Supplementary Provisions, Article 5Transitional Measures Concerning the Special Provisions on the Time of Transfer, etc. of Assets Relating to Long-Term Installment Sales, etc.

①The provisions of Article 31, Article 32, paragraph (1) (limited to the part pertaining to the proviso to Article 63, paragraph (1) of the Corporation Tax Act (Act No. 34 of 1965) (limited to the part pertaining to paragraphs (3) and (4) of that Article)) and paragraph (2), Articles 33 through 35, and Article 37 of the Former Order, which are based on the provisions of Article 16 of the Consumption Tax Act prior to amendment by the provisions of Article 5 of the Amending Act that are to remain in force pursuant to Article 44, paragraph (1) of the Supplementary Provisions of the Act Partially Amending the Income Tax Act, etc. (Act No. 7 of 2018; hereinafter in this Article referred to as the "Amending Act"), remain in force. In this case, the phrase "the Act" in Article 31 of the Former Order is deemed to be replaced with "the former Consumption Tax Act kept in effect (meaning the former Consumption Tax Act kept in effect prescribed in Article 44, paragraph (2) of the Supplementary Provisions of the Act Partially Amending the Income Tax Act, etc. (Act No. 7 of 2018; referred to as the "2018 Amendment Act" in Article 37); the same applies in the following Article, Articles 33 through 35, and Article 37)", in Article 32, paragraph (1) of the Former Order, the phrase "with respect to the Act" is deemed to be replaced with "with respect to the former Consumption Tax Act kept in effect", the phrase "the taxable period that includes December 31 of the year in which it did not so account, as prescribed in the proviso to Article 65, paragraph (1) (Time of Attribution of Revenue and Expenses Pertaining to Sales on Deferred Payment Terms, etc.) of the Income Tax Act, or the taxable period that includes the last day of the business year pertaining to the settlement of accounts in which it did not so account, as prescribed in the proviso to Article 63, paragraph (1) (Business Year to Which Revenue and Expenses Pertaining to Long-Term Installment Sales, etc. Are Attributed) of the Corporation Tax Act, or paragraph (3) of that Article" is deemed to be replaced with "Article 63, paragraph (3) of the former Corporation Tax Act kept in effect (meaning the former Corporation Tax Act kept in effect prescribed in Article 28, paragraph (2) of the Supplementary Provisions of the 2018 Amendment Act; the same applies in Article 37)", and the phrase "these" is deemed to be replaced with "that"; in paragraph (2) of that Article, the phrase "the main clause of Article 16, paragraph (2) of the Act" is deemed to be replaced with "the main clause of Article 16, paragraph (2) of the former Consumption Tax Act kept in effect", the phrase "Order for the Enforcement of the Corporation Tax Act" is deemed to be replaced with "Order for the Enforcement of the Corporation Tax Act prior to amendment by the provisions of Article 1 of the Cabinet Order Partially Amending the Order for the Enforcement of the Corporation Tax Act, etc. (Cabinet Order No. 132 of 2018), which is to remain in force pursuant to Article 13, paragraph (1) of the Supplementary Provisions of that Cabinet Order (hereinafter in this paragraph referred to as the "Former Order for the Enforcement of the Corporation Tax Act Kept in Effect")", and the phrase "that Order" is deemed to be replaced with "the Former Order for the Enforcement of the Corporation Tax Act Kept in Effect"; in the provisions of Articles 33 through 35 of the Former Order, the phrase "the main clause of Article 16, paragraph (2) of the Act" is deemed to be replaced with "the main clause of Article 16, paragraph (2) of the former Consumption Tax Act kept in effect"; and in Article 37 of the Former Order, the phrases "Corporation Tax Act" and "that Act" are deemed to be replaced with "former Corporation Tax Act kept in effect", and the phrase "Article 16 of the Act" is deemed to be replaced with "Article 16 of the former Consumption Tax Act kept in effect and Article 44 of the Supplementary Provisions of the 2018 Amendment Act".

③Where, with respect to a specified long-term installment sale, etc. to which Article 44, paragraph (4) of the Supplementary Provisions of the Amending Act applies, of a business operator to which that paragraph applies, there is an amount of the installments pertaining to that specified long-term installment sale, etc. that cannot be fully deducted under the deduction pursuant to that paragraph, the portion of that specified long-term installment sale, etc. pertaining to the amount that cannot be fully deducted is deemed to be, in the applicable taxable period in which the amount that cannot be fully deducted arose (meaning the applicable taxable period prescribed in Article 44, paragraph (4) of the Supplementary Provisions of the Amending Act; the same applies hereinafter in this paragraph, paragraph (8), and paragraph (9)), a refund, etc. of consideration for sales made as prescribed in Article 38, paragraph (1) of the Consumption Tax Act, and the provisions of that Act (excluding paragraph (2) of that Article and Article 57-4, paragraph (3)) apply. In this case, the portion pertaining to the amount that cannot be fully deducted is treated, in each applicable taxable period after that applicable taxable period, as the amount of revenue prescribed in Article 44, paragraph (4) of the Supplementary Provisions of the Amending Act, and that paragraph applies.

④With regard to the application of the preceding paragraph during the period from April 1, 2018 to the day preceding the 2023 Effective Date, the phrase "paragraph (2) of that Article and Article 57-4, paragraph (3)" in that paragraph is deemed to be replaced with "paragraph (2) of that Article".

⑤Where a business operator to which Article 44, paragraph (4) of the Supplementary Provisions of the Amending Act applies comes to fall under any of the following cases with respect to a specified long-term installment sale, etc. to which that paragraph applies, then, notwithstanding Article 44, paragraph (4) of the Supplementary Provisions of the Amending Act, the portion of that specified long-term installment sale, etc. pertaining to an amount other than the amount pertaining to the portion of the installments of that specified long-term installment sale, etc. that has already been deemed to be a transfer, etc. of assets made on or before the day preceding the first day of the taxable period that includes the day on which it came to fall under that case (meaning the taxable period prescribed in Article 19, paragraph (1) of the Consumption Tax Act (including a period deemed to be one taxable period pursuant to paragraph (2) or (4) of that Article); the same applies hereinafter) is deemed to be a transfer, etc. of assets made by that business operator in that taxable period:

⑥Where, with respect to a specified long-term installment sale, etc. to which Article 34, paragraph (2) or Article 35, paragraph (2) (including as applied mutatis mutandis pursuant to paragraph (5) of that Article) of the Former Order that is to remain in force pursuant to the provisions of paragraph (1) (hereinafter in this paragraph, paragraph (11), and paragraph (13) referred to as the "Former Order Kept in Effect") applies, of a business operator to which those provisions apply, the business operator comes to be subject to the application of Article 34, paragraph (3) or Article 35, paragraph (3) (including as applied mutatis mutandis pursuant to paragraph (5) of that Article) of the Former Order Kept in Effect, that specified long-term installment sale, etc. may be deemed to fall under the case prescribed in Article 44, paragraph (2) of the Supplementary Provisions of the Amending Act, and paragraph (4) of that Article may be applied.

⑦The provisions of Article 33, Article 34, paragraph (1), and Article 35, paragraphs (1) and (5) of the New Order apply mutatis mutandis where a business operator to which Article 44, paragraph (4) of the Supplementary Provisions of the Amending Act applies comes to fall under any of the cases set out in the items of Article 33, the items of Article 34, paragraph (1), or the items of Article 35, paragraph (1) (including as applied mutatis mutandis pursuant to paragraph (5) of that Article) of the Former Order. In this case, the phrase "the main clause of Article 16, paragraph (2) of the Act with respect to a lease transfer" in Article 33 of the New Order is deemed to be replaced with "Article 44, paragraph (4) of the Supplementary Provisions of the 2018 Amendment Act with respect to a specified long-term installment sale, etc. (meaning a specified long-term installment sale, etc. prescribed in Article 44, paragraph (1) of the Supplementary Provisions of the Act Partially Amending the Income Tax Act, etc. (Act No. 7 of 2018; hereinafter in this Article, paragraph (1) of the following Article, and Article 35, paragraphs (1) and (5) referred to as the "2018 Amendment Act"); the same applies in this Article, paragraph (1) of the following Article, and Article 35, paragraphs (1) and (5))", the phrase "a lease transfer for which the main clause of that paragraph" is deemed to be replaced with "a specified long-term installment sale, etc. for which that paragraph", the phrase "that lease transfer" is deemed to be replaced with "that specified long-term installment sale, etc.", and the phrase "whose due date for payment arrives on or after (excluding those already received on or before the day preceding the first day of that taxable period), the portion pertaining to which is, the main clause of that paragraph" is deemed to be replaced with "on or before the day preceding which the portion has already been deemed to be a transfer, etc. of assets, the portion pertaining to an amount other than the amount pertaining to that portion is, that paragraph"; in Article 34, paragraph (1) of the New Order, the phrase "the main clause of Article 16, paragraph (2) of the Act with respect to a lease transfer" is deemed to be replaced with "Article 44, paragraph (4) of the Supplementary Provisions of the 2018 Amendment Act with respect to a specified long-term installment sale, etc.", the phrase "a lease transfer for which the main clause of that paragraph" is deemed to be replaced with "a specified long-term installment sale, etc. for which that paragraph", the phrase "installments pertaining to a lease transfer" is deemed to be replaced with "installments pertaining to a specified long-term installment sale, etc.", the phrase "whose due date for payment arrives on or after (excluding those already received on or before the day preceding the first day of that taxable period), the portion pertaining to which is, the main clause of that paragraph" is deemed to be replaced with "on or before the day preceding which the portion has already been deemed to be a transfer, etc. of assets, the portion pertaining to an amount other than the amount pertaining to that portion is, that paragraph", and the phrase "lease transfer" in the items of that paragraph is deemed to be replaced with "specified long-term installment sale, etc."; in Article 35, paragraph (1) of the New Order, the phrase "the main clause of Article 16, paragraph (2) of the Act with respect to a lease transfer" is deemed to be replaced with "Article 44, paragraph (4) of the Supplementary Provisions of the 2018 Amendment Act with respect to a specified long-term installment sale, etc.", the phrase "a lease transfer for which the main clause of that paragraph" is deemed to be replaced with "a specified long-term installment sale, etc. for which that paragraph", the phrase "installments pertaining to a lease transfer" is deemed to be replaced with "installments pertaining to a specified long-term installment sale, etc.", the phrase "whose due date for payment arrives on or after (excluding those already received on or before the day preceding the first day of that taxable period), the portion pertaining to which is, the main clause of that paragraph" is deemed to be replaced with "on or before the day preceding which the portion has already been deemed to be a transfer, etc. of assets, the portion pertaining to an amount other than the amount pertaining to that portion is, that paragraph", and the phrase "lease transfer" in the items of that paragraph is deemed to be replaced with "specified long-term installment sale, etc."; and in paragraph (5) of that Article, the phrase "lease transfer" is deemed to be replaced with "specified long-term installment sale, etc.", and the phrase "the main clause of Article 16, paragraph (2) of the Act" is deemed to be replaced with "Article 44, paragraph (4) of the Supplementary Provisions of the 2018 Amendment Act".

⑧Where an individual business operator to which Article 44, paragraph (4) of the Supplementary Provisions of the Amending Act applies (meaning an individual business operator prescribed in Article 2, paragraph (1), item (iii) of the Consumption Tax Act; the same applies in paragraph (11)) dies (excluding the case where Article 34, paragraph (1) of the New Order as applied mutatis mutandis in the preceding paragraph applies), and an heir who has succeeded to the business pertaining to the specified long-term installment sale, etc. to which that individual business operator was subject to the application of Article 44, paragraph (4) of the Supplementary Provisions of the Amending Act becomes subject, with respect to that specified long-term installment sale, etc., in a taxable period on or after the taxable period that includes the date of death, to the application of Article 8, paragraph (3) of the Supplementary Provisions of the Amending Act pursuant to Article 12, paragraph (4) of the Supplementary Provisions of the Cabinet Order Partially Amending the Order for Enforcement of the Income Tax Act, etc. (Cabinet Order No. 131 of 2018; referred to as the "Income Tax Act Enforcement Order Amendment Order" in paragraph (12)), then, of that specified long-term installment sale, etc., Article 44, paragraph (4) of the Supplementary Provisions of the Amending Act applies to the portion pertaining to the amount of revenue under Article 8, paragraph (3) of the Supplementary Provisions of the Amending Act that is subject to that application, being an amount of the installments pertaining to that specified long-term installment sale, etc. In this case, the provisions of Article 44, paragraph (5) of the Supplementary Provisions of the Amending Act apply mutatis mutandis to the first applicable taxable period to which Article 44, paragraph (4) of the Supplementary Provisions of the Amending Act applies pursuant to the provisions of this paragraph.

⑨Where a corporation to which Article 44, paragraph (4) of the Supplementary Provisions of the Amending Act applies ceases to exist by merger (excluding the case where Article 35, paragraph (1) of the New Order as applied mutatis mutandis in paragraph (7) applies), and, with respect to a specified long-term installment sale, etc. to which its merged corporation (meaning a merged corporation prescribed in Article 2, paragraph (1), item (v)-2 of the Consumption Tax Act; the same applies in paragraphs (11) and (14)) was subject to the application of Article 44, paragraph (4) of the Supplementary Provisions of the Amending Act, its merging corporation (meaning a merging corporation prescribed in Article 2, paragraph (1), item (v) of the Consumption Tax Act; the same applies in paragraph (14)) becomes subject, in a taxable period on or after the taxable period that includes the date of the merger, to the application of Article 28, paragraph (3) of the Supplementary Provisions of the Amending Act pursuant to Article 13, paragraph (5) of the Supplementary Provisions of the Corporation Tax Act Enforcement Order Amendment Order, then, of that specified long-term installment sale, etc., Article 44, paragraph (4) of the Supplementary Provisions of the Amending Act applies to the portion pertaining to the amount of revenue under Article 28, paragraph (3) of the Supplementary Provisions of the Amending Act that is subject to that application, being an amount of the installments pertaining to that specified long-term installment sale, etc. In this case, the provisions of Article 44, paragraph (5) of the Supplementary Provisions of the Amending Act apply mutatis mutandis to the first applicable taxable period to which Article 44, paragraph (4) of the Supplementary Provisions of the Amending Act applies pursuant to the provisions of this paragraph.

⑩The provisions of the preceding paragraph apply mutatis mutandis where a corporation to which Article 44, paragraph (4) of the Supplementary Provisions of the Amending Act applies with respect to a specified long-term installment sale, etc. has, by a company split, caused a successor corporation in a company split (meaning a successor corporation in a company split prescribed in Article 2, paragraph (1), item (vi)-2 of the Consumption Tax Act; the same applies in paragraph (14)) to succeed to the business pertaining to the specified long-term installment sale, etc. to which it was subject to that application (excluding the case where Article 35, paragraph (1) of the New Order (limited to as applied mutatis mutandis pursuant to paragraph (5) of that Article) as applied mutatis mutandis in paragraph (7) applies).

⑪Where, with respect to a specified long-term installment sale, etc. of a business operator to which Article 34, paragraph (2) or Article 35, paragraph (2) (including as applied mutatis mutandis pursuant to paragraph (5) of that Article) of the Former Order Kept in Effect applies, to which those provisions apply, there is a portion for which the business operator did not treat a transfer, etc. of assets as having been made in a taxable period beginning on or before December 31, 2023 in the case of an individual business operator, or in each taxable period included in a business year (meaning a business year prescribed in Article 2, paragraph (1), item (xiii) of the Consumption Tax Act; the same applies in paragraph (13)) beginning on or before March 31, 2023 in the case of a corporation, then, for the portion of that specified long-term installment sale, etc. pertaining to the installments of that specified long-term installment sale, etc. whose due date for payment arrives on or after the first day of the year specified in Article 8, paragraph (2), item (ii) of the Supplementary Provisions of the Amending Act or of the business year specified in Article 28, paragraph (2), item (ii) of the Supplementary Provisions of the Amending Act (excluding those already received, on or before the day preceding that first day, by the decedent, merged corporation, or splitting corporation (meaning a splitting corporation prescribed in Article 2, paragraph (1), item (vi) of the Consumption Tax Act; the same applies in paragraph (14)) whose business pertaining to that specified long-term installment sale, etc. came to be succeeded to, or by that business operator), that business operator is deemed to have made a transfer, etc. of assets in the taxable period that includes December 31 of that year or in the taxable period that includes the last day of that business year. In this case, that specified long-term installment sale, etc. may be deemed to fall under the case prescribed in Article 44, paragraph (3) of the Supplementary Provisions of the Amending Act, and paragraph (4) of that Article may be applied.

⑫Where a business operator becomes subject, by inheritance, to the application of Article 12, paragraph (6) of the Supplementary Provisions of the Income Tax Act Enforcement Order Amendment Order, or becomes subject, by merger or company split, to the application of Article 13, paragraph (12) of the Supplementary Provisions of the Corporation Tax Act Enforcement Order Amendment Order, that business operator (excluding one that falls under a business operator prescribed in Article 44, paragraphs (2) through (4) of the Supplementary Provisions of the Amending Act) is deemed to be a business operator prescribed in Article 44, paragraphs (2) through (4) of the Supplementary Provisions of the Amending Act, and those provisions apply. In this case, the phrase "already received" in paragraph (2) of that Article is deemed to be replaced with "already received by the decedent, merged corporation, or splitting corporation whose business pertaining to that specified long-term installment sale, etc. came to be succeeded to, or by that business operator", and in paragraph (3) of that Article, the phrase "specified in Article 28, paragraph (2), item (ii) of the Supplementary Provisions" is deemed to be replaced with "deemed pursuant to Article 13, paragraph (12) of the Supplementary Provisions of the Cabinet Order Partially Amending the Order for the Enforcement of the Corporation Tax Act, etc. (Cabinet Order No. 132 of 2018)", and the phrase "already received" is deemed to be replaced with "already received by the merged corporation or splitting corporation whose business pertaining to that specified long-term installment sale, etc. came to be succeeded to, or by that business operator".

⑬Where a corporation prescribed in Article 37 of the Former Order Kept in Effect to which that Article applies is to calculate, by the method provided for in Article 28, paragraph (3) of the Supplementary Provisions of the Amending Act, an amount equivalent to the amount of revenue included in the amount of gross profits of each business year, that corporation is deemed to be subject to the application of that paragraph, and Article 44, paragraphs (4) and (5) of the Supplementary Provisions of the Amending Act apply.

⑭With regard to the application of the preceding paragraphs to a trustee business operator (meaning a trustee business operator prescribed in Article 15, paragraph (3) of the Consumption Tax Act; the same applies hereinafter in this paragraph), a merger of trusts is deemed to be a merger; a trustee business operator pertaining to a trust subject to corporate taxation (meaning a trust subject to corporate taxation prescribed in paragraph (1) of that Article; the same applies hereinafter in this paragraph) that is a former trust pertaining to a merger of trusts is deemed to be included in merged corporations, and a trustee business operator pertaining to a trust subject to corporate taxation that is a new trust pertaining to a merger of trusts is deemed to be included in merging corporations; a trust split is deemed to be a company split of a corporation; and a trustee business operator pertaining to a trust subject to corporate taxation that, by a trust split, transfers part of its trust property as the trust property of another trust or of a new trust with the same trustee is deemed to be included in splitting corporations, and a trustee business operator pertaining to a trust subject to corporate taxation that, by a trust split, receives a transfer of part of the trust property of another trust with the same trustee is deemed to be included in successor corporations in a company split.