①Where a tax treaty (meaning a convention prescribed in the proviso to Article 2, item (xii)-19 (Definitions); hereinafter the same applies in this Article) contains provisions on domestic source income that are different from the provisions of the preceding Article, the domestic source income of a foreign corporation that is subject to such tax treaty, notwithstanding the Article, is governed by the tax treaty to the extent of such different provisions. In this case, where the tax treaty contains provisions on domestic source income that can replace the provisions of paragraph (1), item (iv) or (v) of the Article, with regard to the application of the part of this Act that relates to the matters prescribed in these items, any income treated as domestic source income under the tax treaty is deemed to be the corresponding domestic source income listed in the relevant item.

②In the case of calculating the income listed in paragraph (1), item (i) of the preceding Article of a foreign corporation having a permanent establishment, when a tax treaty (limited to one providing that tax may be imposed on the income of the foreign corporation listed in that item, and excluding one providing that income arises from internal dealings prescribed in that item between the permanent establishment and the head office, etc. of the foreign corporation) applies, the internal dealings prescribed in that item are not to include facts equivalent to the payment of interest (including anything specified by Cabinet Order as being equivalent thereto; hereinafter the same applies in this paragraph) between the permanent establishment and the head office, etc. of the foreign corporation (excluding facts equivalent to the payment of interest between the permanent establishment and the head office, etc. of a foreign corporation that falls under the category of financial institutions specified by Cabinet Order) or other facts specified by Cabinet Order.