Corporation Tax Act

The Corporation Tax Act (Act No. 28 of 1947) is wholly amended.

This Act is to prescribe, with regard to corporation tax, the taxpayers, the scope of taxable income, the method of calculation of tax amount, the procedures for filing returns, payment and refunds, and the particulars necessary for ensuring the proper fulfillment of the tax liability.

In this Act, the meanings of the terms listed in the following items are as prescribed respectively in those items:

in Japan:These mean in the region where this Act is enforced.

outside Japan:These mean outside the region where this Act is enforced.

domestic corporation:These mean a corporation that has its head office or principal office in Japan.

foreign corporation:These mean a corporation that is not a domestic corporation.

public service corporation:These mean any of the corporations listed in Appended Table 1.

corporation in the public interest, etc.:These mean any of the corporations listed in Appended Table 2.

cooperative, etc.:This means any of the corporations listed in Appended Table 3.

association or foundation without juridical personality:These mean an association or foundation that is not a juridical person and that has special provisions concerning the representative or administrator.

ordinary corporation:These mean a corporation other than those listed in items (v) through (vii), excluding any association or foundation without a juridical personality, etc.

non-profit corporation: These mean a general incorporated association or general incorporated foundation (excluding public interest incorporated associations or public interest incorporated foundations) that falls under any of the following:

A corporation whose purpose is not to obtain profit from its business or to distribute any of the profit it has obtained, and whose organization is specified by Cabinet Order as being proper for the operation of its business

A corporation that utilizes membership fees received from its members and conducts its business in order to obtain a benefit common to those members, and whose organization is specified by Cabinet Order as being proper for the operation of its business

family company: These mean a company (including an investment corporation; the same applies in this item) in the case where three or fewer of its shareholders, etc. (excluding the company in the case where the company holds shares (including the investment equity prescribed in Article 2, paragraph (14) (Definitions) of the Act on Investment Trusts and Investment Corporations (Act No. 198 of 1951); the same applies hereinafter) or capital contributions in itself) and the individuals and corporations that have a special relationship with them as specified by Cabinet Order hold shares or capital contributions whose number or amount exceeds 50 percent of the total number or total amount of the issued shares of or capital contributions to the company (excluding shares or capital contributions it holds in itself), or in any other case specified by Cabinet Order.

acquired corporation:These mean a corporation whose assets and liabilities were transferred to another corporation as a result of a merger.

acquiring corporation:These mean a corporation that has received a transfer of assets and liabilities from an acquired corporation as a result of a merger.

splitting corporation: These mean a corporation whose assets or liabilities were transferred to another corporation as a result of a company split.

succeeding corporation in a company split: These mean a corporation that received a transfer of assets or liabilities from a splitting corporation as a result of a company split.

corporation making a capital contribution in kind:These mean a corporation whose assets and/or liabilities were transferred to another corporation as a result of a contribution in kind to the capital of other corporation.

corporation receiving a capital contribution in kind:These mean a corporation that has received a transfer of assets and/or liabilities from a corporation making a capital contribution in kind as a result of a contribution in kind to its capital.

corporation making a distribution in kind: These mean a corporation that has transferred the assets it holds as a result of a distribution in kind (meaning the delivery of assets other than monies by a corporation (excluding a public interest corporation, etc. and an association or foundation without juridical personality) to its shareholders, etc. on the grounds of any of the following events of the corporation; the same applies in this Article).

A dividend of surplus (limited to one pertaining to shares or capital contributions, and excluding one made through a company split by split-off), a dividend of profits (excluding one made through a company split by split-off), or a distribution of surplus (limited to one pertaining to capital contributions);

A distribution of residual assets due to dissolution;

The events listed in Article 24, paragraph (1), items (v) through (vii) (The Amount Deemed to Be Dividends).

corporation receiving a distribution in kind: These mean a corporation that has received a transfer of assets from a corporation making a distribution in kind as a result of a distribution in kind.

wholly owned subsidiary corporation in a share exchange:These mean a corporation that has issued shares and had another corporation acquire the issued shares held by its shareholders as a result of a share exchange.

wholly owned subsidiary corporation in a share exchange or similar act: These mean a wholly owned subsidiary corporation in a share exchange, and the target corporation prescribed in item (xii)-16 pertaining to a share exchange, etc. (excluding a share exchange).

wholly owning parent corporation in a share exchange:These mean a corporation that has come to hold the whole of another corporation's issued shares by acquiring the corporation's shares as a result of a share exchange.

wholly owning parent corporation in a share exchange or similar act: These mean a wholly owning parent corporation in a share exchange, a corporation that is the largest shareholder, etc. prescribed in item (xii)-16, (a) and (b) pertaining to a share exchange, etc. (excluding a share exchange), and a corporation that is the one shareholder, etc. referred to in (c) of that item.

wholly owned subsidiary corporation in a share transfer:These mean a corporation that has issued shares and had a corporation established through a share transfer acquire the issued shares held by its shareholders as a result of the share transfer.

wholly owning parent corporation in a share transfer:These mean a corporation established through a share transfer that has acquired the whole of another corporation's issued shares as a result of the share transfer.

group tax sharing parent corporation: These mean a parent corporation prescribed in Article 64-9, paragraph (1) (Group Tax Sharing Approval) that has received the approval under the provisions of that paragraph.

group tax sharing subsidiary corporation: These mean another domestic corporation prescribed in Article 64-9, paragraph (2) that has received the approval under the provisions of paragraph (1) of that Article.

group tax sharing corporation: These mean a group tax sharing parent corporation and a group tax sharing subsidiary corporation.

investment corporation: These mean an investment corporation prescribed in Article 2, paragraph (12) of the Act on Investment Trusts and Investment Corporations.

specific purpose company: These mean a specific purpose company prescribed in Article 2, paragraph (3) (Definitions) of the Act on the Securitization of Assets (Act No. 105 of 1998).

controlling interest: These mean a relationship specified by Cabinet Order as a relationship whereby one person directly or indirectly holds shares or capital contributions whose number or amount exceeds 50 percent of the total number or total amount of the issued shares of or capital contributions to a corporation (excluding the shares that the corporation holds in itself and the capital contributions made thereby; hereinafter referred to as the "issued shares, etc." in this Article) (hereinafter referred to as a "controlling interest between the parties" in this item), or a relationship between corporations each of which has a controlling interest between the parties with one and the same person.

full controlling interest: These mean a relationship specified by Cabinet Order as a relationship whereby one person directly or indirectly holds the whole of the issued shares, etc. of a corporation (hereinafter referred to as a "full controlling interest between the parties" in this item), or a relationship between corporations each of which has a full controlling interest between the parties with one and the same person.

group tax sharing full controlling interest: These mean a full controlling interest between a group tax sharing parent corporation and a group tax sharing subsidiary corporation (limited to the relationship specified by Cabinet Order prescribed in Article 64-9, paragraph (1); hereinafter the same applies in this item), or a relationship between group tax sharing subsidiary corporations each of which has a full controlling interest with the group tax sharing parent corporation.

qualified merger: These mean a merger that falls under any of the following, in which the shareholders, etc. of an acquired corporation do not receive the delivery of assets other than the shares or capital contributions of any one of the corporations, the acquiring corporation or the acquiring parent corporation (meaning a corporation that has a relationship with an acquiring corporation as specified by Cabinet Order as a relationship whereby the corporation holds directly or indirectly the whole of the issued shares, etc. of the acquiring corporation) (such assets exclude monies or other assets to be delivered as a dividend, etc. of surplus to the shareholders, etc. (meaning a dividend of surplus, dividend of profits, or distribution of surplus pertaining to shares or capital contributions), monies or other assets to be delivered to the shareholders, etc. who oppose the merger as the consideration based on the demand that their shares be purchased from them, and monies or other assets to be delivered to shareholders, etc. other than the acquiring corporation in the case where, immediately before the merger, the acquiring corporation holds shares or capital contributions equivalent in number or amount to two-thirds or more of the total number or total amount of the issued shares, etc. of the acquired corporation):

A merger in the case where there is, between the acquired corporation and the acquiring corporation (where the merger aims to establish a corporation (hereinafter referred to as a "consolidation-type merger" in this item), between one acquired corporation and the other acquired corporation), a full controlling interest held by either one of the corporations or any other relationship as specified by Cabinet Order

A merger in the case where there is, between the acquired corporation and the acquiring corporation (where the merger is a consolidation-type merger, between one acquired corporation and the other acquired corporation), a controlling interest held by either one of the corporations or any other relationship as specified by Cabinet Order, and which meets all of the following requirements:

That, out of the employees of the acquired corporation in the merger immediately before the merger, a number of persons equivalent to approximately 80 percent or more of the total number thereof are expected to engage, after the merger, in the business of the acquiring corporation in the merger (including the business of a corporation that has a full controlling interest with the acquiring corporation in the merger, and, in the case where the principal business that the acquired corporation conducts before the merger is expected to be transferred, through a qualified merger to be effected after the merger, to the acquiring corporation in the qualified merger, the business of the acquiring corporation in the qualified merger and of a corporation that has a full controlling interest with the acquiring corporation in the qualified merger).

That the principal business that the acquired corporation in the merger conducts before the merger is expected to continue to be conducted after the merger by the acquiring corporation in the merger (including a corporation that has a full controlling interest with the acquiring corporation in the merger, and, in the case where the principal business is expected to be transferred, through a qualified merger to be effected after the merger, to the acquiring corporation in the qualified merger, the acquiring corporation in the qualified merger and a corporation that has a full controlling interest with the acquiring corporation in the qualified merger).

A merger specified by Cabinet Order as a merger to allow the acquired corporation and the acquiring corporation (where the merger falls under the category of a consolidation-type merger, for one acquired corporation and another acquired corporation) to conduct business jointly

company split by split-off: These mean the company splits listed as follows:

A company split in the case where all of the assets as a consideration for a split (meaning the shares (including capital contributions; hereinafter the same applies through item (xii)-17) of the succeeding corporation in a company split or other assets delivered by the succeeding corporation in a company split as a result of the company split; hereinafter the same applies through item (xii)-11) that the splitting corporation receives as a result of the company split are delivered to the shareholders, etc. of the splitting corporation on the date of the company split, or in the case where all of the assets as a consideration for a split are directly delivered to the shareholders, etc. of the splitting corporation as a result of the company split;

A company split without assets as a consideration for a split (hereinafter referred to as a "company split without consideration" in this item and the following item), in the case where, immediately before the company split, the succeeding corporation in a company split holds the whole of the issued shares, etc. of the splitting corporation or the splitting corporation does not hold shares of the succeeding corporation in a company split.

company split by spin-off: These mean the company splits listed as follows:

A company split in the case where the assets as a consideration for a split that a splitting corporation receives as a result of the company split are not delivered to the shareholders, etc. of the splitting corporation as of the date of the company split (excluding a company split without consideration);

A company split without consideration in the case where, immediately before the company split, the splitting corporation holds shares of the succeeding corporation in a company split (excluding the case where the succeeding corporation in a company split holds the whole of the issued shares, etc. of the splitting corporation).

qualified company split: These mean a company split that falls under any of the following, in which no assets other than the shares of any one of the corporations, the succeeding corporation in a company split or the succeeding parent corporation in a company split (meaning a corporation that has a relationship with the succeeding corporation in a company split that is specified by Cabinet Order as being a relationship whereby the corporation holds directly or indirectly the whole of the issued shares, etc. of the succeeding corporation in a company split), are delivered as assets as a consideration for a split (in the case of a company split by split-off in which the shares are delivered, limited to a company split in which the shares are delivered in accordance with the ratio of the number of the shares of the splitting corporation (in the case of capital contributions, the amount thereof) held by each shareholder, etc. of the splitting corporation to the total number or total amount of the issued shares, etc. of the splitting corporation):

A company split in the case where either the splitting corporation or the succeeding corporation in a company split has a full controlling interest in the other corporation, or any other relationship as specified by Cabinet Order

A company split in the case where either the splitting corporation or the succeeding corporation in a company split has a controlling interest in the other corporation, or any other relationship as specified by Cabinet Order, and which meets all of the following requirements:

That the principal assets and liabilities pertaining to the split business (meaning, out of the business conducted by the splitting corporation before the company split, the business that is to be conducted by the succeeding corporation in a company split as a result of the company split; the same applies in (b)) have been transferred to the succeeding corporation in a company split as a result of the company split.

That, out of the employees engaged in the split business immediately before the company split, a number of persons equivalent to approximately 80 percent or more of the total number thereof are expected to engage in the business of the succeeding corporation in a company split after the company split (including the business of a corporation that has a full controlling interest with the succeeding corporation in a company split, and, in the case where the split business is expected to be transferred, through a qualified merger to be effected after the company split, to the acquiring corporation in the qualified merger, the business of the acquiring corporation and of a corporation that has a full controlling interest with the acquiring corporation).

That the split business pertaining to the company split is expected to continue to be conducted after the company split by the succeeding corporation in a company split (including a corporation that has a full controlling interest with the succeeding corporation in a company split, and, in the case where the split business is expected to be transferred, through a qualified merger to be effected after the company split, to the acquiring corporation in the qualified merger, the acquiring corporation and a corporation that has a full controlling interest with the acquiring corporation).

A company split specified by Cabinet Order as being a company split to allow the splitting corporation and the succeeding corporation in a company split (where the company split aims to establish a corporation, for one splitting corporation and another splitting corporation) to conduct business jointly

A company split specified by Cabinet Order as being a company split (limited to a company split by split-off in which only one corporation is the splitting corporation) to allow the business that the splitting corporation conducts before the company split to be conducted independently by a succeeding corporation in a company split newly established through the company split

qualified company split by split-off:These mean a company split by split-off that falls under the category of qualified company split.

qualified company split by spin-off:These mean a company split by spin-off that falls under the category of qualified company split.

qualified capital contribution in kind: These mean a contribution in kind that falls under any of the following (excluding a contribution in kind that transfers, to a foreign corporation that is the corporation receiving a capital contribution in kind, real estate located in Japan or any other asset specified by Cabinet Order (referred to as "domestic real property, etc." in this item), assets (excluding, in the case of holding shares of a foreign corporation equivalent in number or amount to 25 percent or more of the total number or total amount of the issued shares, etc. of the foreign corporation, the shares of the foreign corporation) or liabilities pertaining to a business conducted through a domestic place of business, etc. (meaning, for a domestic corporation, the head office, etc. prescribed in Article 69, paragraph (4), item (i) (Foreign Tax Credit), and, for a foreign corporation, a permanent establishment) (referred to as "domestic assets, etc." in this item), or industrial property rights, copyrights or any other asset of a domestic corporation specified by Cabinet Order (referred to as "intangible asset, etc." in this item) (excluding a contribution in kind specified by Cabinet Order as one by which all of the domestic real property, etc., domestic assets, etc. and intangible assets, etc. become, as a result of the transfer, assets or liabilities pertaining to a business conducted through the permanent establishment of the foreign corporation that is the corporation receiving a capital contribution in kind), a contribution in kind by which a foreign corporation transfers to a domestic corporation or another foreign corporation assets (excluding domestic real property, etc.) or liabilities pertaining to a business conducted through the head office, etc. prescribed in Article 138, paragraph (1), item (i) (Domestic Source Income) (referred to as "head office, etc." in this item) (referred to as "foreign corporation's overseas assets, etc." in this item) (in the case of a contribution in kind that transfers foreign corporation's overseas assets, etc. to the other foreign corporation, limited to a contribution in kind by which all or part of the foreign corporation's overseas assets, etc. become, as a result of the transfer, assets or liabilities pertaining to a business conducted through the permanent establishment of the other foreign corporation), and a contribution in kind by which a domestic corporation transfers to a foreign corporation assets or liabilities pertaining to a business conducted through an overseas place of business, etc. prescribed in Article 69, paragraph (4), item (i) (referred to as "domestic corporation's assets, etc. outside Japan" in this item) and by which all or part of the domestic corporation's assets, etc. outside Japan become, as a result of the transfer, assets or liabilities pertaining to a business conducted through the head office, etc. of the foreign corporation (limited to a contribution in kind specified by Cabinet Order as being equivalent to a contribution in kind that transfers domestic assets, etc.), as well as the delivery of bonds pertaining to bonds with share options upon the exercise of the share options attached to the bonds with share options, and limited to a contribution in kind in which only the shares of the corporation receiving a capital contribution in kind are delivered to the corporation making a capital contribution in kind):

A contribution in kind to the capital of the receiving corporation in the case where either the corporation making a capital contribution in kind or the corporation receiving a capital contribution in kind has a full controlling interest in the other corporation, or any other relationship as specified by Cabinet Order

A contribution in kind to the capital of the receiving corporation in the case where either the corporation making a capital contribution in kind or the corporation receiving a capital contribution in kind has a controlling interest in the other corporation, or any other relationship as specified by Cabinet Order, and which meets all the following requirements:

That the principal assets and liabilities pertaining to the business transferred by a contribution in kind (meaning, out of the business conducted by the corporation making a capital contribution in kind before the contribution in kind, the business that is to be conducted by the corporation receiving a capital contribution in kind as a result of the contribution in kind; the same applies in (b)) have been transferred to the corporation receiving a capital contribution in kind as a result of the contribution in kind.

That, out of the employees engaged in the business transferred by a contribution in kind immediately before the contribution in kind, a number of persons equivalent to approximately 80 percent or more of the total number thereof are expected to engage in the business of the corporation receiving a capital contribution in kind after the contribution in kind (including the business of a corporation that has a full controlling interest with the corporation receiving a capital contribution in kind, and, in the case where the business transferred by a contribution in kind is expected to be transferred, through a qualified merger to be effected after the contribution in kind, to the acquiring corporation in the qualified merger, the business of the acquiring corporation and of a corporation that has a full controlling interest with the acquiring corporation).

That the business transferred by a contribution in kind pertaining to the contribution in kind is expected to continue to be conducted after the contribution in kind by the corporation receiving a capital contribution in kind (including a corporation that has a full controlling interest with the corporation receiving a capital contribution in kind, and, in the case where the business transferred by a contribution in kind is expected to be transferred, through a qualified merger to be effected after the contribution in kind, to the acquiring corporation in the qualified merger, the acquiring corporation and a corporation that has a full controlling interest with the acquiring corporation).

A contribution in kind to the capital of the receiving corporation that is specified by Cabinet Order as being a contribution in kind to allow for the corporation making a capital contribution in kind and the corporation receiving a capital contribution in kind (where the contribution in kind aims to establish a corporation, for one corporation making a capital contribution in kind and any other corporation making a capital contribution in kind) to conduct business jointly

qualified in-kind distribution: These mean a distribution in kind in which a domestic corporation is the corporation making a distribution in kind and in which the persons receiving the transfer of assets through the distribution in kind are only domestic corporations (limited to ordinary corporations or cooperatives, etc.) that have a full controlling interest with the domestic corporation immediately before the distribution in kind.

share distribution: These mean a distribution in kind (limited to a dividend of surplus or a dividend of profits) through which the whole of the issued shares, etc. of a corporation the whole of whose issued shares, etc. were held by the corporation making a distribution in kind immediately before the distribution in kind (referred to as a "wholly owned subsidiary corporation" in the following item) is transferred (excluding a distribution in kind in the case where the persons receiving the transfer of the issued shares, etc. through the distribution in kind are only persons that have a full controlling interest with the corporation making a distribution in kind immediately before the distribution in kind).

qualified share distribution: These mean a share distribution in which only the shares of a wholly owned subsidiary corporation are transferred and which is specified by Cabinet Order as a share distribution to allow the wholly owned subsidiary corporation and the corporation making a distribution in kind to conduct business independently (limited to a share distribution in which the shares are delivered in accordance with the ratio of the number of the shares of the corporation making a distribution in kind (in the case of capital contributions, the amount thereof) held by each shareholder, etc. of the corporation making a distribution in kind to the total number or total amount of the issued shares, etc. of the corporation making a distribution in kind).

share exchange, etc.: These mean a share exchange, and a target corporation (meaning the corporation prescribed in (a) through (c), respectively) coming, as a result of an act listed in (a) through (c), to be subject to a full controlling interest of the corporation that is the largest shareholder, etc. prescribed in (a) or (b), respectively, or of the corporation that is the one shareholder, etc. referred to in (c).

The resolution of acquisition in the case where, as a result of the resolution of acquisition pertaining to class shares subject to wholly call (meaning a type of share in the case where the corporation that issued such shares has provisions to the effect that all such shares are acquired by resolution of a shareholders meeting or any other meeting equivalent thereto (referred to as the "resolution of acquisition" in (a))), no shares of the corporation other than fractional shares of less than one share come to be delivered as the consideration for the acquisition to any of the shareholders, etc. (excluding the corporation and persons that have a full controlling interest with the largest shareholder, etc.) other than the largest shareholder, etc. of the corporation (meaning, among the shareholders, etc. of the corporation other than the corporation itself, the person who holds the largest number of shares of the corporation);

A consolidation of shares in which the number of shares of the corporation that come to be held by each of the shareholders, etc. (excluding the corporation and persons that have a full controlling interest with the largest shareholder, etc.) other than the largest shareholder, etc. of the corporation that effected the consolidation (meaning, among the shareholders, etc. of the corporation other than the corporation itself, the person who holds the largest number of shares of the corporation) becomes a fraction of less than one share;

The approval in the case where, as a result of the approval pertaining to a demand for share cash-out (meaning a demand, made by one shareholder, etc. of a corporation with the approval of the corporation to all of the other shareholders, etc. of the corporation (excluding the corporation and persons that have a full controlling interest with the one shareholder, etc.) under the provisions of laws and regulations (including foreign laws and regulations; the same applies in (c)), that they sell all of their shares of the corporation), the whole of the issued shares, etc. of the corporation (excluding those held by the one shareholder, etc. or by persons that have a full controlling interest with the one shareholder, etc.) comes to be acquired by the one shareholder, etc. under the provisions of laws and regulations.

qualified share exchange, etc.: These mean a share exchange, etc. that falls under any of the following, in which no assets other than the shares of any one of the corporations, the wholly owning parent corporation in a share exchange or similar act or the fully controlling parent corporation in a share exchange (meaning a corporation that has a relationship with the wholly owning parent corporation in a share exchange that is specified by Cabinet Order as being a relationship whereby the corporation holds directly or indirectly the whole of the issued shares, etc. of the wholly owning parent corporation in a share exchange), are delivered to the shareholders, etc. of the wholly owned subsidiary corporation in a share exchange or similar act (such assets exclude monies or other assets delivered as a dividend of surplus to the shareholders, etc., monies or other assets delivered to the shareholders, etc. who oppose the share exchange, etc. as the consideration based on their demand that their shares be purchased from them, monies or other assets delivered to shareholders other than the wholly owning parent corporation in a share exchange in the case where, immediately before the share exchange, the wholly owning parent corporation in a share exchange holds shares equivalent in number to two-thirds or more of the total number of the issued shares (excluding the shares that the wholly owned subsidiary corporation in a share exchange holds in itself) of the wholly owned subsidiary corporation in a share exchange, monies or other assets delivered based on a petition for a determination of the price of the acquisition set forth in (a) of the preceding item, monies or other assets delivered as the consideration for the acquisition of the fractional shares of less than one share set forth in (a) of that item pertaining to the act listed in (a) of that item or of the fractional shares of less than one share of the corporation prescribed in (b) of that item arising from the act listed in (b) of that item, and monies or other assets delivered as the consideration for the acquisition set forth in (c) of that item).

A share exchange in the case where the wholly owned subsidiary corporation in the share exchange and the wholly owning parent corporation in the share exchange have between them a full controlling interest by the wholly owning parent corporation in the share exchange, or any other relationship as specified by Cabinet Order

A share exchange, etc. in the case where either the wholly owned subsidiary corporation in the share exchange or similar act or the wholly owning parent corporation in the share exchange or similar act has a controlling interest in the other corporation, or any other relationship as specified by Cabinet Order, and which meets all of the following requirements:

That, out of the employees of the wholly owned subsidiary corporation in a share exchange or similar act immediately before the share exchange, etc., a number of persons equivalent to approximately 80 percent or more of the total number thereof are expected to continue to engage in the business of the wholly owned subsidiary corporation in a share exchange or similar act (including the business of a corporation that has a full controlling interest with the wholly owned subsidiary corporation in a share exchange or similar act, and, in the case where the principal business that the wholly owned subsidiary corporation in a share exchange or similar act conducts before the share exchange, etc. is expected to be transferred, through a qualified merger to be effected after the share exchange, etc. or a qualified company split or qualified capital contribution in kind in which the wholly owned subsidiary corporation in a share exchange or similar act is the splitting corporation or the corporation making a capital contribution in kind (referred to as a "qualified merger, etc." in (b)), to the acquiring corporation, succeeding corporation in a company split or corporation receiving a capital contribution in kind in the qualified merger, etc. (referred to as an "acquiring corporation, etc." in (b)), the business of the acquiring corporation, etc. and of a corporation that has a full controlling interest with the acquiring corporation, etc.).

That the principal business that the wholly owned subsidiary corporation in a share exchange or similar act conducts before the share exchange, etc. is expected to continue to be conducted by the wholly owned subsidiary corporation in a share exchange or similar act (including a corporation that has a full controlling interest with the wholly owned subsidiary corporation in a share exchange or similar act, and, in the case where the principal business is expected to be transferred, through a qualified merger, etc. to be effected after the share exchange, etc., to the acquiring corporation, etc. in the qualified merger, etc., the acquiring corporation, etc. and a corporation that has a full controlling interest with the acquiring corporation, etc.).

A share exchange specified by Cabinet Order as being a share exchange to allow the wholly owned subsidiary corporation in the share exchange and the wholly owning parent corporation in the share exchange to conduct business jointly

qualified share transfer: These mean a share transfer that falls under any of the following, in which the shareholders of the wholly owned subsidiary corporation in a share transfer do not receive the delivery of any assets other than the shares of the wholly owning parent corporation in the share transfer (such assets exclude monies or any other assets to be delivered to the shareholders who oppose the share transfer as the consideration based on their demand that their shares be purchased from them):

A share transfer in the case where one wholly owned subsidiary corporation in the share transfer and a second wholly owned subsidiary corporation in the share transfer (hereinafter referred to as "the second wholly owned subsidiary corporation in the share transfer" in this item) have between them a full controlling interest by the same person, or any other relationship as specified by Cabinet Order, or a share transfer in which only one corporation becomes the wholly owned subsidiary corporation in the share transfer and which is specified by Cabinet Order

A share transfer in the case where either one wholly owned subsidiary corporation in a share transfer or a second wholly owned subsidiary corporation in the share transfer has a controlling interest in the other corporation, or any other relationship as specified by Cabinet Order, and which meets all of the following requirements:

That, out of the employees of each wholly owned subsidiary corporation in a share transfer pertaining to the share transfer immediately before the share transfer, a number of persons equivalent to approximately 80 percent or more of the total number thereof are expected to continue to engage in the business of the wholly owned subsidiary corporation in a share transfer (including the business of a corporation that has a full controlling interest with the wholly owned subsidiary corporation in a share transfer, and, in the case where the principal business that the wholly owned subsidiary corporation in a share transfer conducts before the share transfer is expected to be transferred, through a qualified merger to be effected after the share transfer or a qualified company split or qualified capital contribution in kind in which the wholly owned subsidiary corporation in a share transfer is the splitting corporation or the corporation making a capital contribution in kind (referred to as a "qualified merger, etc." in (b)), to the acquiring corporation, succeeding corporation in a company split or corporation receiving a capital contribution in kind in the qualified merger, etc. (referred to as an "acquiring corporation, etc." in (b)), the business of the acquiring corporation, etc. and of a corporation that has a full controlling interest with the acquiring corporation, etc.).

That the principal business that each wholly owned subsidiary corporation in a share transfer pertaining to the share transfer conducts before the share transfer is expected to continue to be conducted by the wholly owned subsidiary corporation in a share transfer (including a corporation that has a full controlling interest with the wholly owned subsidiary corporation in a share transfer, and, in the case where the principal business is expected to be transferred, through a qualified merger, etc. to be effected after the share transfer, to the acquiring corporation, etc. in the qualified merger, etc., the acquiring corporation, etc. and a corporation that has a full controlling interest with the acquiring corporation, etc.).

A share transfer specified by Cabinet Order as being a share transfer to allow the wholly owned subsidiary corporation in the share transfer and the second wholly owned subsidiary corporation in the share transfer to conduct business jointly

permanent establishment: These mean those listed as follows; provided, however, that in the case where a convention for the avoidance of double taxation or the prevention of fiscal evasion with respect to taxes on income that Japan has concluded contains provisions different from those listed as follows, with regard to a foreign corporation to which the convention applies, a permanent establishment is to be what is specified as a permanent establishment in the convention (limited to that located in Japan).

A branch, factory or other fixed place where business is conducted, of a foreign corporation located in Japan, which is specified by Cabinet Order;

A place in Japan where a foreign corporation carries out construction or installation work or provides services of directing and supervising such work, or any other place specified by Cabinet Order as being equivalent thereto;

A person who has the authority to conclude contracts on behalf of a foreign corporation and whom the foreign corporation places in Japan, or any other equivalent person, who is specified by Cabinet Order.

profit-making business:These mean a sales business, manufacturing business or any other business as specified by Cabinet Order that is conducted on a continuous basis by maintaining a workplace.

shareholder, etc.:These mean a shareholder, member of a general partnership company, limited partnership company, or limited liability company, or any other contributor to a corporation.

officer:These mean an executive officer, operating officer, accounting advisor, auditor, director, inspector, or liquidator, and any person other than those persons who engages in the management of a corporation and is specified by Cabinet Order.

amount of stated capital, etc.: These mean the amount specified by Cabinet Order as the amount that a corporation has received from shareholders, etc. as capital contributions.

amount of retained earnings: These mean the amount specified by Cabinet Order as the amount of income of a corporation that has been reserved.

net operating loss:These mean, in the case where deductible expenses for a business year exceed gross profits for the business year, when calculating the amount of income for each business year, the excess amount of the loss.

inventory: These mean commodities, products, semi-finished products, products in progress, raw materials or other assets which are specified by Cabinet Order as those to be inventoried (excluding securities and commodities, etc. for short-term trading as prescribed in Article 61, paragraph (1) (Capital Gains or Losses and Gains or Losses on the Fair Valuation of Commodities, etc. for Short-Term Trading)).

securities:These mean the securities prescribed in Article 2, paragraph (1) (Definition) of the Financial Instruments and Exchange Act (Act No. 25 of 1948) and others equivalent thereto that are specified by Cabinet Order (excluding the shares that a corporation, etc. holds in itself and the capital contributions made thereby, and those related to derivative transactions as prescribed in Article 61-5, paragraph (1) (Inclusion, etc. in Gross Profits or Deductible Expenses of the Amount Equivalent to Profit or Loss on Derivative Transactions)).

fixed assets:These mean land (including any right on land), depreciable assets, telephone subscription rights, or other assets as specified by Cabinet Order.

depreciable assets:This means the buildings, structures, machinery, devices, ships, vehicles and equipment, tools, apparatus and appliances, mining rights, or other assets which are specified by Cabinet Order as assets to be depreciated.

deferred assets:These mean expenses paid by a corporation, with the effects of the payment thereof lasting one year or longer after the day on which the payment was made and which are specified by Cabinet Order.

account for as atax deductibles:These mean that a corporation accounts for an amount as an expense or a loss in the final settlement of the accounts.

jointly managed trust: These mean a money trust operated by a trust company (including a financial institution as prescribed in Article 1, paragraph (1) (Permission for Concurrent Operations) of the Act on Engagement in Trust Business by Financial Institutions (Act No. 43 of 1943) that is engaged in a trust business as prescribed in the paragraph under the Act) in which the trust company jointly manages the trust property of multiple settlors who do not act in concert (excluding an investment trust operated without instructions from the settlor as prescribed in Article 2, paragraph (2) of the Act on Investment Trusts and Investment Corporations, a foreign investment trust equivalent thereto (meaning a foreign investment trust as prescribed in paragraph (24) of the Article; the same applies in the following item and item (xxix), (b)), and other trusts specified by Cabinet Order as those with settlors who are substantially small in number).

securities investment trust:These mean a securities investment trust as prescribed in Article 2, paragraph (4) of the Act on Investment Trusts and Investment Corporations and a foreign investment trust equivalent thereto.

public and company bond investment trust:These mean a securities investment trust that has as its purpose the management of trust property for investment in government bonds or company bonds (including bonds that a corporation other than a company issues under special Acts) and in which the trust property is not managed for investment in shares or capital contributions.

group investment trust: These mean trusts listed as follows:

A jointly operated trust

An investment trust as prescribed in Article 2, paragraph (3) of the Act on Investment Trusts and Investment Corporations (limited to those listed as follows) and a foreign investment trust:

A securities investment trust as prescribed in Article 2, paragraph (4) of the Act on Investment Trusts and Investment Corporations;

An investment trust specified by Cabinet Order as one in which the offering of beneficial rights by its trustee (in the case of an investment trust with instructions from the settlor as prescribed in Article 2, paragraph (1) of the Act on Investment Trusts and Investment Corporations, its settlor) is conducted through a public offering as prescribed in paragraph (8) of that Article and is conducted mainly in Japan.

A specified trust that issues beneficiary certificates (meaning a trust that issues beneficiary certificates as prescribed in Article 185, paragraph (3) (Provisions on Terms of Trust Concerning the Issuance of Beneficiary Certificates) of the Trust Act (Act No. 108 of 2006) that meets all of the following requirements (excluding a trust listed in (a) and a trust listed in (c) of the following item)):

That the trust has been accepted by a corporation that has obtained, as specified by Cabinet Order, the approval of the district director as to its meeting the requirements specified by Cabinet Order with regard to the implementation of trust affairs (referred to as an "approved trustee" in (1)) (excluding the case where, by the day preceding the first day of its calculation period, the approved trustee (including an approved trustee that has taken over the trust affairs by assuming office as trustee of the trust that issues beneficiary certificates) has had the approval rescinded, and the case where a person other than an approved trustee has assumed office as trustee of the trust that issues beneficiary certificates).

That there is a provision in the terms of trust to the effect that the ratio of the amount calculated, as specified by Cabinet Order, as the amount of undistributed profits as of the end of each calculation period to the total amount of the principal as of that time (referred to as the "ratio of retained profits" in (3)) is not to exceed the ratio specified by Cabinet Order.

That, as of the start of each calculation period, the ratio of retained profits calculated at any of the times that have arrived by that time and that are specified by Cabinet Order as times for calculating the ratio of retained profits has not exceeded the ratio specified by Cabinet Order prescribed in (2).

That its calculation period does not exceed one year.

That it has never fallen under the category of a trust for which there are no beneficiaries (limited to those who currently hold rights as beneficiaries).

trust subject to corporate taxation: These mean the trusts listed as follows (excluding a group investment trust, a retirement pension trust, etc. as prescribed in Article 12, paragraph (4), item (i) (Vesting of Assets and Liabilities in Trust Property and Profits and Expenses to Be Attributed to Trust Property) and a public interest trust, etc. as prescribed in item (ii) of the paragraph):

A trust for which there is a provision to the effect that securities which certify beneficial rights are to be issued

A trust for which there are no beneficiaries as prescribed in Article 12, paragraph (1) (including those deemed to be beneficiaries as prescribed in the paragraph pursuant to the provisions of paragraph (2) of the Article)

A trust for which a corporation (excluding a public service corporation and a corporation in the public interest, etc.) becomes a settlor (such trust excludes a trust for which only the assets included in a trust property are entrusted) and which meets any of the following requirements:

That the whole or a material part of the business of the corporation (limited to a business whose transfer requires a resolution of a shareholders meeting of the corporation (including any resolution equivalent thereto) under Article 467, paragraph (1) (limited to the part pertaining to item (i) or item (ii)) (Approval of Business Transfers, etc.) of the Companies Act (Act No. 86 of 2005)) has been entrusted, and that, at the time when the trust became effective, the trust was expected to fall under a trust specified by Cabinet Order as one in which the ratio of the beneficial rights acquired by the shareholders, etc. of the corporation to all the beneficial rights pertaining to the trust exceeds 50 percent (excluding the case specified by Cabinet Order as the case where the types of assets other than monies included in the trust property are approximately the same).

That, at the time when the trust became effective or at the time when a change in the provisions on its duration (meaning the duration specified in the terms of trust; the same applies in (2)) became effective (referred to as the "time of taking effect, etc." in (2)), the corporation or a person who has a special relationship as specified by Cabinet Order with the corporation (referred to as a "specially-related person" in (2) and (3)) was the trustee, and that, at the time of taking effect, etc., the duration on or after the time of taking effect, etc. was set to exceed 20 years (including the case where, neither the corporation nor its specially-related person having been the trustee, the corporation or its specially-related person comes to assume office as trustee and, at the time of assuming office, the duration on or after that time was set to exceed 20 years, and excluding the case specified by Cabinet Order as the case where the management or disposition of the trust property requires a long period of time due to the nature of the trust property).

That, at the time when the trust became effective, the corporation or its specially-related person was the trustee and a specially-related person of the corporation was the beneficiary, and that the trust fell under the case specified by Cabinet Order as the case where the ratio of distribution of proceeds to the specially-related person could be changed at that time.

An investment trust as prescribed in Article 2, paragraph (3) of the Act on Investment Trusts and Investment Corporations

A special purpose trust as prescribed in Article 2, paragraph (13) of the Act on the Securitization of Assets

interim return: This means a return pursuant to the provisions of Article 71, paragraph (1) (Interim Return) or Article 144-3, paragraph (1) or paragraph (2) (Interim Return).

Final Return: These mean a return pursuant to the provisions of Article 74, paragraph (1) (Final Returns) or Article 144-6, paragraph (1) or paragraph (2) (Final Returns) (including a return filed after the due date).

Final Return for the international minimum tax amount: These mean a return pursuant to the provisions of Article 82-6, paragraph (1) (Final Returns for the International Minimum Tax Amount) (including a return filed after the due date).

Final Return for the international minimum tax residual amount: These mean a return pursuant to the provisions of Article 82-14, paragraph (1) (Final Returns for the International Minimum Tax Residual Amount) (including the case where it is applied mutatis mutandis pursuant to Article 145-5 (Filing of Returns and Payment, etc.)) (including a return filed after the due date).

Final Return for the domestic minimum tax amount: These mean a return pursuant to the provisions of Article 82-22, paragraph (1) (Final Returns for the Domestic Minimum Tax Amount) (including the case where it is applied mutatis mutandis pursuant to Article 145-9 (Filing of Returns, Payment, etc.)) (such returns include returns filed after the due date).

Interim Return for Retirement Pension Funds: These mean a return pursuant to the provisions of Article 88 (Interim Returns for Retirement Pension Funds) (including the case where it is applied mutatis mutandis pursuant to Article 145-13 (Filing of Returns and Payment)) (such returns include returns filed after the due date).

Final Return for Retirement Pension Funds: These mean a return pursuant to the provisions of Article 89 (Final Returns for Retirement Pension Funds) (including the case where it is applied mutatis mutandis pursuant to Article 145-13) (including a return filed after the due date).

return filed after the due date: These mean a return filed after the due date prescribed in Article 18, paragraph (2) (Filing of a Return after the Due Date) of the Act on General Rules for National Taxes (Act No. 66 of 1962).

amended return: These mean an amended return prescribed in Article 19, paragraph (3) (Amended Return) of the Act on General Rules for National Taxes.

Blue Return: These mean a return listed in item (xxx), item (xxxi), item (xxxii), and item (xxxiii) and an amended return related thereto filed in a blue form pursuant to the provisions of Article 121 (Blue Returns) (including the case where it is applied mutatis mutandis pursuant to Article 146, paragraph (1) (Blue Returns)).

written request for Reassessment: These mean a written request for Reassessment as prescribed in Article 23, paragraph (3) (Request for Reassessment) of the Act on General Rules for National Taxes.

interim payment: These mean the amount of corporation tax to be paid pursuant to the provisions of Article 76 (Payment by Interim Return) or Article 144-9 (Payment by Interim Return) (where an amended return has been filed or a Reassessment has been made for the amount, the amount of corporation tax after the amended return was filed or the Reassessment was made).

reassessment:These mean reassessment pursuant to the provisions of Article 24 (Reassessment) or Article 26 (Reassessment of Previous Reassessment) of the Act on General Rules for National Taxes.

determination: These mean a determination pursuant to the provisions of Article 25 (Determination) of the Act on General Rules for National Taxes, except in the cases of this Part, Part II, Chapter I, Section 1 (Tax Base and Calculation Thereof), Article 80, paragraph (4) (Refund by Carryback of Loss), Article 133 (Refund of Income Tax Due to Reassessment, etc.), Article 134 (Refund of the Amount of Interim Payment Due to Reassessment, etc. or Determination Related to a Final Return), Article 135, paragraph (3), item (iii) and paragraph (4) (Special Provisions for Refund of Corporation Tax upon Reassessment in the Case of an Excessive Return Based on Fictitious Accounting), Article 147-3 (Refund of Income Tax Due to Reassessment, etc.) and Article 147-4 (Refund of the Amount of Interim Payment Due to Reassessment, etc. or Determination Related to a Final Return).

penalty tax:These mean any penalty tax as prescribed in Article 2, item (iv) (Definitions) of the Act on General Rules for National Taxes.

appropriation:These mean appropriation pursuant to the provisions of Article 57, paragraph (1) (Appropriations) of the Act on General Rules for National Taxes.

interest on a refund:These mean interest on a refund as prescribed in Article 58, paragraph (1) (Interest on Refunds) of the Act on General Rules for National Taxes.

local tax: These mean monies to be collected by local bodies as prescribed in Article 1, paragraph (1), item (xiv) (Terminology) of the Local Tax Act (Act No. 226 of 1950) (including any equivalent monies to be collected by Tokyo Metropolis and special wards).

The provisions of this Act (excluding Article 75-4 (Filing of Returns Using an Electronic Data Processing System), Article 82-7 (Filing of Returns Using an Electronic Data Processing System), Article 82-15 (Filing of Returns Using an Electronic Data Processing System), Article 82-23 (Filing of Returns Using an Electronic Data Processing System) and Appended Table 2) apply to an association or foundation without juridical personality by deeming it to be a corporation.

A domestic corporation is liable to pay corporation tax pursuant to this Act; provided, however, that a public interest corporation, etc. or association or foundation without juridical personality is liable only where it conducts a profit-making business, accepts the position of trustee of a trust subject to corporate taxation, is a constituent entity prescribed in Article 82, item (xiii) belonging to a specified multinational enterprise group, etc. (meaning a specified multinational enterprise group, etc. prescribed in item (iv) (Definitions) of that Article; hereinafter the same applies in this paragraph and paragraph (3)) or is a jointly controlled entity, etc. prescribed in item (xv) of that Article pertaining to a specified multinational enterprise group, etc., or performs retirement pension services, etc. prescribed in Article 84, paragraph (1) (Calculation of the Amount of Retirement Pension Funds).

Notwithstanding the provisions of the preceding paragraph, a public service corporation is not liable to pay corporation tax.

A foreign corporation is liable to pay corporation tax pursuant to this Act when it has domestic source income prescribed in Article 138, paragraph (1) (Domestic Source Income) (limited to the domestic source income from a profit-making business in the case of an association or foundation without juridical personality), when it accepts the position of trustee of a trust subject to corporate taxation, when it is a constituent entity prescribed in Article 82, item (xiii) that has a permanent establishment, etc. belonging to a specified multinational enterprise group, etc. (meaning a permanent establishment, etc. prescribed in item (vi) of that Article, limited to one whose country of location prescribed in item (vii) of that Article is Japan; hereinafter the same applies in this paragraph) or when it is a jointly controlled entity, etc. prescribed in item (xv) of that Article that has a permanent establishment, etc. pertaining to a specified multinational enterprise group, etc., or when it performs retirement pension services, etc. prescribed in Article 145-11 (Calculation of a foreign corporation's Amount of Retirement Pension Funds).

An individual who accepts the position of trustee of a trust subject to corporate taxation is liable to pay corporation tax pursuant to this Act.

A trustee of a trust subject to corporate taxation is deemed to be a different person for each set of trust assets and liabilities under each trust subject to corporate taxation (meaning the assets and liabilities belonging to the trust property and the profit and expenses attributed to the trust property; hereinafter the same applies in this Chapter) and for its own assets, etc. (meaning assets and liabilities, and profit and expenses, other than the trust assets and liabilities under a trust subject to corporate taxation; the same applies in the following paragraph), and the provisions of this Act (excluding Article 2, item (xxix)-2 (Definitions), the preceding Article, Article 12 (Vesting of Assets and Liabilities in Trust Property and Profit and Expenses to Be Attributed to Trust Property), Chapter VI (Place for Tax Payment) and Part V (Penal Provisions); hereinafter the same applies in this Chapter) apply accordingly.

In the case referred to in the preceding paragraph, the trust assets, etc. under each trust subject to corporate taxation and the trustees' own assets, etc. are attributed to the respective persons who were deemed to be different persons pursuant to the provisions of the paragraph.

The provisions of this Act apply to a trust corporation (meaning a corporation that is a trustee of a trust subject to corporate taxation (where the trustee is an individual, the individual who is the trustee) to which the provisions of this Act are applied by deeming that the trust corporation or the individual is to be the person that the trust assets, etc. related to the trust subject to corporate taxation are attributed to pursuant to the provisions of the preceding Article; hereinafter the same applies in this Article) or a trustee of a trust subject to corporate taxation as specified as follows:

in the case where a business office, office or other place equivalent thereto (referred to as a "business office" in the following item), where a trust subject to corporate taxation is entrusted, is located in Japan, a trust corporation under the trust subject to corporate taxation is deemed to be a domestic corporation;

in the case where a business office, where a trust subject to corporate taxation is entrusted, is not located in Japan, a trust corporation under the trust subject to corporate taxation is deemed to be a foreign corporation;

a trust corporation (limited to a trust corporation that is not a company) is deemed to be a company;

the consolidation of trusts is deemed to be a merger, and a trust corporation under a trust subject to corporate taxation prior to the consolidation of trusts is deemed to be included in an acquired corporation, while a trust corporation under the new trust subject to corporate taxation after the consolidation of trusts is to be included in acquiring corporations;

a split of a trust is to be included in a company split by split-off, and a trust corporation under a trust subject to corporate taxation, which transfers a part of the trust property, as a result of the split of the trust, as trust property under another trust with the same trustees or a new trust, is to be included in a splitting corporation, while a trust corporation under a trust subject to corporate taxation, which receives from another trust with the same trustees the transfer of a part of the trust property, as a result of the split of the trust, is to be included in the succeeding corporations in a company split;

the beneficial rights under a trust subject to corporate taxation are deemed to be shares or capital contributions and the beneficiaries of a trust subject to corporate taxation are to be included in the shareholders, etc. In this case, the shares and capital contributions of a corporation which is a trustee of the trust subject to corporate taxation are deemed not to be the shares or capital contributions of a trust corporation under the trust subject to corporate taxation, and the shareholders, etc. of the corporation which is the trustee are not to be the shareholders, etc. of the trust corporation;

a trust corporation is to have been established on the day when a trust subject to corporate taxation related to the trust corporation became effective (where multiple trust contracts are concluded based on a single agreement, on the day when the first contract was concluded, and where any trust other than a trust subject to corporate taxation has come to fall under the category of a trust subject to corporate taxation, on the day when it came to fall under the category);

in the case where a trust under a trust subject to corporate taxation has been terminated or a beneficiary as prescribed in Article 12, paragraph (1) (Vesting of Assets and Liabilities in Trust Property and Profit and Expenses to Be Attributed to Trust Property) (including a person who is deemed to be a beneficiary as prescribed in Article 12, paragraph (1) pursuant to the provisions of paragraph (2) of the Article; referred to as a "beneficiary, etc." in the following item) has come into existence for a trust subject to corporate taxation (limited to a trust listed in Article 2, item (xxix)-2, (b) (Definition)) (excluding the case where the trust falls under the category of a trust listed in Article 2, item (xxix)-2, (a) or (c)), it is deemed that a trust corporation under those trusts subject to corporate taxation has been dissolved;

in the case where the settlor of a trust subject to corporate taxation (excluding a trust listed in Article 2, item (xxix)-2, (b); hereinafter the same applies in this item) has entrusted their own assets, or where a trust, for which a beneficiary, etc. is deemed to hold any of the assets and liabilities included in the trust property pursuant to the provisions of Article 12, paragraph (1), has come to fall under the category of a trust subject to corporate taxation, it is deemed that capital contributions have been made to a trust corporation under those trusts subject to corporate taxation;

the distribution of proceeds from a trust subject to corporate taxation is deemed to be a dividend of surplus independent of a decrease in capital surplus, and the refund of the principal of a trust subject to corporate taxation is deemed to be a dividend of surplus resulting from a decrease in capital surplus; or

beyond what is provided for in the preceding items, necessary matters concerning the application of the provisions of this Act to trust corporations or beneficiaries of a trust subject to corporate taxation are specified by Cabinet Order.

In the case where there are two or more trustees of one trust subject to corporate taxation, the provisions of this Act apply by deeming the trust assets and liabilities of each trustee pertaining to the trust subject to corporate taxation to be the trust assets and liabilities of one person.

In the case prescribed in the preceding paragraph, each trustee referred to in that paragraph is to pay the corporation tax pertaining to the trust subject to corporate taxation, with the trustee that presides over the trust affairs of the trust subject to corporate taxation referred to in that paragraph as the taxpayer.

A domestic corporation has corporation tax imposed on income for each business year with respect to its income for each business year.

Notwithstanding the provisions of the preceding Article, a public interest corporation, etc. or association or foundation without juridical personality that is a domestic corporation does not have corporation tax imposed on income for each business year with respect to the portion of its income for each business year other than the income that has arisen from its profit-making business.

A domestic corporation that is a constituent entity (meaning a constituent entity prescribed in Article 82, item (xiii) (Definitions); hereinafter the same applies in this Section) belonging to a specified multinational enterprise group, etc. (meaning a specified multinational enterprise group, etc. prescribed in item (iv) of that Article; hereinafter the same applies in this Section), beyond the corporation tax imposed pursuant to the provisions of Article 5 (Scope of a domestic corporation's Taxable Income), has corporation tax on the international minimum tax amount for each covered fiscal year imposed with respect to the international minimum tax amount prescribed in Article 82-3, paragraph (1) (International Minimum Tax Amount) for each covered fiscal year.

A domestic corporation that is a constituent entity belonging to a specified multinational enterprise group, etc., beyond the corporation tax imposed pursuant to the provisions of Article 5 (Scope of a domestic corporation's Taxable Income) and the preceding Article, has corporation tax on the international minimum tax residual amount for each covered fiscal year imposed with respect to the international minimum tax residual amount prescribed in Article 82-11, paragraph (1) (International Minimum Tax Residual Amount) for each covered fiscal year.

A domestic corporation that is a constituent entity belonging to a specified multinational enterprise group, etc. or a domestic corporation that is a jointly controlled entity, etc. prescribed in Article 82, item (xv) (Definitions) pertaining to a specified multinational enterprise group, etc., beyond the corporation tax imposed pursuant to the provisions of Article 5 (Scope of a domestic corporation's Taxable Income) and the preceding two Articles, has corporation tax on the domestic minimum tax amount for each covered fiscal year imposed with respect to the domestic minimum tax amount prescribed in Article 82-19, paragraph (1) (Domestic Minimum Tax Amount) for each covered fiscal year.

A domestic corporation which performs retirement pension services, etc. prescribed in Article 84, paragraph (1) (Calculation of the Amount of Retirement Pension Funds), beyond corporation tax imposed pursuant to the provisions of Article 5 (Scope of a domestic corporation's Taxable Income) and the preceding three Articles, has corporation tax imposed on its retirement pension fund with respect to the retirement pension fund for each business year.

A foreign corporation has corporation tax imposed on income for each business year with respect to income pertaining to the domestic source income prescribed in each item of Article 141 (Tax Base) for the category of foreign corporation listed in the relevant item.

Notwithstanding the provision of the preceding paragraph, a foreign corporation (limited to an association or foundation without juridical personality) does not have corporation tax imposed on income for each business year with respect to the portion of the income categorized as domestic source income prescribed in the paragraph which has not arisen from its profit-making business.

A foreign corporation that is a constituent entity having a permanent establishment, etc. (meaning a permanent establishment, etc. prescribed in Article 82, item (vi) (Definitions), limited to one whose country of location prescribed in item (vii) of that Article is Japan; the same applies in the following Article) belonging to a specified multinational enterprise group, etc., beyond the corporation tax imposed pursuant to the provisions of paragraph (1) of the preceding Article, has corporation tax on the international minimum tax residual amount for each covered fiscal year imposed with respect to the international minimum tax residual amount prescribed in Article 145-2, paragraph (1) (International Minimum Tax Residual Amount) for each covered fiscal year.

A foreign corporation that is a constituent entity having a permanent establishment, etc. belonging to a specified multinational enterprise group, etc. or a foreign corporation that is a jointly controlled entity, etc. prescribed in Article 82, item (xv) (Definitions) having a permanent establishment, etc. pertaining to a specified multinational enterprise group, etc., beyond the corporation tax imposed pursuant to the provisions of Article 8, paragraph (1) (Scope of a foreign corporation's Taxable Income) and the preceding Article, has corporation tax on the domestic minimum tax amount for each covered fiscal year imposed with respect to the domestic minimum tax amount prescribed in Article 145-6, paragraph (1) (Domestic Minimum Tax Amount) for each covered fiscal year.

A foreign corporation which performs retirement pension services, etc. prescribed in Article 145-11 (Calculation of a foreign corporation's Amount of Retirement Pension Funds), beyond corporation tax imposed pursuant to the provision of Article 8, paragraph (1) (Scope of a foreign corporation's Taxable Income) and the preceding two Articles, has corporation tax imposed on its retirement pension fund with respect to the retirement pension fund for each business year.

In the case where an ordinary corporation or a cooperative, etc. comes to fall under the category of a public interest corporation, etc., the provisions of Article 80, paragraph (4) (Refund by Carryback of Loss) and other provisions specified by Cabinet Order apply by deeming that the ordinary corporation or cooperative, etc. has dissolved on the day before the day on which it comes to fall under that category.

In the case where an ordinary corporation or a cooperative, etc. has come to fall under the category of a public interest corporation, etc., the following provisions and other provisions specified by Cabinet Order apply by deeming that the public interest corporation, etc. has been established on the day on which it came to fall under that category:

Article 57, paragraph (1) (Carryover of Losses);

Article 59 (Inclusion in Deductible Expenses of the Net Operating Loss Where Corporate Reorganization Caused a Release from Obligation);

Article 80.

In the case where a foreign corporation that has a permanent establishment comes to have no permanent establishment (excluding the case where it comes to have no permanent establishment due to a qualified merger in which the foreign corporation is the acquired corporation or any other event specified by Cabinet Order), the provisions of Article 144-13, paragraph (9) (Refund by Carryback of Loss) and other provisions specified by Cabinet Order apply by deeming that the foreign corporation has dissolved on the day on which it comes to have no permanent establishment.

In the case where a foreign corporation that has no permanent establishment has come to have a permanent establishment (limited to the case where it had a permanent establishment in any business year before the business year that includes the day on which it came to have the permanent establishment), the following provisions and other provisions specified by Cabinet Order (hereinafter referred to as the "covered provisions" in this paragraph) apply by deeming that the foreign corporation has been established on the day on which it came to have the permanent establishment; provided, however, that this does not apply to the application of the covered provisions when calculating the amount of income pertaining to the domestic source income listed in Article 141, item (i), (a) (Tax Base) pertaining to the business conducted through the permanent establishment (limited to the business it has received by the transfer), in the case where the foreign corporation has come to have a permanent establishment as a result of having received a transfer of business through the transfer, by a qualified merger in which the foreign corporation is the acquiring corporation, of the business pertaining to the permanent establishment of another foreign corporation that is the acquired corporation in the qualified merger, or through any other event specified by Cabinet Order.

In the case where a calculation is made in accordance with the provisions of Article 57 pursuant to the provisions of Article 142, paragraph (2) (Calculation of the Amount of Income Pertaining to Income Attributable to a Permanent Establishment), the provisions of paragraph (1) of that Article;

In the case where a calculation is made in accordance with the provisions of Article 59 pursuant to the provisions of Article 142, paragraph (2), the provisions of that Article;

The provisions of Article 142-2, paragraph (2) (Exclusion of Refunds from Gross Profits);

The provisions of Article 144-2, paragraphs (2), (3) and (8) (Foreign Tax Credit for Foreign Corporations);

The provisions of Article 144-13, paragraph (1) (limited to the part pertaining to item (i), and including the case where it is applied mutatis mutandis pursuant to paragraph (9) or (11) of that Article), paragraph (3) (including the case where it is applied mutatis mutandis pursuant to paragraph (9) or (11) of that Article), paragraph (6) (including the case where it is applied mutatis mutandis pursuant to paragraph (11) of that Article) and paragraph (12).

The treatment in the case where an ordinary corporation or a cooperative, etc. has conducted a qualified merger in which that ordinary corporation or cooperative, etc. is the acquired corporation and a public interest corporation, etc. is the acquiring corporation, and other necessary matters concerning the application of the provisions of the preceding paragraphs are specified by Cabinet Order.

In the case where a person who appears to be the legal owner of the proceeds arising from assets or a business is merely a nominal owner and does not enjoy the proceeds, and a corporation other than that person enjoys the proceeds, the provisions of this Act apply on the basis that the proceeds are attributed to the corporation that enjoys them.

A beneficiary of a trust (limited to one who currently has rights as a beneficiary) is deemed to hold the assets and liabilities belonging to the trust property of the trust, and the profit and expenses attributed to the trust property are deemed to be the profit and expenses of the beneficiary, and the provisions of this Act apply accordingly; provided, however, that this does not apply to the assets and liabilities belonging to the trust property of a group investment trust, retirement pension trust, etc., public interest trust, etc. or trust subject to corporate taxation, or to the profit and expenses attributed to the trust property.

A person who actually has the authority to make changes to a trust (other than what Cabinet Order prescribes as the authority to make minor changes) and who is meant to benefit from the trust property (other than a beneficiary) is deemed to be a beneficiary as prescribed in the preceding paragraph, and the provisions of that paragraph apply.

The assets and liabilities belonging to the trust property of a group investment trust, retirement pension trust, etc. or public interest trust, etc. of which a corporation is the trustee, and the profit and expenses attributed to the trust property, are deemed not to be the assets and liabilities or the profit and expenses of the corporation in calculating the amount of income of the corporation for each business year, and the provisions of this Act apply accordingly.

In this Article, the meanings of the terms set forth in the following items are as prescribed in those items:

retirement pension trust, etc.: These mean a trust pertaining to a contract for the management of assets in a defined benefit pension plan, a contract for the management of assets in a defined benefit pension fund, a contract for the management of assets in a defined contribution pension plan, a benefits contract related to asset-building for wage earners or a benefits contract related to asset-building funds for wage earners prescribed in Article 84, paragraph (1) (Calculation of the Amount of Retirement Pension Funds), a contract prescribed in Article 128, paragraph (3) (Operations of a National Pension Fund) or Article 137-15, paragraph (4) (Operations of the National Pension Fund Association) of the National Pension Act (Act No. 141 of 1959) that has been concluded by a National Pension Fund or the National Pension Fund Association, or a contract concerning retirement pensions similar thereto that is specified by Cabinet Order;

public interest trust, etc.: These mean a public interest trust prescribed in Article 2, paragraph (1), item (i) (Definitions) of the Act on Public Interest Trusts (Act No. 30 of 2024) and a participant protection trust prescribed in Article 2, paragraph (11) (Definitions) of the Act on Book-Entry Transfer of Corporate Bonds and Shares (Act No. 75 of 2001).

The application of the provisions of paragraph (1) in the case where there are two or more beneficiaries, the determination of whether a person falls under the category of a person who is meant to benefit from the trust property as prescribed in paragraph (2), and other necessary matters concerning the application of the provisions of paragraphs (1) through (3) are specified by Cabinet Order.

The term "business year" as used in this Act means a period that serves as the unit for calculating the property and profit and loss of a corporation (hereinafter referred to as an "accounting period" in this Chapter) which is specified by laws and regulations or specified in the articles of incorporation, act of endowment, rules, bylaws or other equivalent instruments of the corporation (hereinafter referred to as the "articles of incorporation, etc." in this Chapter), and, where no accounting period is specified by laws and regulations or in the articles of incorporation, etc., means the accounting period notified to the competent district director with jurisdiction over the place for tax payment pursuant to the provisions of the following paragraph, or the accounting period designated by the competent district director with jurisdiction over the place for tax payment pursuant to the provisions of paragraph (3) or the period prescribed in paragraph (4); provided, however, that where any of these periods exceeds one year, it means each of the periods into which the period on or after its first day is divided every one year (where a period of less than one year remains at the end, that period of less than one year).

A corporation for which no accounting period is specified by laws and regulations or in its articles of incorporation, etc. must set an accounting period and notify the competent district director with jurisdiction over the place for tax payment thereof within two months on or after the day specified in the following items for the category of corporation listed in each of those items:

domestic corporation: the date of its establishment (for the corporations listed below, the day specified respectively below);

a public interest corporation, etc. or an association or foundation without juridical personality that has newly commenced a profit-making business: the date on which it commenced that business;

a public interest corporation, etc. conducting a profit-making business that was a public service corporation: the date on which it became that public interest corporation, etc.;

an ordinary corporation or a cooperative, etc. that was a public service corporation or a public interest corporation, etc. not conducting a profit-making business: the date on which it became that ordinary corporation or cooperative, etc.

foreign corporation: the date on which it became a foreign corporation that has a permanent establishment, or the date on which, without having a permanent establishment, it commenced in Japan the business prescribed in Article 138, paragraph (1), item (iv) (Domestic Source Income) or came to have domestic source income specified in Article 141, item (ii) (Tax Base) other than the consideration listed in item (iv) of Article 138, paragraph (1) (for an association or foundation without juridical personality, the date on which it came to have, out of the domestic source income specified in each item of Article 141 for the category of foreign corporation listed in the relevant item, the income arising from a profit-making business).

In the case where a corporation (excluding an association or foundation without juridical personality) that is required to give notification under the provisions of the preceding paragraph fails to give the notification, the competent district director with jurisdiction over the place for tax payment is to designate its accounting period and notify the corporation thereof in writing.

In the case where an association or foundation without juridical personality that is required to give notification under the provisions of paragraph (2) fails to give the notification, the accounting period of the association or foundation without juridical personality is to be the period from January 1 of each year (for the year that includes the day specified in item (i), (a) of that paragraph or the day on which it came to have domestic source income prescribed in item (ii) of that paragraph that arises from a profit-making business, from that day) through December 31.

In the case where any of the facts listed in the following items has occurred, notwithstanding the provisions of paragraph (1) of the preceding Article, the business year of the corporation for which the fact has occurred is to end on the day specified in the relevant item, and the following business year is to commence on the day following that day, except in the case where the fact listed in item (ii) or (v) has occurred:

The fact that a domestic corporation has dissolved (excluding dissolution due to a merger) in the middle of a business year: the date of the dissolution;

The fact that a corporation has dissolved due to a merger in the middle of a business year: the day before the date of the merger;

The fact that a public interest corporation, etc. or association or foundation without juridical personality that is a domestic corporation has newly commenced a profit-making business in the middle of a business year (for an association or foundation without juridical personality, excluding the case falling under the case prescribed in paragraph (4) of the preceding Article): the day before the date on which it commenced the business;

Any of the following facts: the day before the day on which the fact occurred;

The fact that a public service corporation has come to fall under the category of a public interest corporation, etc. conducting a profit-making business in the middle of a business year;

The fact that a public service corporation or public interest corporation, etc. has come to fall under the category of an ordinary corporation or a cooperative, etc. in the middle of a business year;

The fact that an ordinary corporation or a cooperative, etc. has come to fall under the category of a public interest corporation, etc. in the middle of a business year.

The fact that the residual assets of a corporation in liquidation have been determined in the middle of a business year: the date of determination of residual assets;

The fact that a domestic corporation in liquidation has continued in the middle of a business year: the day before the date of continuation;

The fact that a foreign corporation that has no permanent establishment has come to have a permanent establishment in the middle of a business year: the day before the day on which it came to have the permanent establishment;

The fact that a foreign corporation that has a permanent establishment has come to have no permanent establishment in the middle of a business year: the day on which it came to have no permanent establishment;

The fact that a foreign corporation that has no permanent establishment has, in the middle of a business year, newly commenced in Japan the business prescribed in Article 138, paragraph (1), item (iv) (Domestic Source Income) or discontinued that business: the day before the date of commencement of that business or the date of discontinuance of that business.

In the case where the approval under the provisions of Article 64-9, paragraph (1) (Approval for Group Tax Sharing) has ceased to be effective with regard to a group tax sharing parent corporation pursuant to the provisions of Article 64-10, paragraph (5) or (6) (limited to the part pertaining to item (iii), (iv) or (vii)) (Withdrawal from the Group Tax Sharing System, etc.), notwithstanding the provisions of paragraph (1) of the preceding Article, the business year of the domestic corporation that was the group tax sharing parent corporation is to end on the day before the day on which the approval ceased to be effective, and the following business year is to commence on the day on which it ceased to be effective.

The business year of a group tax sharing subsidiary corporation that has a group tax sharing full controlling interest with the group tax sharing parent corporation pertaining to the group tax sharing subsidiary corporation at the start of the business year of the group tax sharing parent corporation is to commence on that first day of the business year, and the business year of a group tax sharing subsidiary corporation that has a group tax sharing full controlling interest with the group tax sharing parent corporation pertaining to the group tax sharing subsidiary corporation at the end of the business year of the group tax sharing parent corporation is to end on that last day of the business year.

In the case where any of the facts listed in the following items has occurred, the business year of the domestic corporation for which the fact has occurred is to end on the day before the day specified in the relevant item, and the following business year is to commence on the day specified in the relevant item, except in the case where the fact listed in item (ii) has occurred due to the dissolution by merger or the determination of residual assets of the domestic corporation referred to in that item:

The fact that a domestic corporation has come to have, with a group tax sharing parent corporation, a full controlling interest held by the group tax sharing parent corporation (limited to the relationship specified by Cabinet Order prescribed in Article 64-9, paragraph (1); hereinafter the same applies in this Article): the day on which it came to have that interest;

The fact that a domestic corporation has ceased to have, with a group tax sharing parent corporation, a group tax sharing full controlling interest held by the group tax sharing parent corporation: the day on which it ceased to have that interest.

The business year of a domestic corporation listed in each of the following items is to end on the day before the day specified in the relevant item, and the following business year is to commence on the day specified in the relevant item:

A domestic corporation that has a full controlling interest with a parent corporation (meaning a parent corporation prescribed in Article 64-9, paragraph (1); hereinafter the same applies in this Article) at the start of the special application year (meaning the special application year prescribed in Article 64-9, paragraph (9); hereinafter the same applies in this Article) of the parent corporation: the first day of the special application year;

A domestic corporation that has come to have, with a parent corporation, a full controlling interest held by the parent corporation within the period of the special application year of the parent corporation: the day on which it came to have that interest.

In the case referred to in the preceding paragraph, when a domestic corporation listed in any of the items of that paragraph has not received the approval under the provisions of Article 64-9, paragraph (1), or when a domestic corporation listed in any of the items of the preceding paragraph falls under the category of a corporation listed in paragraph (10), item (i) or paragraph (12), item (i) of that Article, the business year of the domestic corporation commencing on the day specified in the relevant item of the preceding paragraph is to end on the last day of the special application year (in the case where, before that day, the domestic corporation has ceased to have a full controlling interest with the parent corporation referred to in the relevant item due to its dissolution by merger or the determination of residual assets (hereinafter referred to as the "case of dissolution by merger, etc." in this paragraph), the day before the day on which it ceased to have that interest; referred to as the "end date, etc." in the following paragraph), and the following business year is to commence on the day following the last day of the special application year, except in the case of dissolution by merger, etc.

The provisions of paragraph (1) of the preceding Article and paragraph (1) of this Article do not apply with regard to the period during which a domestic corporation falls under the category of a group tax sharing subsidiary corporation (including the period from the day specified in each item of paragraph (5) for the domestic corporation listed in the relevant item to the end date, etc.).

In the case where a domestic corporation has come to have, with a group tax sharing parent corporation, a full controlling interest held by the group tax sharing parent corporation, or has come to have, with a parent corporation, a full controlling interest held by the parent corporation within the period of the special application year of the parent corporation, when the group tax sharing parent corporation or parent corporation (referred to as the "group tax sharing parent corporation, etc." in item (i)) has submitted to the competent district director with jurisdiction over the place for tax payment, by the due date for filing a return under the provisions of Article 74, paragraph (1) (Final Returns) for the business year that would include the day before the date of joining (meaning the day on which the domestic corporation came to have such full controlling interest; the same applies in item (i)) if the provisions of this paragraph were not applied to the domestic corporation, a document stating that it is to receive the application of the provisions of this paragraph, the period listed in (a) or (b) of that item and other matters specified by Ministry of Finance Order, the provisions of paragraph (4) (limited to the part pertaining to item (i)), paragraph (5) (limited to the part pertaining to item (ii)) and the preceding two paragraphs apply as prescribed in the following items for the category of cases listed in each of those items:

In the case where a full controlling interest held by the group tax sharing parent corporation, etc. continues to exist between the domestic corporation and the group tax sharing parent corporation, etc. from the date of joining until the last day of the special closing period (meaning, out of the following periods, the period stated in the document; hereinafter the same applies in this item) that includes the day before the date of joining: for the domestic corporation and any other domestic corporation whose issued shares or capital contributions the domestic corporation directly or indirectly holds (limited to one that has come to have a full controlling interest with the group tax sharing parent corporation, etc. during the period from the date of joining to that last day; referred to as the "other domestic corporation" in the following item), the day following the last day of the special closing period that includes the day before the date of joining is to be the day specified in paragraph (4), item (i) or paragraph (5), item (ii). In this case, when that following day is after the last day of the special application year, the provisions of paragraph (6) apply by deeming that last day of the special closing period to be the last day of the special application year.

The monthly closing period of the domestic corporation (meaning each of the periods into which the accounting period on or after its first day is divided every one month (where a period of less than one month remains at the end, that period of less than one month));

The accounting period of the domestic corporation.

In a case other than the case listed in the preceding item: the provisions of paragraph (4) (limited to the part pertaining to item (i)) and paragraph (5) (limited to the part pertaining to item (ii)) do not apply to the domestic corporation and the other domestic corporation.

In the case where a corporation has changed the accounting period specified in its articles of incorporation, etc. or has newly specified an accounting period in its articles of incorporation, etc., it must, without delay, notify the competent district director with jurisdiction over the place for tax payment of the accounting period before the change and the accounting period after the change, or of the accounting period it has specified.

The term "covered fiscal year" as used in this Act means the period for which the consolidated financial statements, etc. prescribed in item (i) of Article 82 (Definitions) are prepared by the ultimate parent entity, etc. prescribed in item (x) of that Article of a multinational enterprise group, etc. prescribed in item (iii) of that Article.

The place for tax payment for the corporation tax of a domestic corporation is to be the location of its head office or principal office.

The place for tax payment for the corporation tax of a foreign corporation is to be the place specified in the following items for the category of foreign corporation listed in each of those items:

A foreign corporation that has a permanent establishment: the location of the office, place of business or other equivalent place pertaining to the business that the foreign corporation conducts through the permanent establishment (where there are two or more of these, the location of the principal one);

A foreign corporation that has no permanent establishment and receives consideration listed in Article 138, paragraph (1), item (v) (Domestic Source Income) (excluding consideration for the lending of a vessel or aircraft): the location of the assets pertaining to the consideration (where there are two or more such assets, the location of the principal asset);

A foreign corporation not falling under either of the preceding two items: the place specified by Cabinet Order.

The place for tax payment for the corporation tax pertaining to a trust subject to corporate taxation of an individual who is a trustee of the trust subject to corporate taxation is to be the place specified in whichever item of Article 15 (Locality for Paying Over Taxes) of the Income Tax Act (Act No. 33 of 1965) lists the case the individual falls under (where the individual is subject to the provisions of Article 16, paragraph (1) or (2) (Special Provisions on the Locality for Paying Over Taxes) of that Act, the place that is the place for tax payment for income tax pursuant to those provisions, and where the place for tax payment for income tax of the individual has been designated pursuant to the provisions of Article 18, paragraph (1) (Designation of Locality for Paying Over Taxes) of that Act, the designated place).

In the case where the place for tax payment under the provisions of the preceding three Articles is found to be inappropriate as the place for tax payment for corporation tax in light of the state of the business or assets of the corporation (including an individual who is a trustee of a trust subject to corporate taxation; hereinafter the same applies in this Chapter), the regional commissioner having jurisdiction over that place for tax payment (in the case specified by Cabinet Order, the Commissioner of the National Tax Agency; hereinafter the same applies in this Article) may, notwithstanding those provisions, designate the place for tax payment for the corporation tax.

When the regional commissioner has designated the place for tax payment for corporation tax pursuant to the provisions of the preceding paragraph, the regional commissioner is to notify the corporation referred to in that paragraph thereof in writing.

Even in the case where a disposition designating the place for tax payment under the provisions of paragraph (1) of the preceding Article has been revoked by a determination on a request for re-investigation, a decision on a request for review or a judgment, the revocation of the disposition is not to affect the validity of any return, application, claim, notification or other submission of documents and any payment made with regard to the corporation tax by treating the place for tax payment subject to the revocation as the place for tax payment for the corporation tax of the corporation pertaining to the disposition, or the validity of any disposition of the Commissioner of the National Tax Agency, a regional commissioner or a district director (excluding the disposition subject to the revocation), during the period from the time of the disposition subject to the revocation to the time of the revocation.

In the case where there has been a change in the place for tax payment for its corporation tax (excluding the case where there has been a change in the place for tax payment due to the designation under Article 18, paragraph (1) (Designation of Place for Tax Payment)), a corporation must, as specified by Cabinet Order, notify the competent district director with jurisdiction over the place for tax payment before the change to that effect.

The tax base of corporation tax on income for each business year imposed on a domestic corporation is the amount of income for each business year.

The amount of income of a domestic corporation for each business year is the amount that remains after deducting the amount of deductible expenses for the business year from the amount of gross profits for the business year.

When calculating the amount of income of a domestic corporation for each business year, the amount to be included in gross profits for the business year is to be the amount of proceeds for the business year arising from the sales of assets, transfer of assets or provision of services for value or without compensation, acceptance of assets without compensation, or other transactions other than capital, etc. transactions, except as otherwise provided.

When calculating the amount of income of a domestic corporation for each business year, the amount to be included in deductible expenses in the business year is to be the amounts listed as follows, except as otherwise provided:

the amount of cost of sales, cost of completed work, and other costs equivalent thereto related to the proceeds for the business year;

beyond what is listed in the preceding item, the amount of selling expenses, general administrative expenses, and other expenses for the business year (excluding expenses other than the depreciation allowance for which the obligations have not been determined by the final day of the business year); or

the for the business year related to a transaction other than capital, etc. transactions

The amount of proceeds for the business year prescribed in paragraph (2) and the amounts listed in the items of the preceding paragraph are to be calculated in accordance with an accounting standard that is generally accepted as fair and appropriate, except as otherwise provided.

The capital, etc. transactions prescribed in paragraph (2) or paragraph (3) means transactions causing an increase or decrease to the amount of stated capital, etc. of a corporation, and the distribution of profits or distribution of surplus conducted by a corporation (including the distribution of monies prescribed in Article 115, paragraph (1) (Interim Dividend) of the Act on the Securitization of Assets) and the distribution of residual assets or delivery thereof.

The amount of proceeds pertaining to the sale or transfer of assets or the provision of services by a domestic corporation (hereinafter referred to as the "sale, etc. of assets" in this Article) is, except as otherwise provided (excluding paragraph (4) of the preceding Article), included in the amount of gross profit, when calculating the amount of income for the business year that includes the day of the delivery of the subject matter or the provision of the services pertaining to the sale, etc. of assets.

In the case where a domestic corporation, in accordance with an accounting standard that is generally accepted as fair and appropriate, has booked the amount of proceeds pertaining to the sale, etc. of assets as proceeds in the final settlement of the accounts for the business year that includes the day on which the contract pertaining to the sale, etc. of assets becomes effective or any other day close to the day prescribed in the preceding paragraph, notwithstanding the provisions of that paragraph, the amount of proceeds pertaining to the sale, etc. of assets is, except as otherwise provided (excluding paragraph (4) of the preceding Article), included in the amount of gross profit, when calculating the amount of income for that business year.

In the case where a domestic corporation has made a sale, etc. of assets (excluding the case where it has booked the amount of proceeds pertaining to the sale, etc. of assets as proceeds, in accordance with an accounting standard that is generally accepted as fair and appropriate, in the final settlement of the accounts for the business year that includes the day prescribed in paragraph (1) or the close day prescribed in the preceding paragraph), when the Final Return for the business year that includes the close day prescribed in that paragraph pertaining to the sale, etc. of assets contains a statement concerning the inclusion in gross profit of the amount of proceeds pertaining to the sale, etc. of assets, the provisions of that paragraph apply by deeming that the amount has been booked as proceeds in the final settlement of the accounts for that business year.

The amount to be included in the amount of gross profit, when calculating the amount of income for that business year pursuant to the provisions of paragraph (1) or (2), as the amount of proceeds pertaining to the sale, etc. of assets of a domestic corporation for each business year is, except as otherwise provided (excluding paragraph (4) of the preceding Article), the value at the time of delivery of the assets sold or transferred, or the amount equivalent to the amount of consideration normally receivable for the services provided.

The value at the time of delivery or the amount of consideration normally receivable referred to in the preceding paragraph is to be the value as it would be if there were no possibility of the occurrence of the facts listed below, even in the case where such facts may occur with regard to the sale, etc. of assets referred to in that paragraph:

Bad debts of monetary claims pertaining to the amount of consideration for the sale, etc. of assets;

Repurchase of the assets pertaining to the sale, etc. of assets (limited to the sale or transfer of assets).

In the cases of the preceding paragraphs and paragraph (2) of the preceding Article, the amount of proceeds pertaining to the transfer of assets without compensation is to include the amount of proceeds pertaining to the transfer of assets as a distribution of profits or distribution of surplus by means of assets other than monies and a distribution of residual assets or delivery thereof, or any other act similar thereto.

Beyond what is provided for in the preceding two paragraphs, the treatment in the case where corrective accounting has been made for the amount of proceeds pertaining to the sale, etc. of assets and other necessary matters concerning the application of the provisions of paragraphs (1) through (4) are specified by Cabinet Order.

In the case where a domestic corporation receives any of the following amounts (for the amount listed in item (i), excluding those received from a foreign corporation, a public interest corporation, etc. or an association or foundation without juridical personality and those pertaining to a qualified in-kind distribution; hereinafter referred to as the "amount of dividends, etc." in this Article), the amount of dividends, etc. (for the amount of dividends, etc. pertaining to shares, etc. of a related corporation, the amount that remains after deducting from the amount of dividends, etc. the amount calculated as specified by Cabinet Order as the amount equivalent to the amount of interest pertaining to the amount of dividends, etc.; for the amount of dividends, etc. pertaining to shares, etc. (meaning shares or capital contributions; hereinafter the same applies in this Article) that fall under none of wholly owned subsidiary shares, etc., shares, etc. of a related corporation and shares, etc. held for non-controlling purposes, the amount equivalent to 50 percent of the amount of dividends, etc.; and for the amount of dividends, etc. pertaining to shares, etc. held for non-controlling purposes, the amount equivalent to 20 percent of the amount of dividends, etc.) is excluded from the amount of gross profit, when calculating the amount of income of the domestic corporation for each business year:

the amount of the dividend of surplus (limited to a dividend related to shares, etc. and excluding a dividend resulting from a decrease in capital surplus, a dividend due to company split by split-off, and a share distribution), dividend of profits (excluding a dividend due to company split by split-off and a share distribution), or distribution of surplus (limited to distribution related to capital contributions);

the amount of distribution of monies under Article 137 (Distribution of Monies) of the Act on Investment Trusts and Investment Corporations (excluding a distribution of monies specified by Ministry of Finance Order as a distribution of monies accompanying a decrease in the total amount of contributions, etc. (referred to as a "distribution that reduces contributions" in Article 24, paragraph (1), item (iv) (The Amount Deemed to Be Dividends)));

the amount of distribution of monies prescribed in Article 115, paragraph (1) (Interim Dividend) of the Act on Securitization of Assets; and

In the case where a domestic corporation acquired shares, etc., which are the principal for the amount of dividends, etc. receivable (excluding the amount deemed to be the amount of dividends, etc. that the domestic corporation is to receive pursuant to the provisions of Article 24, paragraph (1); hereinafter the same applies in this paragraph), within one month on or before the base date, etc. pertaining to the amount of dividends, etc. (meaning the day specified in each of the following items for the category of the amount of dividends, etc. listed in the relevant item; hereinafter the same applies in this paragraph) and then transferred the shares, etc. or other shares, etc. of the same issue within two months after the base date, etc., the provisions of the preceding paragraph do not apply to the amount of dividends, etc. of the portion of the transferred shares, etc. that is specified by Cabinet Order.

The amount of a dividend of surplus prescribed in item (i) of the preceding paragraph paid by a stock company for which a base date prescribed in Article 124, paragraph (1) (Record Date) of the Companies Act (hereinafter referred to as the "base date" in this paragraph) is set for determining the persons who are to receive the dividend of surplus: the base date;

The amount of a dividend of surplus, dividend of profits or distribution of surplus prescribed in item (i) of the preceding paragraph, a distribution of monies prescribed in item (ii) of that paragraph, or a distribution of monies prescribed in item (iii) of that paragraph (hereinafter referred to as "dividends, etc." in this item and the following item) made by a corporation other than a stock company, for which a day equivalent to the base date is set for determining the persons who are to receive the dividends, etc.: that day;

The amount of dividends, etc. for which neither a base date nor a day equivalent to a base date is set for determining the persons who are to receive the dividends, etc.: the day on which the dividends, etc. become effective (where the day on which they become effective is not set, the day on which the dividends, etc. are made).

The provisions of paragraph (1) do not apply, in the case where a domestic corporation has acquired (including succession through a qualified merger or Qualified Company Split by Split-Off) shares, etc. which are the principal for the amount of dividends, etc. it receives (limited to the amount deemed to be the amount of dividends, etc. that the domestic corporation receives pursuant to the provisions of Article 24, paragraph (1) (limited to the part pertaining to item (v)); hereinafter the same applies in this paragraph) and for which the occurrence of the event listed in that item that gives rise to the amount of dividends, etc. is scheduled, to the amount of dividends, etc. pertaining to the shares, etc. so acquired (limited to the amount specified by Cabinet Order as arising from the scheduled event (excluding an event to which the provisions of Article 61-2, paragraph (17) (Inclusion of Capital Gains or Losses on Securities in Gross Profits or Deductible Expenses) apply)).

The shares, etc. of a related corporation prescribed in paragraph (1) means the shares, etc. of another domestic corporation (excluding the wholly owned subsidiary shares, etc. prescribed in the following paragraph) in the case specified by Cabinet Order as the case where a domestic corporation (including another corporation that has a full controlling interest with the domestic corporation) holds shares, etc. whose number or amount exceeds one-third of the total number or total amount of the issued shares of or capital contributions to the other domestic corporation (excluding a public interest corporation, etc. and an association or foundation without juridical personality) (excluding the shares, etc. that the other domestic corporation holds in itself).

The wholly owned subsidiary shares, etc. prescribed in paragraph (1) means the shares, etc. of another domestic corporation (excluding a public interest corporation, etc. and an association or foundation without juridical personality) that has a full controlling interest with a domestic corporation throughout the calculation period of the amount of dividends, etc., which are specified by Cabinet Order.

The non-controlling-purpose shares, etc. prescribed in paragraph (1) mean the shares, etc. of another domestic corporation (excluding the wholly owned subsidiary shares, etc. prescribed in the preceding paragraph) in the case specified by Cabinet Order as a case where a domestic corporation (including another corporation with which the domestic corporation has a full controlling interest) holds shares, etc. equivalent to 5 percent or less of the total number or total amount of issued shares or capital contributions of another domestic corporation (excluding a public interest corporation, etc. and an association or foundation without juridical personality) (such issued shares or capital contributions exclude shares, etc. that the second domestic corporation holds in itself).

The provisions of paragraph (1) apply only in the case where a Final Return, amended return, or written request for Reassessment comes with the attachment of documents stating the amount of dividends, etc. that is to be excluded from gross profits and a detailed statement concerning the calculation thereof. In this case, the amount to be excluded from gross profits pursuant to the provisions of that paragraph does not exceed such recorded amount.

Necessary matters concerning the application of the provisions of paragraphs (1) and (2) and the provisions of paragraphs (1) through (6) in the case where the shares, etc. have been transferred as a result of a qualified merger, qualified company split, qualified capital contribution in kind, or qualified in-kind distribution are specified by Cabinet Order.

In the case where there is the amount listed in paragraph (1), item (i) of the preceding Article that a domestic corporation receives from a foreign subsidiary (meaning a foreign corporation that satisfies the requirements specified by Cabinet Order, such as the requirement that the number or amount of its shares or capital contributions held by the domestic corporation is equivalent to 25 percent or more of the total number or total amount of its issued shares or capital contributions (excluding the shares that it holds in itself and the capital contributions made thereby); the same applies hereinafter in this Article) (hereinafter referred to as the "amount of dividend of surplus, etc." in this Article), the amount obtained by deducting from the amount of dividend of surplus, etc. the amount calculated as specified by Cabinet Order as the amount equivalent to the amount of expenses pertaining to the amount of dividend of surplus, etc. is excluded from gross profits, when calculating the amount of income of the domestic corporation for each business year.

The provisions of the preceding paragraph do not apply to the following amounts of dividend of surplus, etc.:

the amount of dividend of surplus, etc. that a domestic corporation receives from a foreign subsidiary, in the case where all or part of the amount of dividend of surplus, etc. falls under the amount of dividend of surplus, etc. that is to be included in deductible expenses, when calculating the amount of income of the foreign subsidiary, under the laws and regulations of the country or region where the head office or principal office of the foreign subsidiary is located;

in the case where a domestic corporation has acquired (including acquisition by succession through a qualified merger or Qualified Company Split by Split-Off) shares or capital contributions that are the principal of the amount of dividend of surplus, etc. that it receives from a foreign subsidiary (limited to an amount deemed to be the amount of dividend of surplus, etc. that the domestic corporation receives pursuant to the provisions of paragraph (1) of the following Article (limited to the part pertaining to item (v)); hereinafter the same applies in this item), for which the grounds listed in item (v) of that paragraph that give rise to the amount of dividend of surplus, etc. are scheduled to arise, the amount of dividend of surplus, etc. pertaining to the shares or capital contributions so acquired (limited to the amount specified by Cabinet Order as arising from the scheduled grounds).

In the case where the amount of dividend of surplus, etc. that a domestic corporation receives from a foreign subsidiary is an amount part of which has been included in deductible expenses, when calculating the amount of income of the foreign subsidiary, notwithstanding the provisions of the preceding paragraph (limited to the part pertaining to item (i)), the amount specified by Cabinet Order as the amount of the portion of the amount of dividend of surplus, etc. received that has been included in deductible expenses (referred to as the "amount of dividends received corresponding to deductible expenses" in the following paragraph and paragraph (7)) may be treated as the amount of dividend of surplus, etc. listed in that item.

In the case where the provisions of the preceding paragraph have been applied to the amount of dividend of surplus, etc. that a domestic corporation received from a foreign subsidiary, if the amount of dividends received corresponding to deductible expenses is increased in each business year after the business year containing the date on which the corporation received the amount of dividend of surplus, etc., the amount of dividend of surplus, etc. listed in paragraph (2), item (i) is, notwithstanding the provisions of that paragraph (limited to the part pertaining to that item) and the preceding paragraph, to be the amount specified by Cabinet Order as the amount of dividends received corresponding to deductible expenses after the increase.

The provisions of paragraph (1) apply only in the case where a Final Return, amended return, or written request for Reassessment comes with the attachment of documents stating the amount of dividend of surplus, etc. that is to be excluded from gross profits and a detailed statement concerning the calculation thereof, and the documents specified by Ministry of Finance Order are retained. In this case, the amount to be excluded from gross profits pursuant to the provisions of that paragraph does not exceed such recorded amount.

Even in the case where the documents specified by Ministry of Finance Order prescribed in the preceding paragraph have not been retained for all or part of the amount to be excluded from gross profits pursuant to the provisions of paragraph (1), the district director may apply the provisions of paragraph (1) to the amount for which the documents were not retained, when they find any unavoidable circumstances for the failure to retain the documents.

The provisions of paragraph (3) apply only in the case where the Final Return, amended return, or written request for Reassessment for the business year containing the date on which the amount of dividend of surplus, etc. referred to in that paragraph is received comes with the attachment of documents stating that the application of the provisions of that paragraph is sought, and stating the amount of dividends received corresponding to deductible expenses and a detailed statement concerning the calculation thereof, and the documents specified by Ministry of Finance Order, such as documents that clarify the amount of dividend of surplus, etc. included in deductible expenses when calculating the amount of income of the foreign subsidiary, are retained.

Necessary matters concerning the application of the provisions of paragraph (1) and the provisions of paragraphs (1) through (4) in the case where shares of or capital contributions to a foreign corporation have been transferred as a result of a qualified merger, qualified company split, qualified capital contribution in kind, or qualified in-kind distribution are specified by Cabinet Order.

In the case where a domestic corporation that is a shareholder, etc. of a corporation (excluding public interest corporations, etc. and associations or foundations without juridical personality; hereinafter the same applies in this Article) has received a delivery of monies or other assets on any of the following grounds concerning the corporation, when the sum of the amount of the monies and the value of the assets other than monies (for assets pertaining to a qualified in-kind distribution, the amount equivalent to the book value of the assets of the corporation as of immediately prior to the delivery) exceeds the portion of the corporation's amount of stated capital, etc. that corresponds to the corporation's shares or capital contributions that were basic causes of the delivery, with regard to the application of the provisions of this Act, the amount of the excess is deemed to be the amount listed in Article 23, paragraph (1), item (i) or item (ii) (Exclusion of Dividends Received from Gross Profits):

merger (excluding a qualified merger);

company split by split-off (excluding a qualified company split by split-off);

share distribution (excluding a qualified share distribution);

return of the capital (meaning a dividend of surplus (limited to a dividend of surplus resulting from a decrease in capital surplus) on grounds other than that of a company split by split-off and other than a share distribution, and a distribution that reduces contributions) or the distribution of residual assets due to a dissolution;

acquisition of its own shares or capital contributions (excluding an acquisition as a result of a purchase on a market opened by a financial instruments exchange as prescribed in Article 2, paragraph (16) (Definitions) of the Financial Instruments and Exchange Act, other types of acquisition as specified by Cabinet Order, and the acquisition of shares or capital contributions listed in Article 61-2, paragraph (14), items (i) through (iii) (Inclusion of Capital Gains or Losses on Securities in Gross Profits or Deductible Expenses) in the case falling under the case prescribed in the paragraph);

cancellation of capital contributions (excluding a cancellation with regard to acquired capital contributions), refund of capital contributions, refund of equity due to the withdrawal of a member or any other contributor from the corporation, or extinguishment of shares or capital contributions by the issuing corporation without having acquired them; and

entity conversion (limited to an entity conversion accompanying the delivery of assets other than shares of or capital contributions to the corporation that has effected the entity conversion).

Even in the case where an acquiring corporation had not delivered shares or other assets as a result of the merger for tie-in shares (meaning the acquired corporation's shares (including capital contributions; hereinafter the same applies in this paragraph and the following paragraph) that the acquiring corporation held as of immediately prior to the merger, or shares of a second acquired corporation that the first acquired corporation held as of immediately prior to the merger), the provisions of the preceding paragraph apply by deeming that the acquiring corporation has received the delivery of the shares or other assets, as specified by Cabinet Order.

Even in the case where an acquiring corporation or a splitting corporation has not delivered shares or other assets to the shareholders, etc. of the acquired corporation or the splitting corporation's shareholders, etc. as a result of a merger or company split by split-off, if the merger or company split by split-off falls under a merger or company split by split-off specified by Cabinet Order as one in which the delivery of shares of the acquiring corporation or succeeding corporation in a company split is found to have been omitted, the provisions of paragraph (1) apply by deeming that these shareholders, etc. have received the delivery of shares of the acquiring corporation or succeeding corporation in a company split, as specified by Cabinet Order.

Necessary matters concerning the method of calculating the amount of the portion corresponding to the shares or capital contributions prescribed in paragraph (1) and the application of the provisions of the preceding three paragraphs are specified by Cabinet Order.

In the case where a domestic corporation has revaluated its assets to increase their book value, the amount of the increase is excluded from gross profits, when calculating the amount of income of the domestic corporation for each business year.

In the case where, as an order on the confirmation of a reorganization plan has been rendered with regard to its assets, a domestic corporation has revaluated its assets in accordance with the provisions of the Corporate Reorganization Act (Act No. 154 of 2002) or the Act on Special Measures for the Reorganization Proceedings of Financial Institutions (Act No. 95 of 1996) or has revaluated its assets otherwise as specified by Cabinet Order to increase their book value, the amount of the increase is included in gross profits, when calculating the amount of income for the business year containing the date of the revaluation, notwithstanding the provisions of the preceding paragraph.

In the case where an order on the confirmation of a rehabilitation plan has been rendered for a domestic corporation or any equivalent event as specified by Cabinet Order has occurred, when the domestic corporation evaluates the value of its assets as specified by Cabinet Order, the amount specified by Cabinet Order as a valuation gain on the assets (excluding those specified by Cabinet Order as unsuitable for recording a valuation gain) is included in gross profits, when calculating the amount of income for the business year containing the date of any of such events, notwithstanding the provisions of paragraph (1).

In the case where the domestic corporations referred to in the preceding two paragraphs are group tax sharing corporations, the provisions of the preceding two paragraphs do not apply to shares of or capital contributions to another group tax sharing corporation (excluding a corporation specified by Cabinet Order as a corporation not subject to the provisions of Article 64-5 (Aggregation of Profits and Losses) and the group tax sharing parent corporation) held by those domestic corporations.

In the case where the provisions of paragraph (1) were applied, with regard to the assets whose increased value due to revaluation was not included in gross profits, it is deemed that the book value of the assets has not increased, when calculating the amount of income for each business year after the business year containing the date of the revaluation.

The provisions of paragraph (3) apply only in the case where a Final Return contains a detailed statement concerning the inclusion in gross profits of the amount specified by Cabinet Order as the amount of the valuation gain prescribed in the paragraph (referred to as a "statement of valuation gain" in the following paragraph) and is attached with documents specified by Ministry of Finance Order (referred to as "documents related to valuation gain" in the following paragraph) (when, with regard to the assets prescribed in Article 33, paragraph (4) (Valuation Loss on Assets), there is any amount specified by Cabinet Order as the amount of valuation loss prescribed in the paragraph (such case is referred to as the "case where there is a valuation loss" in the following paragraph), only in the case where a Final Return contains the statement of valuation loss prescribed in paragraph (7) of the Article (referred to as a "statement of valuation loss" in the following paragraph) and the documents related to valuation loss prescribed in paragraph (7) of the Article (referred to as "documents related to valuation loss" in the following paragraph)).

Even in the case where a tax return has been filed without a detailed statement of the valuation gain (in the case where there is any valuation loss, without a detailed statement of the valuation gain or a detailed statement of the valuation loss) or without valuation gain-related documents (in the case where there is any valuation loss, without valuation gain-related documents or valuation loss-related documents), the district director of the tax office may apply the provisions of paragraph (3), when they find any unavoidable grounds for the person's failure to make entries of such a statement or to attach such documents.

Beyond what is provided for in the preceding three paragraphs, necessary matters concerning the application of the provisions of paragraphs (1) through (4) are specified by Cabinet Order.

The amount of gain on gifts received that a domestic corporation has received in each business year from another domestic corporation with which the domestic corporation has a full controlling interest (limited to a full controlling interest held by a corporation) (limited to an amount corresponding to the amount of a donation prescribed in Article 37, paragraph (7) that would be included in deductible expenses, when calculating the amount of income of the other domestic corporation for each business year, if the provisions of Article 37 (Exclusion of Contributions or Donations from Deductible Expenses) were not applied) is excluded from gross profits, when calculating the amount of income of the domestic corporation for each business year.

The amount of gain on gifts received prescribed in the preceding paragraph, irrespective of the gift having been made as a donation, contribution, gift, or under any other name, is to be the amount of monies, the value of the assets other than monies as of the time of the gift, or the value of the economic benefits as of the time of the conveyance, in the case where a domestic corporation has received a gift or the gratuitous conveyance of monies or other assets or economic benefits (excluding those to be deemed expenses for advertising or providing samples or other equivalent expenses, and entertainment and social expenses, reception expenses, and welfare expenses; the same applies in the following paragraph).

In the case where a domestic corporation has received a transfer of assets or a conveyance of economic benefits, when the price for the transfer or conveyance is low compared with the value of the assets as of the transfer or the value of the economic benefits as of the conveyance, the portion of the difference between the price and the value that is found to have been, in effect, received as a gift or gratuitous conveyance is to be included in the amount of gain on gifts received set forth in the preceding paragraph.

In the case where a domestic corporation receives a refund of the following amount or the amount to be refunded is to be appropriated for the unpaid national tax or local tax, the amount to be refunded or to be appropriated is excluded from gross profits, when calculating the amount of income of the domestic corporation for each business year:

the amount excluded from deductible expenses, when calculating the amount of income for each business year pursuant to the provisions of Article 38, paragraph (1) or paragraph (2) (Exclusion of the Amount of Corporate Tax from Deductible Expenses);

the amount excluded from deductible expenses, when calculating the amount of income for each business year pursuant to the provisions of Article 55, paragraph (4) (Expenses, etc. Related to Unlawful Acts, etc.);

a refund pursuant to the provisions of Article 78 (Refund of Income Tax) or Article 133 (Refund of Income Tax due to Reassessment, etc.), or Article 22 (Refund of Foreign Taxes) or Article 27-2 (Refund of Foreign Taxes due to Reassessment, etc.) of the Local Corporation Tax Act (Act No. 11 of 2014); and

a refund pursuant to the provisions of Article 80 (Refund by Carryback of Loss) or Article 23 (Refund in the Case of a refund of Corporation Tax by Carryback of Loss) of the Local Corporation Tax Act.

In the case where the amount of foreign withholding tax, etc. prescribed in Article 39-2 (Exclusion of Foreign Withholding Tax, etc. on Dividends Received from Foreign Subsidiaries from Deductible Expenses) that is excluded from deductible expenses of a domestic corporation, when calculating the amount of income for each business year pursuant to the provisions of that Article, has been reduced, the amount of the reduction is excluded from gross profits, when calculating the amount of income of the domestic corporation for each business year.

In the case where the amount of a foreign country's corporate tax (meaning the foreign country's corporate tax prescribed in Article 69, paragraph (1) (Foreign Tax Credit); hereinafter the same applies in this paragraph) that a domestic corporation has come to pay, for which the domestic corporation was subject to the provisions of paragraphs (1) through (3) or paragraph (18) of that Article (including as applied mutatis mutandis pursuant to paragraph (24) of that Article), has been reduced in each business year of the domestic corporation beginning within seven years after the first day of the business year in which it was subject to those provisions (hereinafter referred to as the "applicable business year" in this paragraph) (when the domestic corporation has received the transfer of the whole or a part of the business from another domestic corporation that is an acquired corporation, etc. as prescribed in paragraph (9) of that Article as a result of a qualified merger, etc. as prescribed in that paragraph, including the case where, out of the amount of the foreign country's corporate tax that the acquired corporation, etc. has come to pay, the amount of the foreign country's corporate tax that it has come to pay on the basis of the income arising from the business transferred to the domestic corporation has been reduced in each business year of the domestic corporation beginning within seven years after the first day of the applicable business year of the acquired corporation, etc. pertaining to that amount), the amount specified by Cabinet Order as the reduced portion of the creditable amount of the foreign country's corporate tax prescribed in paragraph (1) of that Article out of the amount of the reduction (excluding the amount specified by Cabinet Order as the amount to be included in gross profits) is excluded from gross profits, when calculating the amount of income of the domestic corporation for each business year.

In the case where a domestic corporation receives from another domestic corporation the group tax sharing tax effect amount of the other domestic corporation (meaning the amount exchanged between a group tax sharing corporation and another group tax sharing corporation as the amount equivalent to the amount of corporation tax and local corporation tax (excluding the amount of interest tax) that is reduced by applying the provisions of Article 64-5, paragraph (1) (Aggregation of Profits and Losses) or Article 64-7 (Aggregation of Losses) or any other provisions applicable only to group tax sharing corporations (including a domestic corporation that was a group tax sharing corporation; hereinafter the same applies in this paragraph)), the amount received is excluded from gross profits, when calculating the amount of income of the domestic corporation for each business year.

In the case where a domestic corporation receives a refund of the amount to be excluded from deductible expenses in the calculation of the amount of income for each business year, pursuant to the provisions of Article 55, paragraph (5), the amount to be refunded is excluded from gross profits, when calculating the amount of income of the domestic corporation for each business year.

In the case where, with regard to the net operating loss caused by a disaster prescribed in Article 80, paragraph (5) (Refund by Carryback of Loss) that has arisen in the interim period prescribed in that paragraph of a domestic corporation (hereinafter referred to as the "net operating loss caused by a disaster" in this Article), the domestic corporation (including another group tax sharing corporation, if the domestic corporation is a group tax sharing corporation) was subject to the provisions of Article 80, the amount equivalent to the net operating loss caused by a disaster that was used as the basis of the calculation of the amount to be refunded by filing the interim return based on provisional closing of accounts prescribed in that paragraph (if the domestic corporation is a group tax sharing corporation, the amount that was treated as the amount used as the basis of the calculation of the amount to be refunded pursuant to the provisions of paragraph (13) of that Article) is included in gross profits, when calculating the amount of income for the business year containing the interim period.

When, with regard to a domestic corporation's inventory, calculating the amount to be included in deductible expenses in each business year in the calculation of the amount of income for the business year, pursuant to the provisions of Article 22, paragraph (3) (The Amount to be Included in Deductible Expenses in Each Business Year), the value of the inventory held by the domestic corporation as of the end of the business year that is used as the basis of the calculation (hereinafter referred to as the "closing inventory" in this paragraph) is to be the amount evaluated based on the valuation method that the domestic corporation selected for the closing inventory from among the method of treating the average acquisition cost of inventory as the fair value of the inventory held as of the end of the business year and other valuation methods specified by Cabinet Order (in the case where the domestic corporation did not select any valuation method or did not evaluate the inventory based on the valuation method of their choice, the amount evaluated based on one of the valuation methods specified by Cabinet Order).

Cabinet Order provides for special provisions on the selectable valuation methods referred to in the preceding paragraph, the way of selecting a valuation method, the acquisition cost of inventory to be used as the basis of the calculation of the fair value of inventory, and other necessary particulars concerning the valuation of inventory.

With regard to depreciable assets held by a domestic corporation as of the end of each business year, the amount to be included in deductible expenses as the depreciation allowance thereof in the calculation of the amount of income for the business year, pursuant to the provisions of Article 22, paragraph (3) (General Rules for Calculation of the Amount of Income for Each Business Year), is the portion of the amount that the domestic corporation accounted for as a loss as its depreciation allowance in the business year (hereinafter referred to as the "amount accounted for as a loss" in this Article) up to the amount calculated as specified by Cabinet Order based on the depreciation method that the domestic corporation selected for the assets from among the depreciation method under which the depreciation allowance is the same every year, the depreciation method under which the depreciation allowance decreases at a fixed rate every year, and other depreciation methods specified by Cabinet Order, in accordance with the date of the acquisition of assets and the category of their types (in the case where the domestic corporation did not select any depreciation method, based on one of depreciation methods as specified by Cabinet Order) (such calculated amount is referred to as the "maximum amount of depreciation" in the following paragraph).

In the case where a domestic corporation transfers its depreciable assets to a succeeding corporation in a company split, corporation receiving a capital contribution in kind, or corporation receiving a distribution in kind as a result of a qualified company split, qualified capital contribution in kind, or qualified in-kind distribution (for a qualified in-kind distribution, excluding a distribution of all residual assets; hereinafter referred to as a "qualified company split, etc." through to paragraph (4)), when the amount equivalent to the amount accounted for as a loss was accounted for as a loss with regard to the depreciable assets, the portion of the amount accounted for as a loss (referred to as the "amount accounted for as a loss during the period" in the following paragraph and paragraph (4)) up to the amount equivalent to the maximum amount of depreciation calculated with regard to the depreciable assets as prescribed in the preceding paragraph by deeming the day prior to the date of the qualified company split, etc. to be the last day of the business year is included in deductible expenses, when calculating the amount of income for the business year containing the date of the qualified company split, etc. (referred to as the "business year of the company split, etc." in paragraph (4)).

The provisions of the preceding paragraph apply only in the case where the domestic corporation set forth in the paragraph has submitted a document stating the amount accounted for as a loss during the period and other matters specified by Ministry of Finance Order to the competent district director with jurisdiction over the place for tax payment, within two months after the date of the qualified company split, etc.

Out of the amount accounted for as a loss for depreciable assets set forth in paragraph (1) in each business year prior to the business year in which a depreciation allowance for the depreciable assets was accounted for as a loss by the domestic corporation set forth in the paragraph (hereinafter referred to as the "business year of the depreciation" in this paragraph) (such amount accounted for includes, when the depreciable assets were transferred from an acquired corporation or corporation making a distribution in kind (hereinafter referred to as an "acquired corporation, etc." in this paragraph) as a result of a qualified merger or qualified in-kind distribution (limited to a distribution of all residual assets), the portion of the amount accounted for as a loss in each business year on or before the business year containing the day prior to the date of the qualified merger or the date of the determination of residual assets of the acquired corporation, etc. that was excluded from deductible expenses in the calculation of the amount of income for the business year, and when the depreciable assets were transferred from a splitting corporation, corporation making a capital contribution in kind, or corporation making a distribution in kind (hereinafter referred to as a "splitting corporation, etc." in this paragraph) as a result of a qualified company split, etc., the amount recorded in the books as the amount accounted for as a loss during the period in the business year of the company split, etc. of the splitting corporation, etc., and the portion of the amount accounted for as a loss in each business year prior to the business year of the company split, etc. that was excluded from deductible expenses in the calculation of the amount of income for each business year on or before the business year of the company split, etc.; hereinafter the same applies in this paragraph), the amount accounted for as a loss includes the amount excluded from deductible expenses in the calculation of the amount of income for each business year prior to the business year of the depreciation; and the amount accounted for as a loss during the period includes the portion of the amount accounted for as a loss for depreciable assets set forth in paragraph (2) in each business year prior to the business year of the company split, etc. of the domestic corporation set forth in the paragraph that was excluded from deductible expenses in the calculation of the amount of income for the business year.

In the case referred to in the preceding paragraph, with regard to depreciable assets held by the domestic corporation (limited to depreciable assets transferred from an acquired corporation as a result of a qualified merger, depreciable assets falling under the category of assets evaluated by fair value prescribed in Article 62-9, paragraph (1) (Gains or Losses on the Fair Valuation of Assets Held by Wholly Owned Subsidiary Corporations in a share exchange Involved in Non-qualified Share Exchange) to which the provisions of the paragraph were applied, and other depreciable assets as specified by Cabinet Order), in the case where the amount specified by Cabinet Order as the amount recorded in the books as the value of the depreciable assets is less than the amount recorded in the acquired corporation's books immediately prior to the transfer, the book value immediately after the provisions of paragraph (1) of the Article were applied, or any other amount specified by Cabinet Order, the amount of the shortfall is deemed to be the amount accounted for as a loss in each business year prior to the business year specified by Cabinet Order.

Special provisions on depreciation methods that can be selected as set forth in paragraph (1), procedures for selecting a depreciation method, acquisition costs of depreciable assets that are used as the basis of the calculation of the depreciation allowance, special provisions under which the amount corresponding to the portion that extends the usable period, etc., out of the amount expended on depreciable assets, is treated as the acquisition cost of depreciable assets, and other matters necessary for the depreciation of depreciable assets are specified by Cabinet Order.

With regard to deferred assets held by a domestic corporation as of the end of each business year, the amount to be included in deductible expenses as the depreciation allowance thereof in the calculation of the amount of income for the business year, pursuant to the provisions of Article 22, paragraph (3) (General Rules for Calculation of the Amount of Income for Each Business Year), is to be the portion of the amount that the domestic corporation accounted for as a loss as the depreciation allowance in the business year (hereinafter referred to as the "amount accounted for as a loss" in this Article) up to the amount calculated as specified by Cabinet Order based on the period during which the expenses related to the deferred assets continued to affect the calculation (such calculated amount is referred to as the "maximum amount of depreciation" in the following paragraph).

In the case where, as a result of a qualified company split, qualified capital contribution in kind, or qualified in-kind distribution (for a qualified in-kind distribution, excluding a distribution of all residual assets; hereinafter referred to as a "qualified company split, etc." in this Article), a domestic corporation hands over its deferred assets to a succeeding corporation in a company split, corporation receiving a capital contribution in kind, or corporation receiving a distribution in kind (hereinafter referred to as a "succeeding corporation in a company split, etc." in this Article) (such deferred assets are limited to those related to assets, liabilities, or contracts (referred to as "assets, etc." in paragraph (4)) to be transferred as a result of the qualified company split, etc. to the succeeding corporation in a company split, etc.), when the amount equivalent to the amount accounted for as a loss was accounted for as a loss with regard to the deferred assets, the portion of the amount accounted for as a loss (referred to as the "amount accounted for as a loss during the period" in the following paragraph and paragraph (6)) up to the amount equivalent to the maximum amount of depreciation calculated with regard to the deferred assets as prescribed in the preceding paragraph by deeming the day prior to the date of the qualified company split, etc. to be the last day of the business year is included in deductible expenses, when calculating the amount of income for the business year containing the date of the qualified company split, etc. (referred to as the "business year of the company split, etc." in paragraph (6)).

The provisions of the preceding paragraph apply only in the case where the domestic corporation set forth in the paragraph has submitted a document stating the amount accounted for as a loss during the period and other matters specified by Ministry of Finance Order to the competent district director with jurisdiction over the place for tax payment, within two months after the date of the qualified company split, etc.

In the case where a domestic corporation has effected a qualified merger, qualified company split, qualified capital contribution in kind, or qualified in-kind distribution (hereinafter referred to as a "qualified organizational restructuring" in this paragraph), the deferred assets prescribed in the following items, in accordance with the category of qualified organizational restructuring listed in the relevant item, are to be succeeded to, at the book value as of immediately prior to the qualified organizational restructuring, by an acquiring corporation, succeeding corporation in a company split, corporation receiving a capital contribution in kind, or corporation receiving a distribution in kind involved in the qualified organizational restructuring:

qualified merger or qualified in-kind distribution (limited to a distribution of all residual assets): Deferred assets as of immediately prior to the qualified merger or as of the time of the determination of residual assets pertaining to the qualified in-kind distribution; and

qualified company split, etc.: The following deferred assets:

Deferred assets specified by Cabinet Order as having a close relation to the assets, etc. to be transferred to a succeeding corporation in a company split, etc. as a result of the qualified company split, etc.

Deferred assets which have a relation to the assets, etc. to be transferred to a succeeding corporation in a company split, etc. as a result of the qualified company split, etc. and to which the provisions of paragraph (2) were applied (excluding those listed in (a))

Deferred assets which have a relation to the assets, etc. to be transferred to a succeeding corporation in a company split, etc. as a result of the qualified company split, etc. (excluding those listed in (a) and (b))

The provisions of the preceding paragraph (limited to the part pertaining to item (ii), (c)) apply only in the case where the domestic corporation set forth in the paragraph has submitted a document stating the book value of the deferred assets listed in (c) of the item that are to be succeeded to by a succeeding corporation in a company split, etc. pursuant to the provisions of the preceding paragraph and other matters specified by Ministry of Finance Order to the competent district director with jurisdiction over the place for tax payment, within two months after the date of the qualified company split, etc.

Out of the amount accounted for as a loss for deferred assets set forth in paragraph (1) in each business year prior to the business year in which a depreciation allowance for the deferred assets was accounted for as a loss by the domestic corporation set forth in the paragraph (hereinafter referred to as the "business year of the depreciation" in this paragraph) (such amount accounted for includes, when the deferred assets were succeeded to from an acquired corporation or corporation making a distribution in kind (hereinafter referred to as an "acquired corporation, etc." in this paragraph) as a result of a qualified merger or qualified in-kind distribution (limited to a distribution of all residual assets), the portion of the amount accounted for as a loss in each business year on or before the business year containing the day prior to the date of the qualified merger or the date of the determination of residual assets of the acquired corporation, etc. that was excluded from deductible expenses in the calculation of the amount of income for the business year, and when the deferred assets were succeeded to from a splitting corporation, corporation making a capital contribution in kind, or corporation making a distribution in kind (hereinafter referred to as a "splitting corporation, etc." in this paragraph) as a result of a qualified company split, etc., the amount recorded in the books as the amount accounted for as a loss during the period in the business year of the company split, etc. of the splitting corporation, etc., and the portion of the amount accounted for as a loss in each business year prior to the business year of the company split, etc. that was excluded from deductible expenses in the calculation of the amount of income for each business year on or before the business year of the company split, etc.; hereinafter the same applies in this paragraph), the amount accounted for as a loss includes the amount excluded from deductible expenses in the calculation of the amount of income for each business year prior to the business year of the depreciation; and the amount accounted for as a loss during the period includes the portion of the amount accounted for as a loss for deferred assets set forth in paragraph (2) in each business year prior to the business year of the company split, etc. of the domestic corporation set forth in the paragraph that was excluded from deductible expenses in the calculation of the amount of income for the business year.

In the case referred to in the preceding paragraph, with regard to the deferred assets held by the domestic corporation (limited to deferred assets succeeded to from an acquired corporation as a result of a qualified merger, deferred assets falling under the category of assets evaluated by fair value prescribed in Article 62-9, paragraph (1) (Gains or Losses on the Fair Valuation of Assets Held by Wholly Owned Subsidiary Corporations in a share exchange Involved in Non-qualified Share Exchange) to which the provisions of the paragraph were applied, and other deferred assets specified by Cabinet Order), in the case where the amount specified by Cabinet Order as the amount recorded in the books as their value is less than the amount recorded in the acquired corporation's books immediately prior to the succession, the book value immediately after the provisions of paragraph (1) of the Article were applied, or another amount as specified by Cabinet Order, the amount of the shortfall is deemed to be the amount accounted for as a loss in each business year prior to the business year specified by Cabinet Order.

Beyond what is provided for in the preceding paragraphs, necessary matters concerning the depreciation of deferred assets are specified by Cabinet Order.

In the case where a domestic corporation has revaluated its assets to reduce their book value, the amount of the reduction is excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year.

With regard to a domestic corporation's assets, when the value of the assets has fallen below their book value due to significant damages caused by a disaster or any other events specified by Cabinet Order have occurred, and when the domestic corporation has revaluated the assets and accounted for as a loss in order to reduce their book value, the portion of the amount of the reduction up to the difference between the book value of the assets as of immediately prior to the revaluation and the value of the assets as of the end of the business year containing the date of the revaluation is included in deductible expenses, when calculating the amount of income for the business year containing the date of the revaluation, notwithstanding the provisions of the preceding paragraph.

In the case where a domestic corporation has revaluated its assets to reduce their book value pursuant to the provisions of the Corporate Reorganization Act or the Act on Special Measures for the Reorganization Proceedings of Financial Institutions as a result of an order of approval of a reorganization plan having been made, the amount of the reduction is included in deductible expenses, when calculating the amount of income for the business year containing the date of the revaluation, notwithstanding the provisions of paragraph (1).

In the case where an order on the confirmation of a rehabilitation plan has been rendered for a domestic corporation or any equivalent event as specified by Cabinet Order has occurred, when the domestic corporation evaluates the value of its assets as specified by Cabinet Order, the amount specified by Cabinet Order as a valuation loss of the assets (excluding those specified by Cabinet Order as not being suitable for recording a valuation loss) is included in deductible expenses, when calculating the amount of income for the business year containing the date of any of such events, notwithstanding the provisions of paragraph (1).

The provisions of the preceding three paragraphs do not apply to shares or capital contributions of another domestic corporation specified by Cabinet Order that has a full controlling interest with the domestic corporation referred to in the preceding three paragraphs, in the case where that domestic corporation holds them, or to shares or capital contributions of another group tax sharing corporation (excluding a corporation specified by Cabinet Order as a corporation not subject to the provisions of Article 64-5 (Aggregation of Profits and Losses), and the group tax sharing parent corporation) held by the domestic corporation referred to in those provisions in the case where it is a group tax sharing corporation.

In the case where the provisions of paragraph (1) were applied, with regard to the assets whose reduced value due to revaluation was not included in deductible expenses, it is deemed that the book value of the assets was not reduced, when calculating the amount of income for each business year after the business year containing the date of the revaluation.

The provisions of paragraph (4) apply only in the case where a Final Return contains a detailed statement concerning the inclusion in deductible expenses of the amount specified by Cabinet Order as the amount of valuation loss prescribed in the paragraph (referred to as a "statement of valuation loss" in the following paragraph) and is attached with the documents specified by Ministry of Finance Order (referred to as "documents related to valuation loss" in the following paragraph) (when with regard to the assets prescribed in Article 25, paragraph (3) (Valuation Gains on Assets), there is any amount specified by Cabinet Order as the amount of valuation gain prescribed in the paragraph (such case is referred to as the "case where there is a valuation gain" in the following paragraph), only in the case where a Final Return contains a statement of valuation gain prescribed in paragraph (6) of the Article (referred to as a "statement of valuation gain" in the following paragraph) and is attached with the documents related to valuation gain prescribed in paragraph (6) of the Article (referred to as "documents related to valuation gain" in the following paragraph)).

Even in the case where a Final Return has been filed without a statement of valuation loss (in the case where there is a valuation gain, without a statement of valuation loss or a statement of valuation gain) or without documents related to valuation loss (in the case where there is a valuation gain, without documents related to valuation loss or documents related to valuation gain), the district director may apply the provisions of paragraph (4), when they find any unavoidable grounds for the person's failure to make entries of such a statement or to attach such documents.

Beyond what is provided for in the preceding three paragraphs, necessary matters concerning the application of the provisions of paragraphs (1) through (5) are specified by Cabinet Order.

The amount of remuneration that a domestic corporation pays to its officers (such remuneration excludes a retirement allowance that does not fall under the category of performance-linked remuneration, any remuneration that is paid to officers who have duties as employees for carrying out such duties, and any remuneration that is subject to the provisions of paragraph (3); hereinafter the same applies in this paragraph) and that does not fall under any of the following categories of remuneration is excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year:

remuneration that is paid for each specified period of one month or less (referred to as "regular remuneration" in (a) of the following item) and where the amount of each payment is the same in the business year, and any other remuneration specified by Cabinet Order as being equivalent thereto (referred to as "regular fixed remuneration" in that item);

remuneration that is paid for the duties of the officer based on provisions to the effect that a fixed amount of monies, or a fixed number of shares (including capital contributions; hereinafter the same applies in this paragraph and paragraph (5)) or share options, or specified restricted shares as prescribed in Article 54, paragraph (1) (Special Provisions on the Business Year for Vesting Expenses in Exchange for Restricted Shares) or specified share options as prescribed in Article 54-2, paragraph (1) (Special Provisions on the Business Year for Vesting Expenses in Exchange for Share Options) pertaining to monetary claims of a fixed amount, are to be delivered at a prescribed time, and that falls under neither regular fixed remuneration nor performance-linked remuneration (including remuneration in succeeding restricted shares as prescribed in Article 54, paragraph (1) pertaining to the shares or the specified restricted shares, or in succeeding share options as prescribed in Article 54-2, paragraph (1) pertaining to the share options or the specified share options, and, in the cases listed below, limited to remuneration that meets the requirements specified below for the respective cases);

In the case where the remuneration is remuneration other than remuneration paid to an officer to whom regular remuneration is not paid (limited to remuneration in monies paid by a domestic corporation that does not fall under the category of family company) (such remuneration excludes remuneration in shares or share options that is specified by Cabinet Order as pertaining to the provision of services in the future): That a notification concerning the details of the provisions has been filed with the competent district director with jurisdiction over the place for tax payment, as specified by Cabinet Order.

In the case of delivering shares: That the shares are shares with a market price or shares to be exchanged for shares with a market price (limited to those issued by the domestic corporation or a related corporation; referred to as "qualified shares" in the following item).

In the case of delivering share options: That the share options are share options through whose exercise shares with a market price are delivered (limited to those issued by the domestic corporation or a related corporation; referred to as "qualified share options" in the following item).

performance-linked remuneration (in the case where assets other than monies are delivered, limited to remuneration in which qualified shares or qualified share options are delivered) that is paid by a domestic corporation (in the case of a family company, limited to one in which a corporation other than a family company has a full controlling interest) to its executive officers (meaning officers specified by Cabinet Order as those executing business; hereinafter the same applies in this item) and that meets the following requirements (limited to the case where performance-linked remuneration that meets the following requirements is paid to all the other executive officers):

That the method of calculating the amount of monies or the number of shares or share options to be delivered, or the number of share options to be delivered that are to be acquired without consideration or extinguished, is an objective method based on an indicator showing the state of profits for a business year ending on or after the first day of the period for performing the duties to which the remuneration pertains (referred to as the "start date of the period of performance of duties" in (a)) (limited to the amount of profits, an indicator obtained by adjusting the amount of profits by matters to be stated in an annual securities report (meaning an annual securities report as prescribed in Article 24, paragraph (1) (Submission of Annual Securities Reports) of the Financial Instruments and Exchange Act; the same applies in (a)) or any other indicator relating to profits specified by Cabinet Order, which is stated in an annual securities report; the same applies in (a)), an indicator showing the state of the market price of shares during a prescribed period on or after the first day of the business year containing the start date of the period of performance of duties or on a prescribed day on or after the start date of the period of performance of duties (limited to the market price of shares of the domestic corporation or of a corporation that has a full controlling interest with the domestic corporation, its average value or any other indicator relating to the market price of shares specified by Cabinet Order; the same applies in (a)), or an indicator showing the state of sales for a business year ending on or after the start date of the period of performance of duties (limited to the sales, an indicator obtained by adjusting the sales by matters to be stated in an annual securities report or any other indicator relating to sales specified by Cabinet Order, which is used together with an indicator showing the state of profits or an indicator showing the state of the market price of shares and which is stated in an annual securities report) (limited to a method that meets the following requirements).

That the method sets as its limit a fixed amount for remuneration in monies, and a fixed number for remuneration in shares or share options, and is the same as the calculation method pertaining to the performance-linked remuneration paid to the other executive officers.

That appropriate procedures specified by Cabinet Order have been followed, including that, by the day specified by Cabinet Order, the compensation committee set forth in Article 404, paragraph (3) (Authority of Nominating Committee) of the Companies Act (limited to a committee the majority of whose members are persons specified by Cabinet Order as persons, among the outside directors as prescribed in Article 2, item (xv) (Definitions) of that Act of the domestic corporation, whose independence in performing their duties is ensured (referred to as "independent outside directors" in (2)), and excluding a committee of which a person who has a special relationship as specified by Cabinet Order with an executive officer of the domestic corporation is a member) has made a decision (limited to a decision in the case where all of the independent outside directors who are members of the compensation committee have voted in favor of the resolution of the compensation committee pertaining to the decision).

That its details have been disclosed, without delay on or after the day on which the appropriate procedures specified by Cabinet Order referred to in (2) were completed, by being stated in an annual securities report or by any other method specified by Ministry of Finance Order.

Any other requirements specified by Cabinet Order.

The portion of the amount of remuneration paid by a domestic corporation to its officers (excluding remuneration subject to the provisions of the preceding paragraph or the following paragraph) that is specified by Cabinet Order as an amount which is unreasonably high is excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year.

The amount of remuneration paid by a domestic corporation to its officers through accounting by concealing or falsifying facts is excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year

Remuneration as prescribed in the preceding three paragraphs is to include profits resulting from a release from an obligation and other economic benefits.

The performance-linked remuneration prescribed in paragraph (1) means remuneration in monies, or in shares or share options, of an amount or number calculated on the basis of an indicator showing the state of profits, an indicator showing the state of the market price of shares or any other indicator showing the performance of the domestic corporation referred to in that paragraph or of a corporation that has a controlling interest with the domestic corporation, and remuneration in specified restricted shares or succeeding restricted shares as prescribed in Article 54, paragraph (1) or in specified share options or succeeding share options as prescribed in Article 54-2, paragraph (1) in which the number of shares or share options to be acquired without consideration or extinguished varies due to grounds other than the period of provision of services.

Officers who have duties as employees as prescribed in paragraph (1) are officers (excluding the president, chief director or others specified by Cabinet Order) who hold any of the positions of department director, section chief, or other employees of a corporation and who are engaged in the duties of a full-time employee.

The related corporation prescribed in paragraph (1), item (ii), (b) and (c) means a corporation specified by Cabinet Order as a corporation that has a controlling interest with the domestic corporation referred to in that paragraph.

Beyond what is provided for in paragraph (4) through the preceding paragraph, necessary matters concerning the application of the provisions of paragraphs (1) through (3) are specified by Cabinet Order.

The portion of the amount of remuneration paid by a domestic corporation to employees who have a special relationship as specified by Cabinet Order with its officers (including profits resulting from a release from an obligation and other economic benefits) that is specified by Cabinet Order as an amount which is unreasonably high is excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year.

The portion of the sum of the donations made by a domestic corporation in each business year (excluding the amount of donations subject to the provisions of the following paragraph) that exceeds the amount calculated, as specified by Cabinet Order, based on the sum of the amount of stated capital and the amount of capital reserve or the amount of capital contributions of the domestic corporation as of the end of the business year, or on the amount of income for the business year, is excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year.

The amount of a donation that a domestic corporation has made in each business year to another domestic corporation that has a full controlling interest (limited to a full controlling interest held by a corporation) with the domestic corporation (limited to the amount corresponding to the amount of gain on gifts received prescribed in Article 25-2, paragraph (2) that would be included in gross profits when calculating the amount of income of the other domestic corporation for each business year if the provisions of Article 25-2 (Gain on Gifts Received) did not apply) is excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year.

In the case referred to in paragraph (1), when the amount of a donation as prescribed in the paragraph contains any of the following amounts, the total amount of donations listed in the following items is excluded from the sum of the donations prescribed in the paragraph:

the amount of a donation to the national or a local government (including port authorities as prescribed by the Ports and Harbors Act (Act No. 218 of 1950)) (when it is deemed that a person who has made a donation may utilize the facilities established by the donation exclusively or may enjoy any other special benefits therefrom, such donation is excluded); or

the amount of a donation to a public interest incorporated association, public interest incorporated foundation, or any other corporation or group that conducts business for public interest purposes (including a donation for the purpose of establishing such corporation or any other donation made prior to the establishment thereof that is specified by Cabinet Order) that is designated by the Minister of Finance as a donation meeting the following requirements, as specified by Cabinet Order:

That the donation is collected widely from the general public.

That it is fully expected that the donation is appropriated to urgent expenses to serve in the promotion of education or science, the enhancement of culture, as a contribution to social welfare or any other improvement in the public interest.

In the case referred to in paragraph (1), when the amount of a donation as prescribed in the paragraph contains any amount of a donation made to a public service corporation, public interest corporation, etc. (excluding any of the general incorporated associations, general incorporated foundations and workers' cooperatives listed in Appended Table 2; hereinafter the same applies through paragraph (6)), or any other corporation established under special Acts that is specified by Cabinet Order as serving significantly in the promotion of education or science, the enhancement of culture, as a contribution to social welfare or any other improvement in the public interest, with regard to the business of such corporation's major purpose (excluding donations that are clearly to be appropriated to business relating to investment and donations falling under any of the categories prescribed in the items of the preceding paragraph), the sum of such donations (in the case where the sum exceeds the amount calculated, as specified by Cabinet Order, based on the sum of the amount of stated capital and the amount of capital reserve or the amount of capital contributions as of the end of the business year, or on the amount of income for the business year, the amount equivalent to the calculated amount) is excluded from the sum of the donations prescribed in paragraph (1); provided, however, that this does not apply to the amount of a donation made by a public interest corporation, etc.

In the case referred to in paragraph (1), when the amount of a donation as prescribed in the paragraph contains any amount of a donation pertaining to the trust affairs of a public interest trust as prescribed in Article 2, paragraph (1), item (i) (Definitions) of the Act on Public Interest Trusts, made in order to make it the trust property of the public interest trust (excluding donations that are clearly to be appropriated to trust affairs relating to investment and donations falling under any of the categories prescribed in the items of paragraph (3) or in the preceding paragraph), the sum of such donations (in the case where the sum exceeds the amount obtained by deducting, from the amount calculated as specified by Cabinet Order as prescribed in the preceding paragraph, the amount excluded from the sum of the donations prescribed in paragraph (1) pursuant to the provisions of that paragraph, the amount equivalent to the amount after the deduction) is excluded from the sum of the donations prescribed in paragraph (1); provided, however, that this does not apply to the amount of a donation made by a public interest corporation, etc.

The amount that a public interest corporation, etc. has spent from among the assets belonging to its profit-making business for the purpose of a business other than the profit-making business (with regard to a public interest incorporated association or public interest incorporated foundation, the amount that it has spent from among the assets belonging to its profit-making business for the purpose of a business other than the profit-making business that is specified by Cabinet Order as a business related to the public interest) is deemed to be the amount of a donation related to its profit-making business and the provisions of paragraph (1) apply; provided, however, that this does not apply to the amount spent through accounting by concealing or falsifying facts.

The amount of a donation as prescribed in the preceding paragraphs, irrespective of the donation having been made as a donation, contribution, gift, or under any other name, is to be the amount of monies in the case where a domestic corporation has made a gift or the gratuitous conveyance of monies or other assets or economic benefits (excluding expenses for advertising or providing samples or other equivalent expenses, and those deemed to be entertainment and social expenses, reception expenses, and welfare expenses; the same applies in the following paragraph), the value of the assets other than monies as of the time of the gift, or the value of the economic benefits as of the time of the conveyance.

In the case where a domestic corporation has transferred assets or conveyed economic benefits, when the price for the transfer or conveyance is low compared with the value of the assets as of the transfer or the value of the economic benefits as of the conveyance, the portion of the difference between the price and the value that is deemed to have been, in effect, given as a gift or gratuitous conveyance is included in the amount of the donation set forth in the preceding paragraph.

The provisions of paragraph (3) apply only in the case where a Final Return, amended return or written request for Reassessment is attached with a document stating the amount of donations listed in the items of paragraph (3) that is excluded from the sum of the donations prescribed in paragraph (1) and the details of the donations, and the provisions of paragraph (4) and paragraph (5) apply only in the case where a Final Return, amended return or written request for Reassessment is attached with a document stating the amount of donations prescribed in paragraph (4) or paragraph (5) that is excluded from the sum of the donations prescribed in paragraph (1) and the details of the donations, and where documents specified by Ministry of Finance Order as documents certifying that the donations stated in that document fall under the donations prescribed in those provisions are retained. In this case, the amount that is excluded from the sum of the donations prescribed in paragraph (1) pursuant to the provisions of paragraphs (3) through (5) does not exceed the amount entered as the amount.

Even in the case where the documents specified by Ministry of Finance Order prescribed in the preceding paragraph are not retained with regard to the whole or a part of the amount to be excluded from the sum of the donations prescribed in paragraph (1) pursuant to the provisions of paragraph (4) or paragraph (5), the district director may apply the provisions of paragraph (4) or paragraph (5) to the amount for which the documents were not retained, when they find any unavoidable grounds for the person's failure to retain the documents.

When the Minister of Finance has made a designation set forth in paragraph (3), item (ii), they make a public notification thereof.

Beyond what is provided for in paragraph (6) through the preceding paragraph, necessary matters concerning the application of the provisions of paragraphs (1) through (5) are specified by Cabinet Order.

The amount of corporation tax (excluding delinquent tax, additional tax for understatement, additional tax for failure to file, and substantial additional tax; hereinafter the same applies in this paragraph) and the amount of local corporation tax (excluding delinquent tax, additional tax for understatement, additional tax for failure to file, and substantial additional tax; hereinafter the same applies in this paragraph) that a domestic corporation is to pay are excluded from deductible expenses, except for the corporation taxes listed in items (i) through (iii) and the local corporation taxes listed in items (iv) through (vi), when calculating the amount of income of the domestic corporation for each business year:

corporation tax on a retirement pension fund;

corporation tax corresponding to the amount listed in Article 19, paragraph (4), item (ii), (c) (Amended Return) or Article 28, paragraph (2), item (iii), (c) (Procedures for Reassessment or Determination) of the Act on General Rules for National Taxes out of the amount to be paid pursuant to the provisions of Article 35, paragraph (2) (Payment of National Tax using the Self-Assessment System) of that Act;

interest tax pursuant to the provisions of Article 75, paragraph (7) (Extension of the Due Date for Filing a Tax Return) (including as applied mutatis mutandis pursuant to Article 75-2, paragraph (8) or paragraph (10) (Special Provisions on Extension of the Due Date for Filing a Tax Return));

local corporation tax pertaining to the corporation tax listed in item (i);

local corporation tax corresponding to the amount listed in Article 19, paragraph (4), item (ii), (c) or Article 28, paragraph (2), item (iii), (c) of the Act on General Rules for National Taxes out of the amount to be paid pursuant to the provisions of Article 35, paragraph (2) of that Act; and

interest tax pursuant to the provisions of Article 75, paragraph (7) (including as applied mutatis mutandis pursuant to Article 75-2, paragraph (8) or paragraph (10)) as applied mutatis mutandis pursuant to Article 19, paragraph (4) (Final Returns) of the Local Corporation Tax Act.

The following amounts that a domestic corporation is to pay are excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year:

gift tax and inheritance tax pursuant to the provisions of Article 9-4 (Special Provisions on Trusts without Beneficiaries), Article 66 (Taxation of Associations or Foundations without Juridical Personality, etc.), or Article 66-2 (Taxation of Specified General Incorporated Associations, etc.) of the Inheritance Tax Act (Act No. 73 of 1950); and

prefectural inhabitants' tax and municipal inhabitants' tax pursuant to the provisions of the Local Tax Act (including Tokyo inhabitants' tax and excluding tax pertaining to corporation tax on a retirement pension fund).

In the case where a domestic corporation pays to another domestic corporation the group tax sharing tax effect amount of the domestic corporation (meaning the group tax sharing tax effect amount prescribed in Article 26, paragraph (4) (Exclusion of Refunds from Gross Profits)), the amount paid is excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year.

The net operating loss incurred by a domestic corporation as a result of paying the following national tax or local tax (including the net operating loss arising from a right to reimbursement regarding the payment; the same applies in the following paragraph) is excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year:

national tax to be paid pursuant to the provisions of Article 33, Articles 35 to 40, or Article 41, paragraph (1) (Secondary Tax Liability of Members of General Partnership Companies, etc.) of the National Tax Collection Act (Act No. 147 of 1959) (including charges incurred in procedure of collection of the tax delinquency; the same applies in item (iii) and the following paragraph);

local tax to be paid pursuant to the provisions of Article 11-2, Articles 11-4 to Article 11-9, or Article 12-2, paragraph (2) (Secondary Tax Liability of Members of General Partnership Companies, etc.) of the Local Tax Act; and

national tax or local tax specified by Cabinet Order as being equivalent to the national tax or local tax listed in the preceding two items.

The net operating loss that a domestic corporation, which holds any of the amount deemed to be the amount listed in Article 23, paragraph (1), item (i) or item (ii) (Exclusion of Dividends Received from Gross Profits) pursuant to the provisions of Article 24, paragraph (1), item (iv) (The Amount Deemed to Be Dividends) (limited to the part pertaining to the distribution of residual assets due to dissolution) that is excluded from gross profits in the calculation of the amount of income for each business year under the provisions of that paragraph or Article 23-2, paragraph (1) (Exclusion of Dividends Received from Foreign Subsidiaries from Gross Profits) or Article 62-5, paragraph (4) (Transfer of Assets through In-Kind Distribution), has incurred as a result of paying any of the following national tax or local tax, with regard to a corporation that has distributed residual assets pertaining to the amount deemed to be as above, is excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year; provided, however, that in the case where the amount of the national tax or local tax exceeds the amount excluded from gross profits, this does not apply to the amount equivalent to the excess out of the net operating loss:

national tax to be paid pursuant to the provisions of Article 34 (Secondary Tax Liability of Liquidators) of the National Tax Collection Act; and

local tax to be paid pursuant to the provisions of Article 11-3 (Secondary Tax Liability of Liquidators) of the Local Tax Act; and

national tax or local tax specified by Cabinet Order as being equivalent to the national tax or local tax listed in the preceding two items.

In the case where a domestic corporation is subject to the provisions of Article 23-2, paragraph (1) (Exclusion of Dividends Received from Foreign Subsidiaries from Gross Profits) with regard to the amount of dividend of surplus, etc. prescribed in that paragraph that it receives from a foreign subsidiary prescribed in that paragraph (hereinafter referred to as the "amount of dividend of surplus, etc." in this Article) (including the case specified by Cabinet Order as a case where a foreign country's corporate tax (meaning the foreign country's corporate tax prescribed in Article 69, paragraph (1) (Foreign Tax Credit); hereinafter the same applies in this Article) is imposed on the amount used as the basis of the calculation of the amount of dividend of surplus, etc.), the amount of foreign withholding tax, etc. pertaining to the amount of dividend of surplus, etc. (excluding the amount of the portion to which the provisions of Article 23-2, paragraph (2) apply) (meaning the amount of a foreign country's corporate tax imposed, with the amount of dividend of surplus, etc. as the tax base, by a method similar to the method of withholding at source prescribed in Article 2, paragraph (1), item (xlv) (Definitions) of the Income Tax Act, and the amount of a foreign country's corporate tax specified by Cabinet Order as being imposed with the amount used as the basis of the calculation of the amount of dividend of surplus, etc. as the tax base) is excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year.

In the case where a domestic corporation seeks the application of the provisions of Article 68, paragraph (1) (Income Tax Credit), Article 78, paragraph (1) (Refund of Income Tax), or Article 133, paragraph (1) (Refund of Income Tax due to Reassessment, etc.) with regard to the amount of income tax prescribed in Article 68, paragraph (1), the amount equivalent to the amount to be credited or refunded pursuant to these provisions is excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year.

In the case where a domestic corporation (excluding a group tax sharing corporation) seeks the application of the provisions of Article 69, Article 78, paragraph (1) (Refund of Income Tax), or Article 133, paragraph (1) (Refund of Income Tax due to Reassessment, etc.) with regard to the creditable amount of the foreign country's corporate tax (meaning the creditable amount of the foreign country's corporate tax prescribed in Article 69, paragraph (1) (Foreign Tax Credit); hereinafter the same applies in this Article), the creditable amount of the foreign country's corporate tax is excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year.

In the case where a group tax sharing corporation, or another group tax sharing corporation that has a group tax sharing full controlling interest with the group tax sharing corporation as of the end of each business year of the group tax sharing corporation (limited to a business year ending on the last day of the business year of the group tax sharing parent corporation pertaining to the group tax sharing corporation), seeks the application of the provisions of Article 69, Article 78, paragraph (1), or Article 133, paragraph (1) with regard to the creditable amount of the foreign country's corporate tax, the creditable amount of the foreign country's corporate tax that the group tax sharing corporation is to pay is excluded from deductible expenses, when calculating the amount of income of the group tax sharing corporation for each business year.

In the case where a domestic corporation seeks the application of the provisions of Article 69-2, paragraph (1) (Credit for Amount Equivalent to the Foreign Tax Adjusted at Distribution) with regard to the amount equivalent to the foreign tax adjusted at distribution prescribed in that paragraph pertaining to the amount of income tax on the distribution of proceeds of a group investment trust of which it receives payment, the amount equivalent to the foreign tax adjusted at distribution pertaining to the amount of income tax on the distribution of proceeds of which it receives payment is excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year.

In the case where a domestic corporation (excluding a domestic corporation in liquidation; hereinafter the same applies in this Article) has received in each business year subsidies or benefits from the national or a local government or any other financial assistance as specified by Cabinet Order as being equivalent thereto (hereinafter referred to as "national subsidies, etc." through to Article 44) for the purpose of spending them to acquire or improve its Fixed Assets (limited to the case where it is determined that the national subsidies, etc. need not be returned by the end of the business year), when, with regard to Fixed Assets that it has acquired or improved by the end of the business year in line with the purpose of the delivery, their book value has been reduced, with the reduction accounted for as a loss, within the limit of the amount equivalent to the amount of the national subsidies, etc. received in the business year (if the Fixed Assets are depreciable assets acquired or improved in a business year prior to the business year, the amount calculated as specified by Cabinet Order on the basis of the amount of the national subsidies, etc.; hereinafter referred to as the "advanced depreciation limit" in this paragraph) or the amount not exceeding the advanced depreciation limit has been booked in such a manner as to save it as a reserve (including in a manner as specified by Cabinet Order) in the final settlement of the accounts in the business year, the amount equivalent to the amount reduced or booked as above is included in deductible expenses, when calculating the amount of income for the business year.

In the case where a domestic corporation has acquired Fixed Assets which are delivered in lieu of national subsidies, etc. in each business year, when, in the business year, their book value has been reduced, with the reduction accounted for as a loss, within the limit equivalent to the value of the Fixed Assets (hereinafter such limit is referred to as the "advanced depreciation limit" in this paragraph) or the amount not exceeding the advanced depreciation limit has been booked in such a manner as to save it as a reserve (including in a manner as specified by Cabinet Order) in the final settlement of the accounts in the business year, the amount equivalent to the amount reduced or booked as above is included in deductible expenses, when calculating the amount of income for the business year.

The provisions of the preceding two paragraphs apply only in the case where a tax return contains a detailed statement concerning the inclusion in deductible expenses of the amount equivalent to the amount reduced or booked as prescribed in these provisions.

Even in the case where a tax return without entries for the matters set forth in the preceding paragraph has been filed, the district director of the tax office may apply the provisions of paragraph (1) or paragraph (2), when they find any unavoidable grounds for the person's failure to make entries for such matters.

In the case where a domestic corporation transfers, as a result of a qualified company split, qualified capital contribution in kind, or qualified in-kind distribution (hereinafter referred to as a "qualified company split, etc." in this Article), any of the Fixed Assets that it has acquired or improved by the time immediately prior to the qualified company split, etc. (limited to those in line with the purpose of the national subsidies, etc. received during the period from the beginning of the business year containing the date of the qualified company split, etc. to that time immediately prior) to a succeeding corporation in a company split, corporation receiving a capital contribution in kind, or corporation receiving a distribution in kind (referred to as a "succeeding corporation in a company split, etc." in the following paragraph) (limited to the case where it is determined that the national subsidies, etc. need not be returned by the time immediately prior to the qualified company split, etc.), when, in the business year, the book value of the Fixed Assets has been reduced to within the limit of the amount equivalent to the advanced depreciation limit prescribed in paragraph (1), the amount equivalent to the amount reduced as above is included in deductible expenses, when calculating the amount of income for the business year.

In the case where a domestic corporation transfers, as a result of a qualified company split, etc., any of the Fixed Assets as prescribed in paragraph (2) (limited to those acquired during the period from the beginning of the business year containing the date of the qualified company split, etc. to immediately prior to the qualified company split, etc.) to a succeeding corporation in a company split, etc., when, in the business year, the book value of the Fixed Assets has been reduced to within the limit equivalent to the value of the Fixed Assets, the amount equivalent to the amount reduced as above is included in deductible expenses, when calculating the amount of income for the business year.

The provisions of the preceding two paragraphs apply only in the case where the domestic corporation prescribed in these provisions has submitted documents stating the amount equivalent to the reduced amount prescribed in these provisions and other matters specified by Ministry of Finance Order to the competent district director with jurisdiction over the place for tax payment, within two months on or after the date of the qualified company split, etc.

In the case where an acquiring corporation, succeeding corporation in a company split, corporation receiving a capital contribution in kind, or corporation receiving a distribution in kind has received the transfer of any of the Fixed Assets to which the provisions of paragraph (1), paragraph (2), paragraph (5), or paragraph (6) had been applied under an acquired corporation, splitting corporation, corporation making a capital contribution in kind, or corporation making a distribution in kind, as a result of a qualified merger, qualified company split, qualified capital contribution in kind, or qualified in-kind distribution, the acquisition cost of the Fixed Assets and other necessary matters concerning the application of the provisions of the preceding paragraphs are specified by Cabinet Order.

In the case where a domestic corporation (excluding a domestic corporation in liquidation; hereinafter the same applies in this Article) receives national subsidies, etc. in each business year (excluding a business year containing the day preceding the date of the merger of an acquired corporation (excluding a qualified merger; referred to as a "non-qualified merger" in the following paragraph and paragraph (3))) for the purpose of spending such subsidies to acquire or improve its fixed assets (limited to the case where it has not been determined that the national subsidies, etc. need not be returned by the end of the business year), when the amount not exceeding the amount equivalent to the national subsidies, etc. has been booked in such a manner as to establish a special account (including in a manner as specified by Cabinet Order) in the final settlement of the accounts in the business year, the amount equivalent to the amount booked as above is included in deductible expenses, when calculating the amount of income for the business year.

A domestic corporation that has established a special account set forth in the preceding paragraph must, in the case where it has been determined either that national subsidies, etc. should be returned or need not be returned, or where the domestic corporation has been dissolved as a result of a non-qualified merger, or in other cases as specified by Cabinet Order, dispose of the portion of the special account pertaining to the national subsidies, etc. that has been calculated as specified by Cabinet Order.

The amount of the special account set forth in paragraph (1) that is to be disposed of under the preceding paragraph or the amount of the special account that has been disposed of without falling under the provisions of the preceding paragraph (excluding the amount to be succeeded to by an acquiring corporation, succeeding corporation in a company split, corporation receiving a capital contribution in kind, or corporation receiving a distribution in kind (referred to as an "acquiring corporation, etc." in paragraph (8) and paragraph (10)) pursuant to the provisions of paragraph (8)) is included in gross profits, when calculating the amount of income, respectively, for the business year containing the day on which the former amount is to be disposed of (in the case where the domestic corporation prescribed in the preceding paragraph has been dissolved as a result of a non-qualified merger, containing the day preceding the date of the non-qualified merger) or for the business year containing the day on which the latter amount was disposed of.

The provisions of paragraph (1) apply only in the case where a tax return contains a detailed statement concerning the inclusion in deductible expenses of the amount equivalent to the booked amount prescribed in the paragraph.

Even in the case where a tax return without entries for the matters set forth in the preceding paragraph has been filed, the district director of the tax office may apply the provisions of paragraph (1), when they find any unavoidable grounds for the person's failure to make entries for such matters.

In the case where a domestic corporation has effected a qualified company split, qualified capital contribution in kind, or qualified in-kind distribution (hereinafter referred to as a "qualified company split, etc." in this Article) and has received national subsidies, etc. for the purpose of spending them to acquire or improve its Fixed Assets (limited to national subsidies, etc. for which it has not been determined that they need not be returned by the time immediately prior to the qualified company split, etc.; hereinafter the same applies in this paragraph) during the period from the beginning of the business year containing the date of the qualified company split, etc. to immediately prior to the qualified company split, etc. (limited to the case where any of the following requirements is met), when a special account equivalent to that which is set forth in paragraph (1) has been established within the limit equivalent to the amount of national subsidies, etc. to be spent for the acquisition or improvement of the Fixed Assets (hereinafter such special account is referred to as a "special account during the period" in this Article), the amount equivalent to the amount of the special account during the period established as above is included in deductible expenses, when calculating the amount of income for the business year:

that the domestic corporation transfers any of the Fixed Assets that it has acquired or improved with the national subsidies, etc. (limited to Fixed Assets in line with the purpose of the national subsidies, etc.) to a succeeding corporation in a company split, corporation receiving a capital contribution in kind, or corporation receiving a distribution in kind (referred to as a "succeeding corporation in a company split, etc." in paragraph (8), item (ii), (a) and paragraph (9)) as a result of the qualified company split, etc.; or

that a succeeding corporation in a company split or corporation receiving a capital contribution in kind involved in the qualified company split or qualified capital contribution in kind is expected to acquire or improve its Fixed Assets with the national subsidies, etc. in line with the purpose thereof.

The provisions of the preceding paragraph apply only in the case where the domestic corporation set forth in the paragraph has submitted documents stating the amount equivalent to the special account during the period and other matters specified by Ministry of Finance Order to the competent district director with jurisdiction over the place for tax payment, within two months on or after the date of the qualified company split, etc.

In the case where a domestic corporation has effected a qualified merger, qualified company split, qualified capital contribution in kind, or qualified in-kind distribution (hereinafter referred to as a "qualified organizational restructuring" in this paragraph), the amount of a special account or special account during the period prescribed in the following items is to be succeeded to by an acquiring corporation, etc. involved in the qualified organizational restructuring, in accordance with the category of the following qualified organizational restructuring:

qualified merger: The amount of a special account set forth in paragraph (1) pertaining to national subsidies, etc. (limited to those for which it has not been determined that they need not be returned by the time immediately prior to the qualified organizational restructuring; the same applies in the following item) that the domestic corporation holds as of immediately prior to the qualified merger; and

qualified company split, etc.: The portion prescribed respectively as follows, in accordance with the category of the following cases, out of the amount of a special account set forth in paragraph (1) pertaining to national subsidies, etc. that the domestic corporation holds as of immediately prior to the qualified company split, etc. and the amount of the special account during the period pertaining to national subsidies, etc. that the domestic corporation established at the time of the qualified company split, etc.:

In the case where the domestic corporation has transferred any of the Fixed Assets that it has acquired or improved with the national subsidies, etc. (limited to Fixed Assets in line with the purpose of the national subsidies, etc.) to a succeeding corporation in a company split, etc. as a result of the qualified company split, etc.: The amount of a special account pertaining to the national subsidies, etc. that have been spent for acquiring or improving the Fixed Assets

In the case where a succeeding corporation in a company split or corporation receiving a capital contribution in kind involved in the qualified company split or qualified capital contribution in kind is expected to acquire or improve its Fixed Assets with the national subsidies, etc. in line with the purpose thereof: The amount of a special account pertaining to the national subsidies, etc. that is to be spent for acquiring or improving the Fixed Assets

With regard to a domestic corporation that has established a special account set forth in paragraph (1) and has effected a qualified company split, etc. (excluding a domestic corporation that has established both the special account and a special account during the period and carries over only the amount of the special account during the period to a succeeding corporation in a company split, etc. as a result of a qualified company split, etc.), the provisions of the preceding paragraph apply only in the case where the domestic corporation that has established the special account has submitted documents stating the amount of the special account to be carried over to a succeeding corporation in a company split, etc. as a result of the qualified company split, etc. and any other matters specified by Ministry of Finance Order to the competent district director with jurisdiction over the place for tax payment, within two months on or after the date of the qualified company split, etc.

The amount of a special account set forth in paragraph (1) or the amount of a special account during the period that an acquiring corporation, etc. has succeeded to pursuant to the provisions of paragraph (8) is deemed to be the amount of a special account set forth in paragraph (1) that the acquiring corporation, etc. has established pursuant to the provisions of the paragraph.

Necessary matters concerning the application of the provisions of the preceding paragraphs in the case where a merger, company split, contribution in kind to the capital of the receiving corporation, or in-kind distribution (meaning the in-kind distribution prescribed in Article 2, item (xii)-5-2 (Definitions)) has been effected are specified by Cabinet Order.

In the case where a domestic corporation that holds the amount of a special account set forth in paragraph (1) of the preceding Article (excluding the amount already having been disposed of) has acquired or improved its Fixed Assets with national subsidies, etc. in line with the purpose thereof (in the case where the domestic corporation has succeeded to the amount of the special account from an acquired corporation, splitting corporation, corporation making a capital contribution in kind, or corporation making a distribution in kind (hereinafter referred to as an "acquired corporation, etc." in this paragraph and paragraph (6)), pursuant to the provisions of Article 43, paragraph (8) (hereinafter such case is referred to as the "case where the special account is taken over" in this paragraph), including the case where the acquired corporation, etc. has acquired or improved such Fixed Assets with national subsidies, etc.; hereinafter the same applies in this paragraph and paragraph (4)), and where it has been determined that the whole or a part of the national subsidies, etc. spent for the acquisition or improvement need not be returned in a business year on or after the business year containing the date of the acquisition or improvement (in the case where the special account is taken over, in a business year on or after the business year containing the date of a qualified organizational restructuring as prescribed in Article 43, paragraph (8) (referred to as a "qualified organizational restructuring" in paragraph (6))), when the book value of the Fixed Assets has been reduced, with the reduction accounted for as a loss, within the limit of the amount calculated, as specified by Cabinet Order, as the portion of the special account as of the date of the determination that pertains to the national subsidies, etc. for which it has been determined that they need not be returned (hereinafter such limit is referred to as the "advanced depreciation limit" in this paragraph and paragraph (4)) or the amount not exceeding the advanced depreciation limit has been booked in such a manner as to save it as a reserve (including in a manner as specified by Cabinet Order) in the final settlement of the accounts in the business year, the amount equivalent to the amount reduced or booked as above is included in deductible expenses, when calculating the amount of income for the business year.

The provisions of the preceding paragraph apply only in the case where a tax return contains a detailed statement concerning the inclusion in deductible expenses of the amount reduced or booked as prescribed in the paragraph.

Even in the case where a tax return without entries for the matters set forth in the preceding paragraph has been filed, the district director of the tax office may apply the provisions of paragraph (1), when they find any unavoidable grounds for the person's failure to make entries for such matters.

In the case where a domestic corporation that holds the amount of a special account set forth in paragraph (1) has effected a qualified company split, qualified capital contribution in kind, or qualified in-kind distribution (hereinafter referred to as a "qualified company split, etc." in this paragraph and the following paragraph) and where the domestic corporation has acquired or improved its Fixed Assets with the national subsidies, etc. in line with the purpose thereof immediately prior to the qualified company split, etc. (limited to the case where it has determined that the whole or a part of the national subsidies, etc. spent for the acquisition or improvement need not be returned during the period from the beginning of the business year containing the date of the qualified company split, etc. to immediately prior to the qualified company split, etc. and where the Fixed Assets acquired or improved are to be transferred to a succeeding corporation in a company split, corporation receiving a capital contribution in kind, or corporation receiving a distribution in kind as a result of the qualified company split, etc.), when the book value of the Fixed Assets has been reduced to within the advanced depreciation limit, the amount equivalent to the amount reduced as above is included in deductible expenses, when calculating the amount of income for the business year.

The provisions of the preceding paragraph apply only in the case where the domestic corporation prescribed in the paragraph has submitted documents stating the amount equivalent to the reduced amount prescribed in the paragraph and other matters specified by Ministry of Finance Order to the competent district director with jurisdiction over the place for tax payment, within two months on or after the date of the qualified company split, etc.

In the case where an acquiring corporation, succeeding corporation in a company split, corporation receiving a capital contribution in kind, or corporation receiving a distribution in kind has received the transfer of any of the Fixed Assets to which the provisions of paragraph (1) or paragraph (4) had been applied under an acquired corporation, etc., as a result of a qualified organizational restructuring, the acquisition cost of the Fixed Assets and other necessary matters concerning the application of the provisions of the preceding paragraphs are specified by Cabinet Order.

In the case where a domestic corporation (excluding a domestic corporation in liquidation; hereinafter the same applies in this Article) that conducts any of the following businesses has received monies or materials in each business year, for the purpose of establishing the facilities necessary for conducting the business, from persons who consume electricity, gas or water, persons who use railway or rail track services, or other persons who enjoy benefits from such facilities (hereinafter referred to as the "beneficiaries" in this Article), when, with regard to the Fixed Assets comprising such facilities that it has acquired by the end of the business year, the book value of the Fixed Assets has been reduced, with the reduction accounted for as a loss, within the limit of the amount up to the amount required for the acquisition of the Fixed Assets out of the amount of the monies or the value of the materials received in the business year (if the Fixed Assets are depreciable assets acquired in a business year prior to the business year, the amount calculated as specified by Cabinet Order on the basis of that amount; hereinafter such limit is referred to as the "advanced depreciation limit" in this paragraph) or the amount not exceeding the advanced depreciation limit has been booked in such a manner as to save it as a reserve (including in a manner as specified by Cabinet Order) in the final settlement of the accounts in the business year, the amount equivalent to the amount reduced or booked as above is included in deductible expenses, when calculating the amount of income for the business year:

the general electricity transmission and distribution business prescribed in Article 2, paragraph (1), item (viii) (Definitions) of the Electricity Business Act (Act No. 170 of 1964), electricity transmission business prescribed in item (x) of the paragraph, electricity distribution business prescribed in item (xi)-2 of the paragraph, or electricity generation business prescribed in item (xiv) of the paragraph;

the general gas pipeline service business prescribed in Article 2, paragraph (5) (Definitions) of the Gas Business Act (Act No. 51 of 1954);

the water utility business prescribed in Article 3, paragraph (2) (Definitions of Terms) of the Water Supply Act (Act No. 177 of 1957);

the railway business prescribed in Article 2, paragraph (1) (Definitions) of the Railway Business Act (Act No. 92 of 1986);

the transport business conducted by laying rail tracks prescribed in Article 1, paragraph (1) (Coverage of the Act on Rail Tracks) of the Act on Rail Tracks (Act No. 76 of 1921);

businesses equivalent to those listed in the preceding items that are specified by Cabinet Order.

In the case where the domestic corporation set forth in the preceding paragraph has received the delivery of Fixed Assets comprising the facilities necessary for conducting the businesses listed in the items of the paragraph in each business year from the beneficiaries of the business, when, in the business year, the book value of the Fixed Assets has been reduced, with the reduction accounted for as a loss, within the limit of the amount equivalent to the value of the Fixed Assets (hereinafter such limit is referred to as the "advanced depreciation limit" in this paragraph) or the amount not exceeding the advanced depreciation limit has been booked in such a manner as to save it as a reserve (including in a manner as specified by Cabinet Order) in the final settlement of the accounts in the business year, the amount equivalent to the amount reduced or booked as above is included in deductible expenses, when calculating the amount of income for the business year.

The provisions of the preceding two paragraphs apply only in the case where a tax return contains a detailed statement concerning the inclusion in deductible expenses of the amount reduced or booked as prescribed in these provisions.

Even in the case where a tax return without entries for the matters set forth in the preceding paragraph has been filed, the district director of the tax office may apply the provisions of paragraph (1) or paragraph (2), when they find any unavoidable grounds for the person's failure to make entries for such matters.

In the case where the domestic corporation set forth in paragraph (1) transfers, as a result of a qualified company split, qualified capital contribution in kind, or qualified in-kind distribution (hereinafter referred to as a "qualified company split, etc." in this Article), Fixed Assets that it has acquired by the time immediately prior to the qualified company split, etc. (limited to those comprising the facilities in the case where the domestic corporation has received monies or materials, for the purpose of establishing the facilities necessary for conducting the business listed in the items of that paragraph, from the beneficiaries of the business during the period from the beginning of the business year containing the date of the qualified company split, etc. to that time immediately prior) to a succeeding corporation in a company split, corporation receiving a capital contribution in kind, or corporation receiving a distribution in kind (referred to as a "succeeding corporation in a company split, etc." in the following paragraph), when, in the business year, the book value of the Fixed Assets has been reduced to within the amount equivalent to the advanced depreciation limit prescribed in paragraph (1), the amount equivalent to the amount reduced as above is included in deductible expenses, when calculating the amount of income for the business year.

In the case where the domestic corporation set forth in paragraph (1) transfers, as a result of a qualified company split, etc., Fixed Assets comprising the facilities necessary for conducting the business listed in the items of the paragraph (limited to the Fixed Assets that the domestic corporation acquired from the beneficiaries of the business during the period from the beginning of the business year containing the date of the qualified company split, etc. to immediately prior to the qualified company split, etc.) to a succeeding corporation in a company split, etc., when, in the business year, the book value of the Fixed Assets has been reduced to within the amount equivalent to the value of the Fixed Assets, the amount equivalent to the amount reduced as above is included in deductible expenses, when calculating the amount of income for the business year.

The provisions of the preceding two paragraphs apply only in the case where the domestic corporation prescribed in these provisions has submitted documents stating the amount equivalent to the reduced amount prescribed in these provisions and any other matters as specified by Ministry of Finance Order to the competent district director with jurisdiction over the place for tax payment, within two months on or after the date of the qualified company split, etc.

In the case where an acquiring corporation, succeeding corporation in a company split, corporation receiving a capital contribution in kind, or corporation receiving a distribution in kind has received the transfer of any of the Fixed Assets to which the provisions of paragraph (1), paragraph (2), paragraph (5), or paragraph (6) had been applied under an acquired corporation, splitting corporation, corporation making a capital contribution in kind, or corporation making a distribution in kind, as a result of a qualified merger, qualified company split, qualified capital contribution in kind, or qualified in-kind distribution, the acquisition cost of the Fixed Assets and other necessary matters concerning the application of the provisions of the preceding paragraphs are specified by Cabinet Order.

In the case where a cooperative, etc. that does not hold capital contributions has allotted the expenses for acquiring or improving its Fixed Assets to be used for its business to its partners or members in each business year, when, with regard to the Fixed Assets to be used for its business that it has acquired or improved by the end of the business year, the book value of the Fixed Assets has been reduced, with the reduction accounted for as a loss, within the limit of the amount up to the amount required for the acquisition or improvement of the Fixed Assets out of the amount paid based on such allotment in the business year (if the Fixed Assets are depreciable assets acquired or improved in a business year prior to the business year, the amount calculated as specified by Cabinet Order on the basis of that amount; hereinafter such limit is referred to as the "advanced depreciation limit" in this paragraph) or the amount not exceeding the advanced depreciation limit has been booked in such a manner as to save it as a reserve in the final settlement of the accounts in the business year, the amount equivalent to the amount reduced or booked as above is included in deductible expenses, when calculating the amount of income for the business year.

The provisions of the preceding paragraph apply only in the case where a tax return contains a detailed statement concerning the inclusion in deductible expenses of the amount equivalent to the amount reduced or booked as prescribed in the paragraph.

Even in the case where a tax return without entries for the matters set forth in the preceding paragraph has been filed, the district director of the tax office may apply the provisions of paragraph (1), when they find any unavoidable grounds for the person's failure to make entries for such matters.

The acquisition cost of the Fixed Assets to which the provisions of paragraph (1) have been applied and other necessary matters concerning the application of the provisions of the preceding three paragraphs are specified by Cabinet Order.

In the case where a domestic corporation (excluding a domestic corporation in liquidation; hereinafter the same applies in this Article) has received, in each business year, insurance monies, mutual aid monies, or compensation for damages that is specified by Cabinet Order (hereinafter referred to as "insurance monies, etc." through to Article 49) for any loss of or damage to its Fixed Assets (in the case where a qualified merger, qualified company split, qualified capital contribution in kind, or qualified in-kind distribution (hereinafter referred to as a "qualified organizational restructuring" in this paragraph and paragraph (8)) in which the domestic corporation is the acquiring corporation, succeeding corporation in a company split, corporation receiving a capital contribution in kind, or corporation receiving a distribution in kind (referred to as an "acquiring corporation, etc." in paragraph (8)) has been effected, such Fixed Assets include those owned by the acquired corporation, splitting corporation, corporation making a capital contribution in kind, or corporation making a distribution in kind (referred to as an "acquired corporation, etc." in paragraph (8)) involved in the qualified organizational restructuring; hereinafter referred to as "owned Fixed Assets" in this Article), when, with regard to substituted assets (meaning the same type of Fixed Assets substituting the owned Fixed Assets; the same applies hereinafter in this Article) that it has acquired by the end of the business year (excluding the acquisition through a lease transaction that is specified by Cabinet Order as a transaction wherein the ownership is not transferred out of those prescribed in Article 64-2, paragraph (3) (Calculation of the Amount of Income Related to Lease Transactions); the same applies in paragraph (5)) or damaged assets, etc. (meaning the owned Fixed Assets that were damaged or assets to be substituted assets; the same applies in paragraph (5)) that it has improved by the end of the business year, the book value thereof has been reduced, with the reduction accounted for as a loss, within the limit of the amount calculated as specified by Cabinet Order as the amount of the gain pertaining to the insurance monies, etc. received in the business year (hereinafter such limit is referred to as the "advanced depreciation limit" in this paragraph) or the amount not exceeding the advanced depreciation limit has been booked in such a manner as to save it as a reserve (including in a manner as specified by Cabinet Order) in the final settlement of the accounts in the business year, the amount equivalent to the amount reduced or booked as above is included in deductible expenses, when calculating the amount of income for the business year.

In the case where a domestic corporation has received the delivery of substituted assets in lieu of insurance monies, etc. for the loss of or damage to its owned Fixed Assets in each business year, when, in the business year, the book value of the substituted assets has been reduced, with the reduction accounted for as a loss, within the limit of the amount calculated as specified by Cabinet Order as the amount of the gain pertaining to the substituted assets (hereinafter such limit is referred to as the "advanced depreciation limit" in this paragraph) or the amount not exceeding the advanced depreciation limit has been booked in such a manner as to save it as a reserve (including in a manner as specified by Cabinet Order) in the final settlement of the accounts in the business year, the amount equivalent to the amount reduced or booked as above is included in deductible expenses, when calculating the amount of income for the business year.

The provisions of the preceding two paragraphs apply only in the case where a tax return contains a detailed statement concerning the inclusion in deductible expenses of the amount equivalent to the amount reduced or booked as prescribed in these provisions.

Even in the case where a tax return without entries for the matters set forth in the preceding paragraph has been filed, the district director of the tax office may apply the provisions of paragraph (1) or paragraph (2), when they find any unavoidable grounds for the person's failure to make entries for such matters.

In the case where a domestic corporation transfers, as a result of a qualified company split, qualified capital contribution in kind, or qualified in-kind distribution (hereinafter referred to as a "qualified company split, etc." in this Article), the Fixed Assets that it has acquired or improved by the time immediately prior to the qualified company split, etc. (limited to substituted assets or damaged assets, etc. pertaining to the loss or damage in the case where it has received insurance monies, etc. for the loss of or damage to its owned Fixed Assets during the period from the beginning of the business year containing the date of the qualified company split, etc. to that time immediately prior) to a succeeding corporation in a company split, corporation receiving a capital contribution in kind, or corporation receiving a distribution in kind (referred to as a "succeeding corporation in a company split, etc." in the following paragraph), when, in the business year, the book value of the Fixed Assets has been reduced to within the amount equivalent to the advanced depreciation limit prescribed in paragraph (1), the amount equivalent to the amount reduced as above is included in deductible expenses, when calculating the amount of income for the business year.

In the case where a domestic corporation transfers, as a result of a qualified company split, etc., substituted assets (limited to assets which have been delivered to the domestic corporation in lieu of insurance monies, etc. for the loss of or damage to its owned Fixed Assets during the period from the beginning of the business year containing the date of the qualified company split, etc. to immediately prior to the qualified company split, etc.) to a succeeding corporation in a company split, etc., when, in the business year, the book value of the substituted assets has been reduced to within the amount equivalent to the advanced depreciation limit prescribed in paragraph (2), the amount equivalent to the amount reduced as above is included in deductible expenses, when calculating the amount of income for the business year.

The provisions of the preceding two paragraphs apply only in the case where the domestic corporation prescribed in these provisions has submitted documents stating the amount equivalent to the reduced amount prescribed in these provisions and other matters specified by Ministry of Finance Order to the competent district director with jurisdiction over the place for tax payment, within two months on or after the date of the qualified company split, etc.

In the case where an acquiring corporation, etc. has received the transfer of any of the fixed assets to which the provisions of paragraph (1), paragraph (2), paragraph (5), or paragraph (6) had been applied under an acquired corporation, etc. as a result of a qualified organizational restructuring, the acquisition cost of the fixed assets and other necessary matters concerning the application of the provisions of the preceding paragraphs are specified by Cabinet Order.

In the case where a domestic corporation (excluding a domestic corporation in liquidation; hereinafter the same applies in this Article) that is to receive the payment of insurance monies, etc. intends to make an acquisition or improvement as prescribed in paragraph (1) of the preceding Article with the insurance monies, etc. during the period up to the day preceding the day on which two years have elapsed from the day following the last day of the business year in which it receives the payment (excluding a business year containing the day preceding the date of a merger (excluding a qualified merger; referred to as a "non-qualified merger" in the following paragraph and paragraph (3)) of an acquired corporation) (in the case where it is difficult to acquire the substituted assets prescribed in paragraph (1) of the preceding Article as prescribed in the paragraph by the date due to any disaster or other unavoidable circumstances, during the period up to the day designated by the competent district director with jurisdiction over the place for tax payment as specified by Cabinet Order (referred to as the "designated date" in paragraph (6) and paragraph (8))) (such case includes the case where the domestic corporation has effected a qualified merger through which it becomes an acquired corporation, and where the acquiring corporation involved in the qualified merger intends to make the acquisition or improvement or other cases specified by Cabinet Order), when the amount not exceeding the amount calculated as a gain pertaining to the insurance monies, etc to be spent for the acquisition or improvement as specified by Cabinet Order has been booked in such a manner as to establish a special account (including in a manner as specified by Cabinet Order) in the final settlement of the accounts in the business year, the amount equivalent to the amount booked as above is included in deductible expenses, when calculating the amount of income for the business year.

A domestic corporation that has established a special account set forth in the preceding paragraph must, in the case where it has acquired substituted assets as prescribed in paragraph (1) of the preceding Article as specified in the paragraph, or where the domestic corporation has been dissolved as a result of a non-qualified merger, or in other cases as specified by Cabinet Order, dispose of the portion of the special account pertaining to the insurance monies, etc. that has been calculated as specified by Cabinet Order.

The amount of the special account set forth in paragraph (1) that is to be disposed of under the preceding paragraph or the amount of the special account that has been disposed of without falling under the provisions of the preceding paragraph (excluding the amount to be succeeded to by an acquiring corporation, succeeding corporation in a company split, or corporation receiving a capital contribution in kind (referred to as an "acquiring corporation, etc." in paragraph (8) and paragraph (10)) pursuant to the provisions of paragraph (8)) is included in gross profits, when calculating the amount of income, respectively, for the business year containing the day on which the former amount is to be disposed of (in the case where the domestic corporation prescribed in the preceding paragraph has been dissolved as a result of a non-qualified merger, containing the day preceding the date of the non-qualified merger) or for the business year containing the day on which the latter amount was disposed of.

The provisions of paragraph (1) apply only in the case where a tax return contains a detailed statement concerning the inclusion in deductible expenses of the amount equivalent to the booked amount prescribed in the paragraph.

Even in the case where a tax return without entries for the matters set forth in the preceding paragraph has been filed, the district director of the tax office may apply the provisions of paragraph (1), when they find any unavoidable grounds for the person's failure to make entries for such matters.

In the case where a domestic corporation has effected a qualified company split or qualified capital contribution in kind (hereinafter referred to as a "qualified company split, etc." in this Article) and has received the payment of insurance monies, etc. during the period from the beginning of the business year containing the date of the qualified company split, etc. to immediately prior to the qualified company split, etc. (limited to the case where the succeeding corporation in a company split or corporation receiving a capital contribution in kind (referred to as a "succeeding corporation in a company split, etc." in paragraph (8), item (ii) and paragraph (9)) involved in the qualified company split, etc. is expected to make an acquisition or improvement as prescribed in paragraph (1) of the preceding Article with the insurance monies, etc. during the period from the date of the qualified company split, etc. to the day preceding the day on which two years have elapsed from the day following the last day of the business year (in the case where there is a designated date, up to the designated date)), when a special account equivalent to that which is set forth in paragraph (1) has been established within the limit of the amount equivalent to the amount calculated as prescribed in paragraph (1) pertaining to the insurance monies, etc. to be spent for the acquisition or improvement (hereinafter such special account is referred to as a "special account during the period" in this Article), the amount equivalent to the amount of the special account during the period established as above is included in deductible expenses, when calculating the amount of income for the business year.

The provisions of the preceding paragraph apply only in the case where the domestic corporation set forth in the paragraph has submitted documents stating the amount equivalent to the special account during the period and other matters specified by Ministry of Finance Order to the competent district director with jurisdiction over the place for tax payment, within two months on or after the date of the qualified company split, etc.

In the case where a domestic corporation has effected a qualified merger, qualified company split, or qualified capital contribution in kind (hereinafter referred to as a "qualified merger, etc." in this paragraph), the amount of a special account or special account during the period as prescribed in the following items is to be succeeded to by an acquiring corporation, etc. involved in the qualified merger, etc., in accordance with the category of the following qualified merger, etc.:

qualified merger:The amount of a special account set forth in paragraph (1) pertaining to insurance monies, etc. that the domestic corporation holds as of immediately prior to the qualified merger;

qualified company split, etc.: The portion of the amount of a special account set forth in paragraph (1) pertaining to the insurance monies, etc. that the domestic corporation holds as of immediately prior to the qualified company split, etc. which pertains to the insurance monies, etc. to be spent for the acquisition or improvement prescribed in paragraph (1) of the preceding Article that is expected to be made by the succeeding corporation in a company split, etc. involved in the qualified company split, etc. during the acquisition/improvement period (meaning the period from the date of the qualified company split, etc. to the day preceding the day on which two years have elapsed from the day following the last day of the business year in which the splitting corporation or corporation making a capital contribution in kind involved in the qualified company split, etc. received the payment of the insurance monies, etc. (in the case where there is a designated date, up to the designated date)) and the amount of the special account during the period pertaining to insurance monies, etc. that the domestic corporation established upon the qualified company split, etc.

With regard to a domestic corporation that has established a special account set forth in paragraph (1) and has effected a qualified company split, etc. (excluding a domestic corporation that has established both the special account and a special account during the period and carries over only the amount of the special account during the period to a succeeding corporation in a company split, etc. as a result of a qualified company split, etc.), the provisions of the preceding paragraph apply only in the case where the domestic corporation that has established the special account has submitted documents stating the amount of the special account to be carried over to a succeeding corporation in a company split, etc. as a result of the qualified company split, etc. and other matters specified by Ministry of Finance Order to the competent district director with jurisdiction over the place for tax payment, within two months on or after the date of the qualified company split, etc.

The amount of a special account set forth in paragraph (1) or the amount of a special account during the period that an acquiring corporation, etc. has succeeded to pursuant to the provisions of paragraph (8) is deemed to be the amount of a special account set forth in paragraph (1) that the acquiring corporation, etc. has established pursuant to the provisions of the paragraph.

Necessary matters concerning the application of the provisions of the preceding paragraphs in the case where a merger, company split, contribution in kind to the capital of the receiving corporation, or in-kind distribution (meaning the in-kind distribution prescribed in Article 2, item (xii)-5-2 (Definitions)) has been effected are specified by Cabinet Order.

In the case where a domestic corporation that holds the amount of a special account set forth in paragraph (1) of the preceding Article (excluding the amount already having been disposed of) has made an acquisition or improvement as prescribed in the paragraph during the period prescribed in the paragraph (in the case where the amount of the special account was the amount succeeded to from an acquired corporation pursuant to the provisions of paragraph (8) of the preceding Article or in other cases as specified by Cabinet Order, during the period specified by Cabinet Order; referred to as the "designated acquisition period" in paragraph (4)), when the book value of the fixed assets pertaining to the acquisition or improvement has been reduced by accounting for losses to within the limit of the amount calculated, as specified by Cabinet Order, as the portion of the special account as of the date of the acquisition or improvement that pertains to the insurance monies, etc. spent for the acquisition or improvement (hereinafter such limit is referred to as the "advanced depreciation limit" in this paragraph and paragraph (4)) or the amount not exceeding the advanced depreciation limit has been booked in such a manner as to save it as a reserve (including in a manner as specified by Cabinet Order) in the final settlement of the accounts in the business year, the amount equivalent to the amount reduced or booked as above is included in deductible expenses, when calculating the amount of income for the business year.

The provisions of the preceding paragraph apply only in the case where a tax return contains a detailed statement concerning the inclusion in deductible expenses of the amount reduced or booked as prescribed in the paragraph.

Even in the case where a tax return without entries for the matters set forth in the preceding paragraph has been filed, the district director of the tax office may apply the provisions of paragraph (1), when they find any unavoidable grounds for the person's failure to make entries for such matters.

In the case where a domestic corporation that holds the amount of a special account set forth in paragraph (1) has effected a qualified company split, qualified capital contribution in kind, or qualified in-kind distribution (hereinafter referred to as a "qualified company split, etc." in this paragraph and the following paragraph) and where the domestic corporation has made an acquisition or improvement as prescribed in paragraph (1) during the period from the beginning of the business year containing the date of the qualified company split, etc. to immediately prior to the qualified company split, etc. (limited to the case where the acquisition or improvement has been made during the designated acquisition period pertaining to the acquisition or improvement, and the acquired or improved Fixed Assets are to be transferred to a succeeding corporation in a company split, corporation receiving a capital contribution in kind, or corporation receiving a distribution in kind as a result of the qualified company split, etc.), when the book value of the Fixed Assets has been reduced to within the advanced depreciation limit, the amount equivalent to the amount reduced as above is included in deductible expenses, when calculating the amount of income for the business year.

The provisions of the preceding paragraph apply only in the case where the domestic corporation prescribed in the paragraph has submitted documents stating the amount equivalent to the reduced amount prescribed in the paragraph and other matters as specified by Ministry of Finance Order to the competent district director with jurisdiction over the place for tax payment, within two months on or after the date of the qualified company split, etc.

In the case where an acquiring corporation, succeeding corporation in a company split, corporation receiving a capital contribution in kind, or corporation receiving a distribution in kind has received the transfer of any of the Fixed Assets to which the provisions of paragraph (1) or paragraph (4) had been applied under an acquired corporation, splitting corporation, corporation making a capital contribution in kind, or corporation making a distribution in kind, as a result of a qualified merger, qualified company split, qualified capital contribution in kind, or qualified in-kind distribution, the acquisition cost of the Fixed Assets and other necessary matters concerning the application of the provisions of the preceding paragraphs are specified by Cabinet Order.

In the case where a domestic corporation (excluding a domestic corporation in liquidation; hereinafter the same applies in this Article) has, in each business year, exchanged any of the following Fixed Assets that it had owned for one year or more (including Fixed Assets that the domestic corporation had received from an acquired corporation, splitting corporation, corporation making a capital contribution in kind, or corporation making a distribution in kind (hereinafter referred to as an "acquired corporation, etc." in this paragraph and paragraph (7)) as a result of a qualified merger, qualified company split, qualified capital contribution in kind, or qualified in-kind distribution (hereinafter referred to as a "qualified organizational restructuring" in this paragraph and paragraph (7)) and that had been owned by the acquired corporation, etc. and the domestic corporation for one year or more in total) with the relevant Fixed Assets listed as follows that other persons had owned for one year or more (including Fixed Assets that the other persons had received from an acquired corporation, etc. as a result of qualified organizational restructuring and that had been owned by the acquired corporation, etc. and the other persons for one year or more in total) (such Fixed Assets exclude those deemed to have been acquired for the purpose of exchanging them with other assets), and has used the following assets that it acquired through the exchange (hereinafter referred to as the "acquired assets" in this Article) for the same usage as that of the relevant assets listed as follows that it transferred through the exchange (hereinafter referred to as the "transferred assets" in this Article) immediately prior to the transfer, when the book value of the acquired assets has been reduced, with the reduction accounted for as a loss, within the limit of the amount calculated as specified by Cabinet Order as the amount of gain on the exchange, the amount equivalent to the amount reduced as above is included in deductible expenses, when calculating the amount of income for the business year:

land (including superficies and leasehold rights for the purpose of owning buildings or structures, and rights relating to cultivation (including the cultivation of crops deemed to constitute cultivation pursuant to the provisions of Article 43, paragraph (1) of the Cropland Act) on cropland as prescribed in Article 2, paragraph (1) (Definitions) of the Cropland Act (Act No. 229 of 1952) (including cropland as prescribed in Article 2, paragraph (1) of that Act to which that Act applies by deeming the cultivation of crops to constitute cultivation pursuant to the provisions of Article 43, paragraph (1) (Special Provisions on Facilities for Advanced Crop Cultivation) of that Act));

a building (including the facilities and structures attached thereto);

machinery and equipment;

a vessel; and

a mining right (this includes a mining lease right, a right of quarrying, or any other right to dig or quarry soil and stone).

The provisions of the preceding paragraph and paragraph (5) do not apply in the case where the difference between the value of the acquired assets and that of the transferred assets at the time of an exchange set forth in these provisions exceeds 20 percent of the larger value of either of these.

The provisions of paragraph (1) apply only in the case where a tax return contains a detailed statement concerning the inclusion in deductible expenses of the amount reduced as prescribed in the paragraph.

Even in the case where a tax return without entries for the matters set forth in the preceding paragraph has been filed, the district director of the tax office may apply the provisions of paragraph (1), when they find any unavoidable grounds for the person's failure to make entries for such matters.

In the case where a domestic corporation transfers, as a result of a qualified company split, qualified capital contribution in kind, or qualified in-kind distribution (hereinafter referred to as a "qualified company split, etc." in this paragraph and the following paragraph), any acquired assets (limited to assets that had been acquired through an exchange as prescribed in paragraph (1) during the period from the beginning of the business year containing the date of the qualified company split, etc. to immediately prior to the qualified company split, etc. and used for the same usage as that of the transferred assets immediately prior to the transfer) to a succeeding corporation in a company split, corporation receiving a capital contribution in kind, or corporation receiving a distribution in kind, when the book value of the acquired assets has been reduced to within the amount equivalent to the calculated amount prescribed in paragraph (1), the amount equivalent to the amount reduced as above is included in deductible expenses, when calculating the amount of income for the business year.

The provisions of the preceding paragraph apply only in the case where the domestic corporation set forth in the paragraph has submitted documents stating the amount equivalent to the reduced amount prescribed in the paragraph and other matters specified by Ministry of Finance Order to the competent district director with jurisdiction over the place for tax payment, within two months on or after the date of the qualified company split, etc.

In the case where an acquiring corporation, succeeding corporation in a company split, corporation receiving a capital contribution in kind, or corporation receiving a distribution in kind has received the transfer of any of the Fixed Assets to which the provisions of paragraph (1) or paragraph (5) had been applied under an acquired corporation, etc. as a result of a qualified organizational restructuring, the acquisition cost of the Fixed Assets and other necessary matters concerning the application of the provisions of the preceding paragraphs are specified by Cabinet Order.

With regard to the amount that any of the following domestic corporations has accounted for as a loss and credited to the reserve for bad debts in each business year (excluding the business year containing the day preceding the date of a merger of an acquired corporation that does not fall under the category of a qualified merger and the business year containing the date of the determination of residual assets (limited to a determination where the distribution of residual assets does not fall under the category of a qualified in-kind distribution; the same applies in the following paragraph)) as the prospective amount of loss on monetary claims that it holds (excluding those that should be represented by bonds; hereinafter the same applies in this paragraph and the following paragraph), part of which are expected to generate a loss due to bad debts or any other equivalent grounds as a result of the occurrence of the fact that the payment has been granted a grace period or is to be made in installments based on an order on the confirmation of a reorganization plan or any other fact specified by Cabinet Order (in the case where there are other monetary claims against the debtor of the monetary claims, including those other monetary claims; hereinafter such monetary claims are referred to as "individually assessed monetary claims" in this Article), the portion of the credited amount up to the amount calculated as specified by Cabinet Order based on the amount of the portion for which it is found that there is no prospect of the collection or payment of the individually assessed monetary claims as of the end of the business year (such calculated amount is referred to as the "limit to individual credit reserve for bad debts" in paragraph (5)) is included in deductible expenses, when calculating the amount of income for the business year:

a domestic corporation that falls under any of the following corporations as of the end of the business year:

an ordinary corporation (excluding an investment corporation and a specific purpose company) whose stated capital or capital contributions are 100 million yen or less (excluding a corporation falling under the corporations listed in Article 66, paragraph (5), item (ii) or item (iii) (Tax Rate for Corporation Tax on Income for Each Business Year) and a large group tax sharing corporation prescribed in paragraph (6) of that Article), or that has no stated capital or capital contributions (excluding a large group tax sharing corporation prescribed in that paragraph);

a public interest corporation, etc. or a cooperative, etc.;

an association or foundation without juridical personality;