This Act comes into effect on April 1, 1998.

Except as otherwise provided in these Supplementary Provisions, the provisions of the Corporation Tax Act as amended by the provisions of Article 1 (hereinafter referred to as the "New Corporation Tax Act") apply to corporation tax on income for a business year of a corporation (including an association or foundation without juridical personality prescribed in Article 2, item (viii) of the New Corporation Tax Act; the same applies hereinafter) starting on or after the date on which this Act comes into effect (hereinafter referred to as the "Effective Date") and to corporation tax on liquidation income from a dissolution or merger on or after the Effective Date (including corporation tax pertaining to income for a business year in liquidation of a corporation on which corporation tax on liquidation income is imposed and corporation tax to be paid upon a partial distribution of residual assets; the same applies hereinafter in this Article), and the provisions then in force continue to govern corporation tax on income for a business year of a corporation that started before the Effective Date and corporation tax on liquidation income from a dissolution or merger before the Effective Date.

The provisions of Article 38, paragraph (2) of the New Corporation Tax Act (limited to the part pertaining to item (v)) apply to the things listed in that item that are imposed on a corporation on or after the Effective Date.

The provisions of Article 51 of the New Corporation Tax Act apply to a contribution of assets other than monies made by a corporation on or after the Effective Date, and the provisions then in force continue to govern a contribution of assets other than monies made by a corporation before the Effective Date.

If a corporation (limited to an ordinary corporation prescribed in Article 2, item (ix) of the Corporation Tax Act as amended by the provisions of Article 1 of the Act Partially Amending the Corporation Tax Act, etc. (Act No. 6 of 2001) (hereinafter referred to as the "2001 New Corporation Tax Act") whose amount of capital or amount of capital contributions as of the end of each business year exceeds 100 million yen, and a mutual company prescribed in the Insurance Business Act (Act No. 105 of 1995) and any other entity specified by Cabinet Order as being equivalent thereto) is subject to the provisions of Article 52, paragraph (2) of the 2001 New Corporation Tax Act in each business year starting during the period from the Effective Date to March 31, 2003, it may, notwithstanding the provisions of that paragraph, treat the amount calculated by multiplying the sum of the book values of the collectively assessed monetary claims prescribed in that paragraph as of the end of that business year (or, for monetary claims specified by Cabinet Order, the balance remaining after deducting the amount specified by Cabinet Order) by the ratio specified by Cabinet Order as the amount calculated in the manner specified by Cabinet Order prescribed in that paragraph.

①With regard to the calculation of the amount of income for each business year of a corporation starting during the period from the Effective Date to March 31, 2003, the provisions of Article 54, paragraphs (1), (3) and (4) of the Corporation Tax Act prior to the amendment by the provisions of Article 1 (hereinafter referred to as the "Former Corporation Tax Act") (including as applied pursuant to Article 142 of the Former Corporation Tax Act; the same applies hereinafter in this Article) remain in force. In this case, the phrase "bonuses prescribed in paragraph (4) of that Article that are paid to officers (" in Article 54, paragraph (1) of the Former Corporation Tax Act is deemed to be replaced with "bonuses prescribed in paragraph (4) of that Article that are paid to officers (hereinafter referred to as 'employees, etc.' in this paragraph) (excluding those paid to employees, etc. who have come to engage in the business of the acquiring corporation or of the succeeding corporation in a company split prescribed in item (xii)-3 of that Article as a result of a merger that does not fall under a qualified merger prescribed in Article 2, item (xii)-8 (Definitions) of the Corporation Tax Act as amended by the provisions of Article 1 of the Act Partially Amending the Corporation Tax Act, etc. (Act No. 6 of 2001) or a company split by split-off prescribed in item (xii)-9 of that Article that does not fall under a Qualified Company Split by Split-Off prescribed in item (xii)-12 of that Article;", and the phrase "calculated amount" is deemed to be replaced with "amount equivalent to five-sixths of the calculated amount" for a business year starting during the period from the Effective Date to March 31, 1999, with "amount equivalent to four-sixths of the calculated amount" for a business year starting during the period from April 1, 1999 to March 31, 2000, with "amount equivalent to three-sixths of the calculated amount" for a business year starting during the period from April 1, 2000 to March 31, 2001, with "amount equivalent to two-sixths of the calculated amount" for a business year starting during the period from April 1, 2001 to March 31, 2002, and with "amount equivalent to one-sixth of the calculated amount" for a business year starting during the period from April 1, 2002 to March 31, 2003.

②If an employee, etc. of a corporation (meaning an employee, etc. prescribed in Article 54, paragraph (1) of the Former Corporation Tax Act as it remains in force pursuant to the provisions of the preceding paragraph and is applied with the replacement of terms; the same applies hereinafter in this paragraph) has, as a result of a qualified merger, etc. (meaning a qualified merger prescribed in Article 2, item (xii)-8 of the 2001 New Corporation Tax Act (hereinafter referred to as a "qualified merger") or a Qualified Company Split by Split-Off prescribed in item (xii)-12 of that Article (hereinafter referred to as a "Qualified Company Split by Split-Off"); the same applies hereinafter in this paragraph and paragraph (4)), come to engage in the business of an acquiring corporation, etc. (meaning an acquiring corporation or a succeeding corporation in a company split prescribed in item (xii)-3 of that Article (hereinafter referred to as a "succeeding corporation in a company split"); the same applies hereinafter in this paragraph and paragraph (4)), the amount of the reserve for bonuses specified in each of the following items in accordance with the category of qualified merger, etc. listed in that item is to be succeeded to by the acquiring corporation, etc. involved in that qualified merger, etc.:

③The amount of the reserve for bonuses that was included in deductible expenses pursuant to the provisions of Article 54, paragraph (1) of the Former Corporation Tax Act, when calculating the amount of income for each business year (excluding the amount succeeded to by a succeeding corporation in a company split involved in a Qualified Company Split by Split-Off pursuant to the provisions of the preceding paragraph), is included in gross profits, when calculating the amount of income for the following business year of the business year.

④The amount of the reserve for bonuses succeeded to by an acquiring corporation, etc. pursuant to the provisions of paragraph (2) is included in gross profits, when calculating the amount of income for the business year containing the date of the qualified merger, etc. of the acquiring corporation, etc.

⑤Necessary matters concerning the application of the provisions of the preceding three paragraphs are specified by Cabinet Order.

①A corporation that has the amount in a special repair reserve account pertaining to assets subject to the transitional measures (meaning assets for which a special repair reserve account has been established as of the last day of the business year immediately preceding the business year first starting on or after the Effective Date (hereinafter referred to as "specified assets" in this paragraph) and assets transferred from an acquired corporation, etc. (meaning an acquired corporation, a splitting corporation prescribed in Article 2, item (xii)-2 of the 2006 New Corporation Tax Act, a corporation making a capital contribution in kind prescribed in item (xii)-4 of that Article or a corporation conducting a post-formation acquisition of assets prescribed in item (xii)-6 of that Article; the same applies hereinafter in this paragraph) through a qualified organizational restructuring (meaning a qualified merger, a qualified company split prescribed in Article 2, item (xii)-11 of the Corporation Tax Act as amended by the provisions of Article 2 of the Act Partially Amending the Income Tax Act, etc., and Other Matters (Act No. 10 of 2006) (hereinafter referred to as the "2006 New Corporation Tax Act" in this paragraph and paragraph (5)), a qualified capital contribution in kind prescribed in item (xii)-14 of that Article or a qualified post-formation acquisition of assets prescribed in item (xii)-15 of that Article; the same applies hereinafter in this Article) that fell under specified assets for that acquired corporation, etc. immediately before that qualified organizational restructuring; the same applies hereinafter in this Article) (limited to the amount included in deductible expenses, when calculating the amount of income for each business year, pursuant to the provisions of Article 56, paragraph (1) of the Former Corporation Tax Act and of Article 56, paragraph (1) of the Former Corporation Tax Act as it remains in force pursuant to the provisions of Article 7, paragraph (1) of the Supplementary Provisions prior to the amendment by the provisions of Article 9 of the Act Partially Amending the Corporation Tax Act, etc. (Act No. 79 of 2002; hereinafter referred to as the "2002 Amendment Act" in this paragraph), and the amount included in deductible expenses, when calculating the amount of income for the business year containing the date of a qualified company split by spin-off, etc. (meaning a qualified company split by spin-off prescribed in Article 2, item (xii)-13 of the 2006 New Corporation Tax Act, a qualified capital contribution in kind prescribed in item (xii)-14 of that Article or a qualified post-formation acquisition of assets prescribed in item (xii)-15 of that Article; the same applies hereinafter in this paragraph and paragraph (3)), by the splitting corporation, etc. (meaning a splitting corporation prescribed in Article 2, item (xii)-2 of the 2006 New Corporation Tax Act, a corporation making a capital contribution in kind prescribed in item (xii)-4 of that Article or a corporation conducting a post-formation acquisition of assets prescribed in item (xii)-6 of that Article) involved in that qualified company split by spin-off, etc., pursuant to the provisions of Article 7, paragraph (2) of the Supplementary Provisions prior to the amendment by the provisions of Article 9 of the 2002 Amendment Act, and excluding the amount that has already been required to be withdrawn pursuant to the provisions of Article 56, paragraph (2) of the Former Corporation Tax Act, Article 56, paragraph (2) of the Former Corporation Tax Act as it remains in force pursuant to the provisions of Article 7, paragraph (1) of the Supplementary Provisions prior to the amendment by the provisions of Article 12 of the Act Partially Amending the Corporation Tax Act, etc. (Act No. 6 of 2001; hereinafter referred to as the "2001 Corporation Tax Amendment Act" in this paragraph), Article 7, paragraph (2) of the Supplementary Provisions prior to the amendment by the provisions of Article 12 of the 2001 Corporation Tax Amendment Act, Article 7, paragraphs (4) and (5) of the Supplementary Provisions prior to the amendment by the provisions of Article 9 of the 2002 Amendment Act, and the following paragraph; the same applies hereinafter in this Article) must, if the special repairs prescribed in Article 56, paragraph (1) of the Former Corporation Tax Act have been completed for those assets subject to the transitional measures, if it has ceased to have those assets subject to the transitional measures (excluding the case where it transfers those assets subject to the transitional measures to an acquiring corporation, etc. (meaning an acquiring corporation, a succeeding corporation in a company split, a corporation receiving a capital contribution in kind prescribed in Article 2, item (xii)-5 of the 2006 New Corporation Tax Act or a transferee corporation in a post-formation acquisition prescribed in item (xii)-6-2 of that Article; the same applies in paragraphs (6) and (7)) through a qualified organizational restructuring), or in any other case specified by Cabinet Order, withdraw the amount in the special repair reserve account pertaining to those assets subject to the transitional measures, pursuant to the provisions of Cabinet Order.

②If, as of the last day of each business year ending on or after March 31, 2003 of a corporation having assets subject to the transitional measures, there is an amount in the special repair reserve account pertaining to those assets subject to the transitional measures carried forward from the previous business year, the corporation must withdraw an amount equivalent to the amount calculated by multiplying the amount of special repair reserve subject to withdrawal (meaning the amount in the special repair reserve account pertaining to those assets subject to the transitional measures as of the last day of the business year of that corporation first ending on or after March 31, 2003) by the number of months in that business year and dividing the result by 48 (or, if that calculated amount exceeds the amount in the special repair reserve account pertaining to those assets subject to the transitional measures as of the last day of that business year, the amount in that special repair reserve account).

③With regard to the business year of a corporation containing the date of a qualified company split by spin-off, etc. in the case where the corporation transfers assets subject to the transitional measures through the qualified company split by spin-off, etc. (limited to the case where it transfers them through a qualified company split by spin-off, etc. carried out on or after April 1, 2003, and excluding the case where it transfers them through a qualified company split by spin-off, etc. carried out on the first day of the business year of that corporation), the provisions of the preceding paragraph apply by deeming the day preceding the date of that qualified company split by spin-off, etc. to be the last day of the business year. In this case, the phrase "the number of months in that business year" in that paragraph is deemed to be replaced with "the number of months in the period from the first day of that business year to the day preceding the date of that qualified company split by spin-off, etc.".

④The number of months set forth in the preceding two paragraphs is calculated according to the calendar and a division of less than one month is counted as one month.

⑤The amount in a special repair reserve account that has become required to be withdrawn pursuant to the provisions of paragraph (1) and paragraph (2) (including as applied with the replacement of terms pursuant to the provisions of paragraph (3)) is included in gross profits, when calculating the amount of income for the business year containing the respective day on which it became required to be withdrawn (or, in the case where the amount in that special repair reserve account is withdrawn in connection with the transfer of assets subject to the transitional measures to an acquiring corporation or a succeeding corporation in a company split through a merger that does not fall under a qualified merger or through a company split by split-off (meaning a company split by split-off prescribed in Article 2, item (xii)-9 of the 2006 New Corporation Tax Act; the same applies hereinafter in this paragraph) that does not fall under a Qualified Company Split by Split-Off (meaning a Qualified Company Split by Split-Off prescribed in item (xii)-12 of that Article), the day preceding the date of that merger or company split by split-off).

⑥If a corporation has transferred assets subject to the transitional measures to an acquiring corporation, etc. through a qualified organizational restructuring, the amount in the special repair reserve account pertaining to those assets subject to the transitional measures immediately before that qualified organizational restructuring is to be succeeded to by that acquiring corporation, etc.

⑦The amount in a special repair reserve account succeeded to by an acquiring corporation, etc. pursuant to the provisions of the preceding paragraph is deemed to be the amount in a special repair reserve account that the acquiring corporation, etc. has as of the date of that qualified organizational restructuring.

⑧Beyond what is provided for in paragraph (4), necessary matters concerning the application of the provisions of paragraphs (1) through (3), paragraph (5), and paragraph (6) are specified by Cabinet Order.

①With regard to the calculation of the amount of income for each business year of a corporation starting during the period from the Effective Date to March 31, 2003, the provisions of Article 56-2, paragraphs (1), (3) and (4) of the Former Corporation Tax Act (including as applied pursuant to Article 142 of the Former Corporation Tax Act; the same applies hereinafter in this Article) remain in force. In this case, in Article 56-2, paragraph (1) of the Former Corporation Tax Act, the phrase "manufacturing business" is deemed to be replaced with "manufacturing business (hereinafter referred to as the 'covered business' in this paragraph)", the phrase "its repair" with "its repair (excluding repairs made for defects in the subject matter pertaining to a business transferred to the acquiring corporation or to the succeeding corporation in a company split prescribed in item (xii)-3 of that Article through a merger that does not fall under a qualified merger prescribed in Article 2, item (xii)-8 (Definitions) of the Corporation Tax Act as amended by the provisions of Article 1 of the Act Partially Amending the Corporation Tax Act, etc. (Act No. 6 of 2001) or through a company split by split-off prescribed in item (xii)-9 of that Article that does not fall under a Qualified Company Split by Split-Off prescribed in item (xii)-12 of that Article)", the phrase "that repair" with "free repair pertaining to that covered business", and the phrase "calculated amount" with "amount equivalent to five-sixths of the calculated amount" for a business year starting during the period from the Effective Date to March 31, 1999, with "amount equivalent to four-sixths of the calculated amount" for a business year starting during the period from April 1, 1999 to March 31, 2000, with "amount equivalent to three-sixths of the calculated amount" for a business year starting during the period from April 1, 2000 to March 31, 2001, with "amount equivalent to two-sixths of the calculated amount" for a business year starting during the period from April 1, 2001 to March 31, 2002, and with "amount equivalent to one-sixth of the calculated amount" for a business year starting during the period from April 1, 2002 to March 31, 2003.

②If a corporation transfers, through a qualified merger or a Qualified Company Split by Split-Off (hereinafter referred to as a "qualified merger, etc." in this paragraph and paragraph (4)), all or part of the covered business prescribed in Article 56-2, paragraph (1) of the Former Corporation Tax Act as it remains in force pursuant to the provisions of the preceding paragraph and is applied with the replacement of terms (hereinafter referred to as the "covered business" in this paragraph) to an acquiring corporation or a succeeding corporation in a company split (hereinafter referred to as an "acquiring corporation, etc." in this paragraph and paragraph (4)), the amount of the reserve for product warranties, etc. specified in each of the following items in accordance with the category of qualified merger, etc. listed in that item is to be succeeded to by the acquiring corporation, etc. involved in that qualified merger, etc.:

③The amount of the reserve for product warranties, etc. that was included in deductible expenses pursuant to the provisions of Article 56-2, paragraph (1) of the Former Corporation Tax Act, when calculating the amount of income for each business year (excluding the amount succeeded to by a succeeding corporation in a company split involved in a Qualified Company Split by Split-Off pursuant to the provisions of the preceding paragraph), is included in gross profits, when calculating the amount of income for the following business year of the business year.

④The amount of the reserve for product warranties, etc. succeeded to by an acquiring corporation, etc. pursuant to the provisions of paragraph (2) is included in gross profits, when calculating the amount of income for the business year containing the date of the qualified merger, etc. of the acquiring corporation, etc.

⑤Necessary matters concerning the application of the provisions of the preceding three paragraphs are specified by Cabinet Order.

①The provisions then in force continue to govern the inclusion in gross profits and in deductible expenses of amounts pertaining to instalment sales or similar transactions prescribed in Article 62, paragraph (1) of the Former Corporation Tax Act, or deferred payment sales or deferred payment contracts for work prescribed in Article 63, paragraph (1) of the Former Corporation Tax Act, of inventory or services or of assets or construction work for which the subject matter was delivered or provided in a business year of a corporation that started before the Effective Date.

②If a corporation that, in the business year immediately preceding the business year first starting on or after the Effective Date, accounted for all instalment sales or similar transactions of inventory or services prescribed in Article 62, paragraph (1) of the Former Corporation Tax Act that it made (hereinafter referred to as "instalment sales or similar transactions" in this paragraph) under the instalment basis method specified by Cabinet Order prescribed in paragraph (1) of that Article (hereinafter referred to as the "instalment basis method" in this paragraph) makes instalment sales or similar transactions of inventory or services in any business year starting during the period from the Effective Date to March 31, 2003, then, when calculating the amount of income for the business year in which it made those instalment sales or similar transactions of inventory or services (excluding those falling under long-term instalment sales or similar transactions prescribed in Article 62, paragraph (2) of the New Corporation Tax Act; hereinafter referred to as an "instalment sale under the transitional rules" in this Article) and for each subsequent business year, the amounts obtained by adding, to each of the amount of proceeds and the amount of expenses that would be included in gross profits or deductible expenses for each of those business years if the amount of proceeds and the amount of expenses pertaining to that instalment sale under the transitional rules were accounted for under the instalment basis method, the amount specified in whichever of the following items lists the business year in which the instalment sale under the transitional rules was made (or, if that business year is less than one year, the amount calculated by dividing that amount by 12 and multiplying the result by the number of months in that business year) (or, if that amount exceeds the amount remaining after deducting, from the amount of proceeds or the amount of expenses pertaining to the instalment sale under the transitional rules, an amount equivalent to the amounts already included in gross profits or deductible expenses pursuant to the provisions of this paragraph for that instalment sale under the transitional rules up to the business year immediately preceding that business year, the amount remaining after that deduction) are included in gross profits and deductible expenses, respectively:

③The number of months set forth in the preceding paragraph is calculated according to the calendar and a division of less than one month is counted as one month.

④The provisions of paragraph (2) apply only if a statement of the amounts, out of the amount of proceeds and the amount of expenses pertaining to the instalment sale under the transitional rules, that are included in gross profits and deductible expenses for the business year in which the instalment sale under the transitional rules was made (hereinafter referred to as the "business year of sale" in this paragraph) is attached to the Final Return (meaning a Final Return prescribed in Article 2, item (xxxi) of the New Corporation Tax Act; the same applies hereinafter in this paragraph and the following paragraph) for the business year of sale (or, if the business year to which the provisions of paragraph (2) apply is a business year after the business year of sale, only if a statement of the amounts included in gross profits and deductible expenses pursuant to the provisions of that paragraph is attached to the Final Return for each business year from the business year of sale through that business year).

⑤Even if a Final Return without the statement referred to in the preceding paragraph attached has been filed, the district director may apply the provisions of paragraph (2) on finding that there were unavoidable circumstances for the failure to attach it, but only if the statement referred to in that paragraph is submitted.

⑥With regard to the application of the provisions of the preceding two paragraphs in the case where the corporation referred to in paragraph (2) is subject to the provisions of Article 72, paragraph (1) of the New Corporation Tax Act (including as applied mutatis mutandis pursuant to Article 145, paragraph (1) of the New Corporation Tax Act), the phrase "the same applies hereinafter in this paragraph and the following paragraph)" in paragraph (4) is deemed to be replaced with "the same applies hereinafter in this paragraph and the following paragraph) (or, if an interim return (meaning an interim return prescribed in item (xxx) of that Article that states the matters listed in the items of Article 72, paragraph (1) of the New Corporation Tax Act; the same applies hereinafter in this paragraph and the following paragraph) is filed for that business year of sale, that interim return)", the phrase "the Final Return for each business year from the business year of sale through that business year" is deemed to be replaced with "the Final Return for each business year from the business year of sale through the business year immediately preceding that business year and the interim return for that business year", and the phrase "Final Return" in the preceding paragraph is deemed to be replaced with "interim return".

⑦Special provisions for the treatment of the amount of proceeds and the amount of expenses pertaining to an instalment sale under the transitional rules in the case where a qualified merger, a qualified company split prescribed in Article 2, item (xii)-11 of the 2001 New Corporation Tax Act, a qualified capital contribution in kind prescribed in item (xii)-14 of that Article or a qualified post-formation acquisition of assets prescribed in item (xii)-15 of that Article has been carried out, and other necessary matters concerning the application of the provisions of paragraph (2), are specified by Cabinet Order.

The provisions of Article 63 of the New Corporation Tax Act apply to contracts for long-term large-scale construction work prescribed in paragraph (1) of that Article and contracts for construction work prescribed in paragraph (2) of that Article pertaining to contracts for work that a corporation concludes on or after the Effective Date, and the provisions then in force continue to govern contracts for long-term construction work prescribed in Article 64, paragraph (2) of the Former Corporation Tax Act pertaining to contracts for work concluded before the Effective Date.

The provisions of Article 69, paragraphs (6) through (8) of the New Corporation Tax Act apply to the foreign country's corporate tax prescribed in paragraph (6) of that Article that is imposed on the income of a foreign sub-subsidiary prescribed in that paragraph pertaining to the amount of dividends, etc. prescribed in paragraph (4) of that Article that a domestic corporation receives from a foreign subsidiary prescribed in that paragraph in a business year starting on or after the Effective Date.

The provisions of Article 159, paragraph (1) of the New Corporation Tax Act apply to violations prescribed in that paragraph committed on or after the Effective Date, and the provisions then in force continue to govern violations prescribed in Article 159, paragraph (1) of the Former Corporation Tax Act committed before the Effective Date.