Order for Enforcement of the Income Tax Act

Income specified by Cabinet Order as income arising from the transfer of Securities located outside Japan as prescribed in Article 7, paragraph (1), item (ii) (Scope of Taxable Income) of the Act is income arising from the transfer of the following among Securities whose date of acquisition does not fall within the period from the day following the date 10 years before the date of the transfer (including, where, pursuant to Article 37-10, paragraph (3) or (4) (Special Provisions on Taxation of Capital Gains, etc. on General Shares, etc.) or Article 37-11, paragraph (3) or (4) (Special Provisions on Taxation of Capital Gains, etc. on Listed Shares, etc.) of the Act on Special Measures Concerning Taxation (Act No. 26 of 1957), the total amount and value of money and assets other than money are deemed to be revenue relating to capital gains, etc. on general shares, etc. prescribed in Article 37-10, paragraph (1) of that Act or capital gains, etc. on listed shares, etc. prescribed in Article 37-11, paragraph (1) of that Act, the transfer or extinguishment of rights corresponding to the amount of that money and the value of those assets other than money, with respect to the shares, etc. listed in Article 37-10, paragraph (2), items (i) through (v) of that Act (for the beneficial interests listed in item (iv) of that paragraph, limited to beneficial interests in Securities Investment Trusts other than Bond Investment Trusts and beneficial interests in Investment Trusts other than Securities Investment Trusts that do not fall under Bond-Based Investment Trusts), based on the events prescribed in Article 37-10, paragraph (3) (excluding the portions relating to items (viii) and (ix)) or paragraph (4), items (i) through (iv), or Article 37-11, paragraph (4), items (i) through (iii) of that Act that gave rise to the delivery of that money and those assets other than money; the same applies hereinafter in this Article) to the date of that transfer (limited to the period during which the person was a Non-Permanent Resident) (referred to as "specified Securities" in the following paragraph):

Those whose transfer is made on a foreign financial instruments market prescribed in Article 2, paragraph (8), item (iii), (b) (Definitions) of the Financial Instruments and Exchange Act;

Those whose transfer is carried out by way of a consignment of sale (limited to one that a foreign financial instruments business operator receives as that business) to a foreign financial instruments business operator (meaning a person who, outside Japan, conducts the same type of business as a financial instruments business operator prescribed in Article 2, paragraph (9) of the Financial Instruments and Exchange Act (limited to a person who conducts type-I financial instruments business prescribed in Article 28, paragraph (1) (General Provisions) of that Act or type-II financial instruments business prescribed in paragraph (2) of that Article); hereinafter the same applies in this paragraph);

Those that are recorded or entered, outside Japan, in something similar to a transfer account book prescribed in the Act on Book-Entry Transfer of Corporate Bonds and Shares (Act No. 75 of 2001) relating to an account opened at a business office, office, or other similar facility (limited to those located outside Japan) of a foreign financial instruments business operator or of a person who, outside Japan, conducts the same type of business as a registered financial institution prescribed in Article 2, paragraph (11) of the Financial Instruments and Exchange Act or an Investment Trust management company prescribed in Article 2, paragraph (11) (Definitions) of the Act on Investment Trusts and Investment Corporations, or that have been deposited for custody in that account.

The determination of whether Securities transferred by a Non-Permanent Resident (hereinafter in this paragraph referred to as "transferred Securities") fall under specified Securities at the time of that transfer is to be made on the basis of the date of acquisition of the Securities of the same class that are deemed to have been transferred where, of the Securities of the same class as those transferred Securities that were acquired before that transfer, those acquired first are assumed to have been transferred in sequence.

Where any of the following events occurs with respect to Securities held by an individual (hereinafter in this paragraph referred to as "former Securities"), the provisions of the preceding two paragraphs apply by deeming the Securities acquired by that event (hereinafter in this paragraph referred to as "acquired Securities") to have been continuously owned by that person, and the portion of those former Securities that gave rise to the acquisition of those acquired Securities to be Securities of the same class as those acquired Securities, respectively:

A share exchange prescribed in Article 57-4, paragraph (1) (Special Provisions on Capital Gains Due to Share Exchange) of the Act or a share transfer prescribed in paragraph (2) of that Article, carried out by the corporation that issued the shares (including capital contributions);

The exercise of the right to request, the occurrence of the grounds to acquire, the resolution to acquire, or the exercise prescribed in those items, with respect to shares with a right to request acquisition prescribed in Article 57-4, paragraph (3), item (i) of the Act, shares subject to call prescribed in item (ii) of that paragraph, shares subject to class-wide call prescribed in item (iii) of that paragraph, bonds with share options prescribed in item (iv) of that paragraph, share options subject to call prescribed in item (v) of that paragraph, or bonds with share options to which share options subject to call prescribed in item (vi) of that paragraph are attached;

A split or consolidation of shares (including capital contributions and investment units prescribed in Article 2, paragraph (14) of the Act on Investment Trusts and Investment Corporations; hereinafter the same applies in this paragraph) or of beneficial interests in an Investment Trust or a Specified Trust That Issues Beneficiary Certificates;

A gratis allotment of shares prescribed in Article 111, paragraph (2) (Acquisition Price of Shares Acquired by Allotment to Shareholders) by the corporation that issued the shares (limited to a gratis allotment of shares by which shares of the same class of shares as those shares are allotted);

A merger prescribed in Article 112, paragraph (1) (Acquisition Price of Shares, etc. Acquired through Merger) carried out by the corporation that issued the shares;

With respect to beneficial interests in an Investment Trust, etc. prescribed in Article 112, paragraph (3) (hereinafter in this item referred to as "Investment Trust, etc."), a merger of trusts prescribed in that paragraph of the Investment Trust, etc.;

A company split by split-off prescribed in Article 113, paragraph (1) (Acquisition Price of Shares, etc. Acquired Through a Company Split by Split-Off) of a corporation that issued the shares;

A trust split, prescribed in Article 113, paragraph (6), of a Specified Trust That Issues Beneficiary Certificates pertaining to a beneficial interest in the Specified Trust That Issues Beneficiary Certificates;

A share distribution prescribed in Article 113-2, paragraph (1) (Acquisition Price of Shares, etc. Acquired Through a Share Distribution) of a corporation that issued the shares;

An entity conversion prescribed in Article 115 (Acquisition Price of Shares, etc. in the Case of an Entity Conversion) of a corporation that issued the shares;

A merger, etc. prescribed in Article 116 (Acquisition Price of Share Options, etc. in the Case of a Merger, etc.) in which a corporation that issued share options (including subscription rights for new investment units prescribed in Article 2, paragraph (17) of the Act on Investment Trusts and Investment Corporations; the same applies in the following item) or bonds with share options is the merged corporation, splitting corporation, wholly owned subsidiary corporation in a share exchange, or wholly owned subsidiary corporation in a share transfer prescribed in that Article;

The exercise of a share option.

The scope of foreign source income prescribed in Article 7, paragraph (1), item (ii) of the Act (hereinafter referred to as "foreign source income" in this paragraph), which is paid in Japan or remitted to Japan from abroad, is as provided in the following:

where a Non-Permanent Resident has received a remittance from abroad in each year, it is deemed that the Non-Permanent Resident's income that is categorized as foreign source income paid outside Japan for that year has been remitted up to the amount of the remittance received; provided, however, that where the Non-Permanent Resident has any income that is categorized as income other than foreign source income for the relevant year (hereinafter referred to as "non-foreign source income" in this paragraph) paid outside Japan, it is deemed that the income categorized as non-foreign source income has been remitted, and then, if any amount remains, it is deemed that income categorized as foreign source income has been remitted up to the remaining amount;

the amount of income prescribed in the preceding item is to be the amount equivalent to the sum of Income in Each Class calculated in accordance with the provisions of Articles 23 to 35 (Types of Income and Amounts of Income in Each Class) and Article 69 (Aggregation of Profits and Losses) of the Act with regard to a Non-Permanent Resident's income that is categorized as foreign source income paid outside Japan and income categorized as non-foreign source income paid outside Japan, respectively. In this case, if these amounts of income include salary income or retirement income, the amount of revenue concerned is deemed to be the amount of salary income or amount of retirement income, respectively, and if they include timber income, capital gains or occasional income, the amount calculated by deducting, from the amount of revenue concerned, the necessary expenses prescribed in Article 32, paragraph (3) (Amount of Timber Income) of the Act, the acquisition cost of the assets prescribed in Article 33, paragraph (3) (Amount of Capital Gains) of the Act and the amount of expenses required for the transfer of assets, or the amount expended prescribed in Article 34, paragraph (2) (Amount of Occasional Income) of the Act, is deemed to be the amount of timber income, amount of capital gains or amount of occasional income, respectively;

in the case where the provisions of Article 7, paragraph (1), item (ii) of the Act and the preceding two items apply, if any of the Income in Each Class of Income categorized as foreign source income or in Each Class of Income categorized as non-foreign source income is paid both in and outside Japan, the amount calculated by multiplying the amount of that Income in Each Class (in the case of the income prescribed in the second sentence of the preceding item, the amount calculated pursuant to the provisions of the second sentence of the same item) by the ratio of the amount paid in Japan or amount paid outside Japan, respectively, to the amount of revenue pertaining to that class of income, is deemed to be the amount of that Income in Each Class paid in Japan or paid outside Japan, respectively;

in the case referred to in item (i), if there are two or more types of income categorized as foreign source income that is paid outside Japan, it is deemed that with regard to the amount of each of those types of income, the amount equivalent to the amount calculated by multiplying the amount of remittance pertaining to the foreign source income that is deemed to be remitted pursuant to the provisions of the same item by the ratio of the amount of that type of income (in the case of the income prescribed in the second sentence of item (ii), the amount calculated pursuant to the provisions of the second sentence of the same item) to the sum of the amounts of those various types of income has been remitted;

with regard to Each Class of Income categorized as a Non-Permanent Resident's foreign source income that is paid outside Japan and is deemed to be remitted pursuant to the provisions of the preceding items, the Non-Permanent Resident's gross income, amount of retirement income and amount of timber income are to be calculated, respectively, by combining each of those classes of income with income categorized as foreign source income that is paid in Japan and income categorized as non-foreign source income, both of which are of the same type as the former;

if, before the end of each year, either a Resident other than a Non-Permanent Resident or a Nonresident becomes a Non-Permanent Resident, or if a Non-Permanent Resident becomes either a Resident other than a Non-Permanent Resident or a Nonresident, the provisions of the preceding items apply to the amount of income categorized as foreign source income or non-foreign source income that has arisen during the period when the individual in question was a Non-Permanent Resident, which is paid outside Japan, and the amount remitted to Japan from abroad during that period.

The interest specified by Cabinet Order prescribed in Article 9, paragraph (1), item (i) (Nontaxable Income) of the Act is interest on a current account bearing interest at a rate exceeding 1 percent per annum.

The Deposits and Savings or Jointly Managed Trusts specified by Cabinet Order prescribed in Article 9, paragraph (1), item (ii) (Nontaxable Income) of the Act are Deposits and Savings or Jointly Managed Trusts that children or students of a school prescribed in that item have deposited or entrusted in the name of a representative of those children or students, under the guidance of the head of the school, as specified by Ministry of Finance Order.