Order for Enforcement of the Income Tax Act

The income specified by Cabinet Order as income arising from the transfer of assets located outside Japan prescribed in Article 95, paragraph (4), item (iii) (Foreign Tax Credit) of the Act is income arising from the transfer of the following assets (for the assets listed in item (iii), the felling or transfer):

real property located outside Japan;

a right on real property located outside Japan, a mining right outside Japan or a quarrying right outside Japan;

forested land located outside Japan;

shares issued by a Foreign Corporation or an investor's interest in a Foreign Corporation, on the transfer of which, where shares or contributions equivalent in number or amount to a certain proportion or more of the total number or total amount of issued shares or contributions of that Foreign Corporation are owned, foreign income tax is imposed on the income arising from the transfer in the country or region where the head office or principal office of that Foreign Corporation is located;

shares of a real estate-related corporation (including contributions and investment units prescribed in Article 2, paragraph (14) (Definitions) of the Act on Investment Trusts and Investment Corporations; the same applies in the following item and the following paragraph);

where owning the shares of a corporation pertaining to the ownership or management of a golf course located outside Japan is required so that the owner becomes a person entitled to use the golf course continuously under advantageous terms compared to general users, those shares;

the right concerning the utilization of golf courses or other facilities located outside Japan.

The real estate-related corporation prescribed in item (v) of the preceding paragraph means a corporation for which the rate of the sum of the values of the following assets accounts for 50 percent or more of the total amount of its gross assets:

land, etc. located outside Japan (meaning land or a right on land, buildings and their associated facilities, or structures; hereinafter the same applies in this paragraph);

shares of a corporation for which the rate of the sum of the values of land, etc. located outside Japan accounts for 50 percent or more of the total amount of its gross assets;

shares (excluding those falling under shares listed in the preceding item) of a corporation which owns shares listed in the preceding item or the following item (limited to a corporation for which the rate of the sum of the values of land, etc. located outside Japan and shares listed in the preceding item, this item, and the following item accounts for 50 percent or more of the total amount of its gross assets);

shares (excluding those falling under shares listed in the preceding two items) of a corporation which owns shares listed in the preceding item (limited to a corporation for which the rate of the sum of the values of land, etc. located outside Japan and shares listed in the preceding two items and this item accounts for 50 percent or more of the total amount of its gross assets).

The businesses specified by Cabinet Order prescribed in Article 95, paragraph (4), item (iv) (Foreign Tax Credit) of the Act are the following businesses:

a business that has as its main content the provision of the services of motion picture or theater actors, musicians and any other entertainers or professional athletes;

a business that has as its main content the provision of the services of attorneys, certified public accountants, architects or other professionals;

a business that has as its main content the provision of services that a person having specialized knowledge or special skills in science and technology, business management or other fields carries out by utilizing that knowledge or those skills (excluding such a business where it is carried out incidentally to the principal operations of the person carrying on the business, such as the sale of machinery and equipment, and a business that has as its main content the provision of services of directing or supervising construction or installation work prescribed in Article 2, paragraph (1), item (viii)-4, (b) (Definitions) of the Act).

The transaction specified by Cabinet Order as a sale or purchase transaction of bonds with a repurchase or resale agreement prescribed in Article 95, paragraph (4), item (viii) (Foreign Tax Credit) of the Act is a transaction in which bonds are transferred or purchased under an agreement to repurchase or resell them on a date agreed in advance at a price agreed in advance (or, where it is possible to agree on the date and price on or after the commencement of the transaction instead of agreeing on them in advance, on a date agreed on or after that commencement at a price agreed on or after that commencement), and bonds of the same kind and quantity as those bonds are repurchased or resold based on that agreement (referred to in the following paragraph as a "bond transaction with a repurchase/resale agreement").

The profit specified by Cabinet Order prescribed in Article 95, paragraph (4), item (viii) of the Act is the profit equivalent to the amount obtained by deducting the amount of consideration for the purchase from the amount of consideration for the resale, where, in a bond transaction with a repurchase/resale agreement that is conducted with a person who conducts operations outside Japan and pertains to those operations, the amount of consideration for the resale when bonds of the same kind and quantity as the bonds are resold exceeds the amount of consideration for the purchase when the bonds are purchased.

With regard to the application of the provisions of Article 95, paragraph (4), item (viii) of the Act, loans provided for a Nonresident or a Foreign Corporation for the purpose of purchasing a vessel or an aircraft to be used for the operations by the Nonresident or the Foreign Corporation are treated as loans falling under the provisions of the same item, and loans provided for a Resident or a Domestic Corporation for the purpose of purchasing a vessel or aircraft to be used for the operations by the Resident or the Domestic Corporation are treated as loans other than those falling under the provisions of Article 95, paragraph (4), item (viii) of the Act.

The implements specified by Cabinet Order prescribed in Article 95, paragraph (4), item (ix), (c) (Foreign Tax Credit) of the Act are vehicles and transport equipment, tools, and appliances and fixtures.

With regard to the application of the provisions of Article 95, paragraph (4), item (ix) of the Act, royalties for the assets prescribed in (b) or (c) of the same item which are used in a vessel or aircraft used for the operations by a Nonresident or a Foreign Corporation are treated as royalties falling under the provisions of the same item, and royalties for those assets which are used in a vessel or aircraft used for the operations by a Resident or a Domestic Corporation are treated as royalties other than those falling under the provisions of the same item.

The provision of personal services specified by Cabinet Order prescribed in Article 95, paragraph (4), item (x), (a) (Foreign Tax Credit) of the Act is the following work or other provision of personal services:

work carried out outside Japan by a person acting as an officer of a Domestic Corporation (excluding the work carried out by the person acting as an officer in the case where the person also works full time as an employee of the Domestic Corporation);

work and other provision of personal services carried out on a vessel or aircraft operated by a Resident or Domestic Corporation (excluding the temporary provision of personal services carried out at a port of call outside Japan).

The provision of personal services specified by Cabinet Order prescribed in Article 95, paragraph (4), item (x), (c) of the Act is the work or other provision of personal services listed in the items of the preceding paragraph that was carried out during a period when the person carrying out that work or other provision of personal services was a Nonresident.

The monetary awards specified by Cabinet Order prescribed in Article 95, paragraph (4), item (xi) (Foreign Tax Credit) of the Act are money, goods or other economic benefits (excluding benefits given in the form of travel or other provision of services in lieu of which money or goods may not be chosen) received as a prize for the advertisement of that business from a person who carries on business outside Japan.

The contracts specified by Cabinet Order prescribed in Article 95, paragraph (4), item (xii) (Foreign Tax Credit) of the Act are insurance policies concluded by a foreign insurer prescribed in Article 2, paragraph (6) (Definitions) of the Insurance Business Act, a life insurance company prescribed in paragraph (3) of that Article or a casualty insurance company prescribed in paragraph (4) of that Article, or contracts pertaining to mutual aid similar thereto, that contain a provision for the payment of an annuity.

The contracts specified by Cabinet Order prescribed in Article 95, paragraph (4), item (xiv) (Foreign Tax Credit) of the Act are contracts under which one party agrees to make a contribution for the business of the other party, and the other party agrees to distribute the profits arising from that business.

The income specified by Cabinet Order prescribed in Article 95, paragraph (4), item (xv) (Foreign Tax Credit) of the Act is, of the income arising from a Resident's carrying on of a business of transport by vessel or aircraft both in Japan and outside Japan, the income to arise from that Resident's operations outside Japan, determined, for a business of transport by vessel, on the basis of revenue pertaining to passengers or cargo that boarded or were loaded outside Japan, and for a business of transport by aircraft, on the basis of revenue or expenses pertaining to its operations outside Japan (meaning operations conducted outside Japan; the same applies hereinafter in this Article), the value of Fixed Assets used for those operations outside Japan, or other factors sufficient to infer the degree to which those operations outside Japan contributed to the generation of income pertaining to that transport business.

The things specified by Cabinet Order prescribed in Article 95, paragraph (4), item (xvi) (Foreign Tax Credit) of the Act are income on which foreign income tax is imposed in the treaty partner prescribed in that item.