etc. of the corporation concerned with those voting rights) is deemed to be a shareholder, etc. of the corporation concerned with those voting rights.