Consumption Tax Act

Of corporations that have no base period for the business year (excluding a social welfare corporation prescribed in Article 22 (Definitions) of the Social Welfare Act (Act No. 45 of 1951) and any other corporation established exclusively for the purpose of making transfers, etc. of assets listed in Appended Table 2, as specified by Cabinet Order), for a corporation whose amount of capital or contributions on the first day of that business year is 10 million yen or more (hereinafter in this paragraph and the following paragraph referred to as a "newly established corporation"), the provisions of the main clause of Article 9, paragraph (1) do not apply to taxable transfers, etc. of assets and specified taxable purchases in each taxable period included in the business year of that newly established corporation in which it has no base period (excluding a taxable period for which the obligation to pay consumption tax is not exempted by the submission of a written notification under Article 9, paragraph (4), or under the provisions of Article 9-2, paragraph (1), Article 11, paragraph (3) or (4), or paragraph (1) or (2) of the preceding Article).

In the case where a newly established corporation prescribed in the preceding paragraph makes a purchase, etc. of an adjustment-target fixed asset during a taxable period included in the business year in which it has no base period (excluding a taxable period to which the provisions of Article 37, paragraph (1) apply), the provisions of the main clause of Article 9, paragraph (1) do not apply to taxable transfers, etc. of assets and specified taxable purchases in each taxable period from the taxable period that includes the day of the purchase, etc. of the adjustment-target fixed asset by that newly established corporation through the taxable period that includes the day on which three years have elapsed from the first day of that taxable period (excluding a taxable period in which the taxable sales in the base period exceed 10 million yen and a taxable period for which the obligation to pay consumption tax is not exempted by the submission of a written notification under Article 9, paragraph (4), or under the provisions of Article 9-2, paragraph (1), Article 11, paragraph (3) or (4), paragraphs (1) through (3) of the preceding Article, or the preceding paragraph).

In the case where a foreign corporation that has a base period for the business year (meaning a foreign corporation prescribed in Article 2, item (iv) (Definitions) of the Corporation Tax Act; the same applies in paragraph (5) of the following Article) commences, on or after the day following the last day of that base period, a business relating to taxable transfers, etc. of assets in Japan, the provisions of the preceding two paragraphs apply to that business year, deeming that there is no base period.

Necessary matters concerning the application of the provisions of paragraph (2) in the case where the purchase, etc. of an adjustment-target fixed asset prescribed in that paragraph is the taking of taxable goods out of a bonded area in connection with the submission of a special return, and in other cases, are specified by Cabinet Order.

Of corporations that have no base period for the business year (excluding a newly established corporation prescribed in paragraph (1) of the preceding Article, a social welfare corporation prescribed in Article 22 (Definitions) of the Social Welfare Act, and any other corporation established exclusively for the purpose of making transfers, etc. of assets listed in Appended Table 2, as specified by Cabinet Order; hereinafter in this Article referred to as a "newly founded corporation"), for a newly founded corporation in the case where, on the first day of the business year in which it has no base period (hereinafter in this paragraph and the following paragraph referred to as the "new establishment start date"), it falls under the specified requirement (meaning a case where shares or capital contributions in a number or amount exceeding 50 percent of the total number or total amount of the issued shares or capital contributions of the newly founded corporation (excluding treasury shares or capital contributions held by that newly founded corporation) are held directly or indirectly by another person, or any other case specified by Cabinet Order as one in which the newly founded corporation is controlled by another person; the same applies hereinafter in this Article), and, with respect to any one of the other person who formed the basis for the determination that the newly founded corporation falls under the specified requirement and the corporations having a special relationship specified by Cabinet Order with that other person, the amount calculated as provided by Cabinet Order as taxable sales in the period corresponding to the base period of the business year of that newly founded corporation that includes the new establishment start date (excluding the amount of consideration for taxable transfers, etc. of assets in a business conducted by the national government or a local government as business pertaining to its general account) exceeds 500 million yen or the amount calculated as provided by Cabinet Order as gross revenue in the period corresponding to that base period (excluding that in a business conducted by the national government or a local government as business pertaining to its general account, or in a business conducted by a foreign country or a local government of a foreign country) exceeds 5 billion yen (such a newly founded corporation is hereinafter in this paragraph and paragraph (3) referred to as a "specified newly founded corporation"), the provisions of the main clause of Article 9, paragraph (1) do not apply to taxable transfers, etc. of assets and specified taxable purchases in each taxable period included in the business year of that specified newly founded corporation in which it has no base period (excluding a taxable period for which the obligation to pay consumption tax is not exempted by the submission of a written notification under Article 9, paragraph (4), or under the provisions of Article 9-2, paragraph (1), Article 11, paragraph (3) or (4), Article 12, paragraph (1) or (2), or paragraph (2) of the preceding Article).

In the case where a newly founded corporation falls under the specified requirement on its new establishment start date and, among corporations that were corporations having the special relationship specified by Cabinet Order prescribed in the preceding paragraph with the other person prescribed in that paragraph and that were dissolved within one year before the day of establishment of that newly founded corporation or within one year before that new establishment start date, there is one that fell under a corporation having that special relationship on the day of its dissolution (excluding one that is still a corporation having that special relationship on that new establishment start date; hereinafter in this paragraph referred to as a "dissolved corporation"), the provisions of the preceding paragraph apply to that newly founded corporation, deeming that dissolved corporation to be a corporation having that special relationship.

The provisions of paragraphs (2) and (4) of the preceding Article apply mutatis mutandis to the case where a specified newly founded corporation makes a purchase, etc. of an adjustment-target fixed asset during a taxable period included in the business year in which it has no base period (excluding a taxable period to which the provisions of Article 37, paragraph (1) apply). In this case, the phrase "newly established corporation prescribed in the preceding paragraph" in paragraph (2) of the preceding Article is deemed to be replaced with "specified newly founded corporation prescribed in paragraph (1) of the following Article", the phrase "that newly established corporation" with "that specified newly founded corporation", and the phrase "or the preceding paragraph" with "this paragraph, or paragraph (1) of the following Article".

The other person prescribed in paragraph (1), when requested by a newly founded corporation that falls under the specified requirement to provide information on matters necessary for determining whether the case applies where the amount calculated as provided by Cabinet Order as the taxable sales referred to in that paragraph exceeds 500 million yen or the case applies where the amount calculated as provided by Cabinet Order as the gross revenue referred to in that paragraph exceeds 5 billion yen, must comply with the request.

In the case where a foreign corporation that has a base period for the business year commences, on or after the day following the last day of that base period, a business relating to taxable transfers, etc. of assets in Japan, the provisions of the preceding paragraphs apply to that business year, deeming that there is no base period.

Beyond what is specified in paragraph (2) through the preceding paragraph, necessary matters concerning the application of the provisions of paragraph (1) are specified by Cabinet Order.

In the case where a business operator (excluding a business operator exempted from the obligation to pay consumption tax under the main clause of Article 9, paragraph (1)) makes, during a taxable period to which the provisions of Article 37, paragraph (1) do not apply, a taxable purchase in Japan of a high-value specified asset (meaning inventory or an adjustment-target fixed asset whose value is high as specified by Cabinet Order; the same applies hereinafter in this Article) or the taking out of a bonded area of taxable goods that fall under a high-value specified asset (hereinafter in this paragraph referred to as a "purchase, etc. of a high-value specified asset") (in the case of a high-value specified asset that the business operator itself constructed, manufactured or produced (hereinafter in this paragraph and the following paragraph referred to as "construction, etc.") under a contract with another person or as inventory or an adjustment-target fixed asset of the business operator (hereinafter in this paragraph referred to as a "self-constructed high-value specified asset"), the case where the amount of expenses specified by Cabinet Order required for the construction, etc. of that self-constructed high-value specified asset becomes the amount specified by Cabinet Order or more (referred to in item (ii) as a "case of a purchase of a self-constructed high-value specified asset")), the provisions of the main clause of Article 9, paragraph (1) do not apply to taxable transfers, etc. of assets and specified taxable purchases in each taxable period from the taxable period following the taxable period that includes the day of that purchase, etc. of a high-value specified asset (meaning the day specified in each of the following items according to the category of high-value specified asset set forth in that item) through the taxable period that includes the day on which three years have elapsed from the first day of the taxable period that includes the day of that purchase, etc. of a high-value specified asset (in the case of a self-constructed high-value specified asset, the taxable period that includes the day on which the construction, etc. of that self-constructed high-value specified asset is completed) (excluding a taxable period in which the taxable sales in the base period exceed 10 million yen and a taxable period for which the obligation to pay consumption tax is not exempted by the submission of a written notification under Article 9, paragraph (4), or under the provisions of Article 9-2, paragraph (1), Article 10, paragraph (2), Article 11, paragraph (2) or (4), Article 12, paragraphs (2) through (4) or paragraph (6), Article 12-2, paragraph (1) or (2), or paragraph (1) or (3) of the preceding Article).

a high-value specified asset (excluding a self-constructed high-value specified asset): the day specified in each item of Article 30, paragraph (1) according to the category of case set forth in that item, relating to the purchase, etc. of the high-value specified asset;

a self-constructed high-value specified asset: the day on which that self-constructed high-value specified asset came to fall under a case of a purchase of a self-constructed high-value specified asset.

In the case where a business operator has been subject to the application of the provisions of Article 36, paragraph (1) or (3) in respect of inventory or taxable goods that are high-value specified assets, or inventory that the business operator itself constructed, etc. under a contract with another person or as its own inventory (including inventory that a decedent, merged corporation or splitting corporation itself constructed, etc. where the business operator succeeded to the business of that decedent, merged corporation or splitting corporation through inheritance, merger or split; limited to inventory for which the amount of expenses specified by Cabinet Order required for the construction, etc. of that inventory has become the amount specified by Cabinet Order or more; hereinafter in this paragraph referred to as an "adjustment-target self-constructed high-value asset"), the provisions of the main clause of Article 9, paragraph (1) do not apply to taxable transfers, etc. of assets and specified taxable purchases in each taxable period from the taxable period following the taxable period in which those provisions were applied through the taxable period that includes the day on which three years have elapsed from the first day of the taxable period in which those provisions were applied (in the case of an adjustment-target self-constructed high-value asset whose construction, etc. had not been completed by the day before the day on which it came to fall under the case prescribed in those provisions, the taxable period that includes the day on which that construction, etc. is completed) (excluding a taxable period in which the taxable sales in the base period exceed 10 million yen and a taxable period for which the obligation to pay consumption tax is not exempted by the submission of a written notification under Article 9, paragraph (4), or under the provisions of Article 9-2, paragraph (1), Article 10, paragraph (2), Article 11, paragraph (2) or (4), Article 12, paragraphs (2) through (4) or paragraph (6), Article 12-2, paragraph (1) or (2), paragraph (1) or (3) of the preceding Article, or the preceding paragraph).

In the case where a business operator (excluding a business operator exempted from the obligation to pay consumption tax under the main clause of Article 9, paragraph (1)) makes, during a taxable period to which the provisions of Article 37, paragraph (1) do not apply, a taxable purchase in Japan of gold or platinum bullion or any other asset similar thereto as specified by Ministry of Finance Order (hereinafter in this paragraph referred to as "gold bullion and similar items") or the taking out of a bonded area of taxable goods that fall under gold bullion and similar items (including a taxable purchase or a taking out of a bonded area relating to inventory to which the provisions of Article 36, paragraph (1) or (3) apply in that taxable period; hereinafter in this paragraph referred to as a "purchase, etc. of gold bullion and similar items"), if the case falls under a case specified by Cabinet Order as one in which the total amount of that purchase, etc. of gold bullion and similar items during that taxable period is high, the provisions of the main clause of Article 9, paragraph (1) do not apply to taxable transfers, etc. of assets and specified taxable purchases in each taxable period from the taxable period following the taxable period in which that purchase, etc. of gold bullion and similar items was made through the taxable period that includes the day on which three years have elapsed from the first day of the taxable period in which that purchase, etc. of gold bullion and similar items was made (excluding a taxable period in which the taxable sales in the base period exceed 10 million yen and a taxable period for which the obligation to pay consumption tax is not exempted by the submission of a written notification under Article 9, paragraph (4), or under the provisions of Article 9-2, paragraph (1), Article 10, paragraph (2), Article 11, paragraph (2) or (4), Article 12, paragraphs (2) through (4) or paragraph (6), Article 12-2, paragraph (1) or (2), paragraph (1) or (3) of the preceding Article, or the preceding two paragraphs).

Necessary matters concerning the application of the provisions of paragraph (1) or the preceding paragraph in the case where the purchase, etc. of a high-value specified asset prescribed in paragraph (1) or the purchase, etc. of gold bullion and similar items prescribed in the preceding paragraph is the taking of taxable goods out of a bonded area in connection with the submission of a special return, and otherwise concerning the application of the provisions of the preceding three paragraphs, are specified by Cabinet Order.