Act on Special Provisions concerning Preservation Methods for Books and Documents Related to National Tax Prepared by Means of Computers

In order to respond to the information-oriented society and to reduce the burden on taxpayers, etc. relating to the preservation of books and documents related to national tax while ensuring the proper performance of national tax payment obligations, and for other purposes, this Act is to provide special provisions of the Income Tax Act (Act No. 33 of 1965), the Corporation Tax Act (Act No. 34 of 1965), and other laws concerning national tax with regard to the preservation methods, etc. for books and documents related to national tax prepared by means of computers.

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

National tax: means national tax prescribed in Article 2, item (i) (Definitions) of the Act on General Rules for National Taxes (Act No. 66 of 1962);

Books and documents related to national tax: means books related to national tax (meaning books that are required to be kept and preserved pursuant to the provisions of laws concerning national tax (excluding the books prescribed in Article 16, paragraph (11) (Special Provisions on National Consumption Tax in Cases of Performing Bonded Operations at Bonded Factories, etc.) of the Act on Collection, etc. of National Consumption Tax Imposed on Imported Goods (Act No. 37 of 1955)); the same applies hereinafter) or documents related to national tax (meaning documents that are required to be preserved pursuant to the provisions of laws concerning national tax; the same applies hereinafter);

Electronic or magnetic record: means a record made by an electronic method, a magnetic method, or any other method that cannot be recognized by human perception (referred to as "electronic or magnetic means" in item (v)), which is used for information processing by a computer;

Person required to preserve: means a person who is required to preserve books and documents related to national tax pursuant to the provisions of laws concerning national tax;

Electronic transaction: means a transaction in which transaction information (meaning the matters ordinarily stated in documents such as purchase orders, contracts, invoices, receipts, and quotations, or documents equivalent thereto, that are received or issued in relation to a transaction; the same applies hereinafter) is given and received by electronic or magnetic means;

Computer output microfilm: means microfilm prepared by outputting an electronic or magnetic record using a computer.

The keeping or preservation of books and documents related to national tax and the preservation of documents other than documents related to national tax are governed by the provisions of this Act, in addition to what is provided for in other laws concerning national tax.

Where a person required to preserve prepares all or part of books related to national tax (excluding those specified by Ministry of Finance Order; the same applies in this paragraph, in Article 5, paragraphs (1) and (3), and in Article 8, paragraphs (1) and (4)) using a computer consistently from the initial stage of recording, the person may, as provided by Ministry of Finance Order, substitute the keeping and preservation of the electronic or magnetic records relating to those books related to national tax for the keeping and preservation of those books related to national tax.

Where a person required to preserve prepares all or part of documents related to national tax using a computer consistently, the person may, as provided by Ministry of Finance Order, substitute the preservation of the electronic or magnetic records relating to those documents related to national tax for the preservation of those documents related to national tax.

In addition to what is prescribed in the preceding paragraph, where a person required to preserve records the matters stated in all or part of documents related to national tax (excluding those specified by Ministry of Finance Order; the same applies in this paragraph) in electronic or magnetic records by a device specified by Ministry of Finance Order, the person may, as provided by Ministry of Finance Order, substitute the preservation of the electronic or magnetic records relating to those documents related to national tax for the preservation of those documents related to national tax. In this case, if the preservation of the electronic or magnetic records relating to those documents related to national tax is not carried out as provided by that Ministry of Finance Order (excluding the case where those documents related to national tax are being preserved), the person required to preserve must preserve those electronic or magnetic records in compliance with requirements specified by Ministry of Finance Order, such as the period during which those electronic or magnetic records are to be preserved.

Where a person required to preserve prepares all or part of books related to national tax using a computer consistently from the initial stage of recording, the person may, as provided by Ministry of Finance Order, substitute the keeping of the electronic or magnetic records relating to those books related to national tax and the preservation of those electronic or magnetic records by computer output microfilm for the keeping and preservation of those books related to national tax.

Where a person required to preserve prepares all or part of documents related to national tax using a computer consistently, the person may, as provided by Ministry of Finance Order, substitute the preservation by computer output microfilm of the electronic or magnetic records relating to those documents related to national tax for the preservation of those documents related to national tax.

A person required to preserve who substitutes the keeping and preservation of the electronic or magnetic records relating to books related to national tax for the keeping and preservation of those books related to national tax pursuant to the provisions of paragraph (1) of the preceding Article, or who substitutes the preservation of the electronic or magnetic records relating to documents related to national tax for the preservation of those documents related to national tax pursuant to the provisions of paragraph (2) of that Article, may, in the cases specified by Ministry of Finance Order, as provided by Ministry of Finance Order, with regard to all or part of those books related to national tax or those documents related to national tax, substitute the preservation by computer output microfilm of the electronic or magnetic records relating to those books related to national tax or those documents related to national tax for the preservation of the electronic or magnetic records relating to those books related to national tax or those documents related to national tax.

With regard to books and documents related to national tax, the provisions of Article 3 (Preservation by Electronic or Magnetic Records) and Article 4 (Preparation by Electronic or Magnetic Records) of the Act on Utilization of Telecommunications Technology in Document Preservation, etc. Conducted by Private Business Operators, etc. (Act No. 149 of 2004) do not apply.

A person required to preserve with regard to income tax (excluding income tax relating to withholding) and corporation tax must, where the person has engaged in an electronic transaction, preserve the electronic or magnetic records relating to the transaction information of that electronic transaction, as provided by Ministry of Finance Order.

With regard to the application of the provisions of other laws concerning national tax to electronic or magnetic records or computer output microfilm relating to books related to national tax that are kept and preserved, or documents related to national tax that are preserved, in accordance with the Ministry of Finance Order prescribed in any of Article 4, paragraph (1), paragraph (2), or the first sentence of paragraph (3), or the paragraphs of Article 5, those electronic or magnetic records or that computer output microfilm are deemed to be those books related to national tax or those documents related to national tax.

With regard to the application of the provisions of other laws concerning national tax to electronic or magnetic records that are preserved in accordance with the Ministry of Finance Order prescribed in the preceding Article, those electronic or magnetic records are deemed to be documents other than documents related to national tax.

Where the provisions of the preceding Article and the preceding two paragraphs apply, the following apply:

with regard to the application of the provisions of Article 145, item (i) (Denial of Applications for Approval to File a Blue Return) of the Income Tax Act (including the case where it is applied mutatis mutandis pursuant to Article 166 (Filing of Returns, Payment of Taxes, and Issuance of Refunds) of that Act) and Article 64-9, paragraph (3), item (iii), (b) (Group Tax Sharing Approval) of the Corporation Tax Act, the phrase "(Books and Documents of Blue Return Taxpayers)" in Article 145, item (i) of the Income Tax Act is deemed to be replaced with "(Books and Documents of Blue Return Taxpayers) or any of Article 4, paragraph (1), paragraph (2), or the first sentence of paragraph (3) (Preservation of Books and Documents Related to National Tax by Means of Electronic or Magnetic Records, etc.), the paragraphs of Article 5 (Preservation of Books and Documents Related to National Tax by Means of Computer Output Microfilm, etc.), or Article 7 (Preservation of Electronic or Magnetic Records Relating to Transaction Information of Electronic Transactions) of the Act on Special Provisions concerning Preservation Methods for Books and Documents Related to National Tax Prepared by Means of Computers (Act No. 25 of 1998)", and the phrase "(Books and Documents of Corporations Filing Blue Returns)" in Article 64-9, paragraph (3), item (iii), (b) of the Corporation Tax Act is deemed to be replaced with "(Books and Documents of Corporations Filing Blue Returns) or any of Article 4, paragraph (1), paragraph (2), or the first sentence of paragraph (3) (Preservation of Books and Documents Related to National Tax by Means of Electronic or Magnetic Records, etc.), the paragraphs of Article 5 (Preservation of Books and Documents Related to National Tax by Means of Computer Output Microfilm, etc.), or Article 7 (Preservation of Electronic or Magnetic Records Relating to Transaction Information of Electronic Transactions) of the Act on Special Provisions concerning Preservation Methods for Books and Documents Related to National Tax Prepared by Means of Computers (Act No. 25 of 1998)";

with regard to the application of the provisions of Article 150, paragraph (1), item (i) (Rescission of Approval to File a Blue Return) of the Income Tax Act (including the case where it is applied mutatis mutandis pursuant to Article 166 of that Act) and Article 123, item (i) (Denial of Applications for Approval to File a Blue Return) of the Corporation Tax Act (including the case where it is applied mutatis mutandis pursuant to Article 146, paragraph (1) (Blue Return) of that Act), the phrase "(Books and Documents of Blue Return Taxpayers)" in Article 150, paragraph (1), item (i) of the Income Tax Act is deemed to be replaced with "(Books and Documents of Blue Return Taxpayers) or any of Article 4, paragraph (1), paragraph (2), or the first sentence of paragraph (3) (Preservation of Books and Documents Related to National Tax by Means of Electronic or Magnetic Records, etc.), the paragraphs of Article 5 (Preservation of Books and Documents Related to National Tax by Means of Computer Output Microfilm, etc.), or Article 7 (Preservation of Electronic or Magnetic Records Relating to Transaction Information of Electronic Transactions) of the Act on Special Provisions concerning Preservation Methods for Books and Documents Related to National Tax Prepared by Means of Computers", and the phrase "(Books and Documents of Corporations Filing Blue Return)" in Article 123, item (i) of the Corporation Tax Act is deemed to be replaced with "(Books and Documents of Corporations Filing Blue Return) or any of Article 4, paragraph (1), paragraph (2), or the first sentence of paragraph (3) (Preservation of Books and Documents Related to National Tax by Means of Electronic or Magnetic Records, etc.), the paragraphs of Article 5 (Preservation of Books and Documents Related to National Tax by Means of Computer Output Microfilm, etc.), or Article 7 (Preservation of Electronic or Magnetic Records Relating to Transaction Information of Electronic Transactions) of the Act on Special Provisions concerning Preservation Methods for Books and Documents Related to National Tax Prepared by Means of Computers".

with regard to the application of the provisions of Article 127, paragraph (1), item (i) (Rescission of Approval to File a Blue Return) of the Corporation Tax Act (including the case where it is applied mutatis mutandis pursuant to Article 146, paragraph (1) of that Act), the phrase "paragraph (1) of the preceding Article" in that item is deemed to be replaced with "paragraph (1) of the preceding Article or any of Article 4, paragraph (1), paragraph (2), or the first sentence of paragraph (3) (Preservation of Books and Documents Related to National Tax by Means of Electronic or Magnetic Records, etc.), the paragraphs of Article 5 (Preservation of Books and Documents Related to National Tax by Means of Computer Output Microfilm, etc.), or Article 7 (Preservation of Electronic or Magnetic Records Relating to Transaction Information of Electronic Transactions) of the Act on Special Provisions concerning Preservation Methods for Books and Documents Related to National Tax Prepared by Means of Computers".

Where the keeping and preservation of electronic or magnetic records relating to books related to national tax set forth in the following items that are specified by Ministry of Finance Order, or the keeping of those electronic or magnetic records and their preservation by computer output microfilm, satisfies the requirements specified by Ministry of Finance Order as contributing to the proper performance of national tax payment obligations, and an amended return prescribed in Article 19, paragraph (3) (Amended Return) of the Act on General Rules for National Taxes (referred to as an "amended return" in the following paragraph) is filed, or a reassessment under Article 24 (Reassessment) or Article 26 (Reassessment of Previous Reassessment) of that Act (referred to as a "reassessment" in the following paragraph) is made (hereinafter in this paragraph referred to as an "amended return, etc."), with regard to matters recorded in those electronic or magnetic records or that computer output microfilm (limited to those whose keeping and preservation have continued to be carried out satisfying those requirements on or after the date specified by Cabinet Order; the same applies hereinafter in this paragraph), and the provisions of Article 65 (Penalty Tax for Understatement) of that Act apply, the amount of the penalty tax for understatement under that Article is, notwithstanding that Article, the amount obtained by deducting, from the amount calculated pursuant to that Article, the amount calculated by multiplying the amount of tax that is to be the basis for calculating that penalty tax for understatement (where there is a fact that is to be the basis for calculating that tax, other than one relating to the matters recorded in those electronic or magnetic records or that computer output microfilm which give rise to that amended return, etc. (hereinafter in this paragraph referred to as a "fact other than one relating to matters recorded in electronic or magnetic records, etc."), the amount of tax obtained by deducting the amount calculated, as provided by Cabinet Order, as the tax based on that fact other than one relating to matters recorded in electronic or magnetic records, etc.) by 5 percent; provided, however, that this does not apply where there is a fact that is to be the basis for calculating that tax that has been concealed or disguised.

the books related to national tax of a person required to preserve who substitutes the keeping and preservation of electronic or magnetic records relating to books related to national tax for the keeping and preservation of those books related to national tax pursuant to the provisions of Article 4, paragraph (1);

the books related to national tax of a person required to preserve who substitutes the keeping of electronic or magnetic records relating to books related to national tax and the preservation of those electronic or magnetic records by computer output microfilm for the keeping and preservation of those books related to national tax pursuant to the provisions of Article 5, paragraph (1) or (3).

Beyond what is provided for in the preceding two paragraphs, matters necessary for the application of those provisions are specified by Cabinet Order.