Order for Enforcement of the Income Tax Act

The amount calculated as specified by Cabinet Order prescribed in Article 102 (Calculating the Amount of Taxes If a Nonresident Becomes a Resident Partway Through the Year) of the Act is to be the amount of income tax calculated in the following order for the Resident prescribed in that Article:

the income listed in Article 7, paragraph (1), item (i) (Scope of Taxable Income) of the Act that arose during the period in which that person was a Resident in that year (hereinafter in this Article referred to as the "period as a Resident") (or, where there is a period within the period as a Resident during which that person was a Non-Permanent Resident, that income and the income listed in item (ii) of that paragraph that arose within that period; the same applies in paragraphs (4) and (5)) and the income pertaining to the domestic source income specified in each item of Article 164, paragraph (1) (How Nonresidents Are Taxed) of the Act according to the category of Nonresident listed in those items that arose during the period in which that person was a Nonresident in that year (hereinafter in this Article referred to as the "period as a Nonresident") are respectively classified into Each Class of Income in accordance with Part II, Chapter II, Section 2 (Calculation of Income in Each Class) of the Act, and the amount of income is calculated for Each Class of Income;

on the basis of the amount of income in the preceding item (or, where, among the Classes of Income classified under that item, there are Classes of Income of the same kind that arose within the period as a Resident and that arose within the period as a Nonresident, the sum of the amounts of income pertaining to each of those Classes of Income), the gross income, the amount of retirement income and the amount of timber income are calculated in accordance with the provisions of Part II, Chapter II, Sections 1 and 3 (Tax Base, Aggregation of Profits and Losses, and Deduction for Carryover of Losses) of the Act;

in accordance with the provisions of Part II, Chapter II, Section 4 (Deductions from Income) of the Act, deduct the basic deduction and other deductions from the gross income, amount of retirement income, or amount of timber income referred to in the preceding item, and calculate the taxable gross income, taxable retirement income, or taxable timber income;

on the basis of the taxable gross income, taxable retirement income, or taxable timber income referred to in the preceding item, calculate the amount of income tax in accordance with the provisions of Part II, Chapter III, Section 1 (Tax Rates) of the Act;

in the case equivalent to the case where that person may receive the dividend tax credit, the credit for the amount equivalent to the foreign tax adjusted at distribution, and the foreign tax credit for that year pursuant to the provisions of Part II, Chapter III, Section 2 (Tax Credits) of the Act (including the case where the calculation is made in accordance with the provisions of that Section pursuant to the provisions of Article 165, paragraph (1) (Calculation of the Tax Base and Amount of Income Taxes Imposed on Aggregate Income) of the Act), deduct those credits from the amount of income tax referred to in the preceding item and calculate the amount of income tax after the deduction;

if that person has domestic source income that the person is to receive payment of during the period as a Nonresident and that is specified in each item of Article 164, paragraph (2) of the Act for the category of Nonresident listed in that item, calculate the amount of income tax on that domestic source income by applying the provisions of Article 169 (Income Tax Base for Separate Taxation) and Article 170 (Tax Rates for Income Taxes under Separate Taxation) of the Act, and add that amount of income tax to the amount of income tax after the deduction referred to in the preceding item.

In the case of calculating the amount of income for Each Class of Income pursuant to the provisions of paragraph (1), item (i), if there is salary income, retirement income, miscellaneous income pertaining to the public pension or retirement package prescribed in Article 35, paragraph (3) (Miscellaneous Income) of the Act, or timber income, capital gains, or occasional income that arose across both the period as a Resident and the period as a Nonresident, the salary income deduction prescribed in Article 28, paragraph (3) (Salary Income) of the Act, the amount of salary income under paragraph (4) of that Article or Article 57-2, paragraph (1) (Special Provisions on Deducting Specific Expenses of Salary Income Earners) of the Act, the retirement income deduction prescribed in Article 30, paragraph (2) (Retirement Income) of the Act, the deduction for public pension or retirement package prescribed in Article 35, paragraph (4) of the Act, or the special deduction prescribed in Article 32, paragraph (4) (Timber Income), Article 33, paragraph (4) (Capital Gains), or Article 34, paragraph (3) (Occasional Income) of the Act, which relate to that income, are to be calculated on the income obtained by aggregating the respective amounts of that income that arose in the period as a Resident and the period as a Nonresident.

In the case of making the basic deduction and other deductions prescribed in paragraph (1), item (iii) pursuant to the provisions of that item, the amount specified in each of the following items is to be deducted for those deductions listed in the relevant item.

Casualty Loss Deduction: the amount by which the sum of the amount of losses prescribed in Article 72, paragraph (1) (Casualty Loss Deduction) of the Act that arose in the period as a Resident and the amount of those losses that arose in the period as a Nonresident (limited to the amount of losses falling under the provisions of Article 292, paragraph (1), item (xii) (Calculation of the Tax Base, etc. of Income Taxes Imposed on Aggregate Income on Income Attributable to a Permanent Establishment)) exceeds the amount specified in each item of Article 72, paragraph (1) of the Act for the category of cases listed in those items (meaning the amount specified in each item of that paragraph where the amount equivalent to one-tenth of the sum of the gross income, amount of retirement income, and amount of timber income prescribed in paragraph (1), item (ii) of this Article is taken as the amount specified in item (i) of Article 72, paragraph (1) of the Act);

Medical Expense Deduction: the amount by which the amount of medical expenses prescribed in Article 73, paragraph (1) (Medical Expense Deduction) of the Act that the person paid during the period as a Resident exceeds the amount equivalent to 5 percent of the sum of the gross income, amount of retirement income, and amount of timber income prescribed in paragraph (1), item (ii) (or 100,000 yen if that amount exceeds 100,000 yen) (or, where that excess exceeds 2,000,000 yen, 2,000,000 yen);

Social Insurance Premium Deduction and Deduction for Small Enterprise-based Mutual Aid Premiums and Similar Payments: the amount of social insurance premiums prescribed in Article 74, paragraph (2) (Social Insurance Premium Deduction) of the Act that the person paid, or that are deducted from the person's salary, during the period as a Resident, and the amount of small enterprise-based mutual aid premiums and similar payments prescribed in Article 75, paragraph (2) (Deduction for Small Enterprise-based Mutual Aid Premiums and Similar Payments) of the Act that the person paid, or that are deducted from the person's salary, during the period as a Resident;

Life Insurance Premium Deduction and Earthquake Insurance Premium Deduction: the amount obtained by applying the provisions of Article 76 or Article 77 of the Act to the new life insurance premiums and old life insurance premiums prescribed in Article 76, paragraph (1) (Life Insurance Premium Deduction) of the Act, the nursing care and medical insurance premiums prescribed in paragraph (2) of that Article, the new individual pension insurance premiums and old individual pension insurance premiums prescribed in paragraph (3) of that Article, and the earthquake insurance premiums prescribed in Article 77, paragraph (1) (Earthquake Insurance Premium Deduction) of the Act, that the person paid during the period as a Resident.

In the case of making the credit for the amount equivalent to the foreign tax adjusted at distribution pursuant to the provisions of paragraph (1), item (v), if there is an amount equivalent to the foreign tax adjusted at distribution prescribed in Article 165-5-3, paragraph (1) (Credit for Amount Equivalent to Foreign Tax Adjusted at Distribution for Nonresidents) of the Act pertaining to a distribution of proceeds of a group investment trust prescribed in that paragraph that the person received payment of during the period as a Nonresident, the amount equivalent to the amount of income tax for that year calculated in accordance with the provisions of Articles 89 through 92 (Tax Rates and Dividend Tax Credit) of the Act on the amount of income listed in Article 7, paragraph (1), item (i) of the Act that arose during the period as a Resident and the amount of income pertaining to domestic source income listed in Article 164, paragraph (1), item (i), (a) of the Act that arose during the period as a Nonresident (hereinafter in this Article referred to as "income attributable to a permanent establishment") is the limit, and the amount equivalent to the foreign tax adjusted at distribution for each year of the person (meaning the sum of the amount equivalent to the foreign tax adjusted at distribution prescribed in Article 93, paragraph (1) (Credit for the Amount Equivalent to the Foreign Tax Adjusted at Distribution) of the Act that pertains to the period as a Resident and the amount equivalent to the foreign tax adjusted at distribution prescribed in Article 165-5-3, paragraph (1) of the Act that pertains to the period as a Nonresident) is to be deducted from the amount of income tax referred to in paragraph (1), item (iv).

In the case of making the foreign tax credit pursuant to the provisions of paragraph (1), item (v), if the person has income attributable to a permanent establishment that arose during the period as a Nonresident, the following provisions apply.

the total amount of credit-eligible foreign income tax that the person is to pay in each year (meaning the sum of the amount of credit-eligible foreign income tax prescribed in Article 95, paragraph (1) (Foreign Tax Credit) of the Act that is imposed on the income listed in Article 7, paragraph (1), item (i) of the Act that arose during the period as a Resident and the amount of credit-eligible foreign income tax prescribed in Article 165-6, paragraph (1) (Foreign Tax Credit for Nonresidents) of the Act that is imposed on income attributable to a permanent establishment that arose during the period as a Nonresident; the same applies hereinafter in this paragraph) is to be deducted from the amount of income tax referred to in paragraph (1), item (iv), up to the limit of the amount calculated by multiplying the amount of income tax for that year, calculated in accordance with the provisions of Articles 89 through 93 of the Act on the amount of income listed in Article 7, paragraph (1), item (i) of the Act that arose during the period as a Resident and the amount of income pertaining to income attributable to a permanent establishment that arose during the period as a Nonresident, by the proportion that the amount listed in (b) for that year bears to the amount listed in (a) for that year (hereinafter in this paragraph referred to as the "maximum credit");

the sum of the gross income, amount of retirement income, and amount of timber income for that year, calculated without applying the provisions of Article 70, paragraph (1) or (2) (Deduction for Carryover of Net Loss) or Article 71 (Deduction for Carryover of Casualty Loss) of the Act, with respect to the income listed in Article 7, paragraph (1), item (i) of the Act that arose during the period as a Resident and the income pertaining to income attributable to a permanent establishment that arose during the period as a Nonresident;

the sum of the amount equivalent to the amount of foreign-source income prescribed in Article 95, paragraph (1) of the Act, calculated without applying the provisions of Article 70, paragraph (1) or (2) or Article 71 of the Act, with respect to the income pertaining to foreign source income that arose during the period as a Resident (meaning the foreign source income prescribed in Article 95, paragraph (1) of the Act; the same applies in (b)) (in the case of a Non-Permanent Resident, limited to the portion of that amount of foreign-source income pertaining to foreign source income paid in Japan or remitted from outside Japan), and the amount equivalent to the amount of foreign-source income prescribed in Article 165-6, paragraph (1) of the Act, calculated without applying the provisions of Article 70, paragraph (1) or (2) or Article 71 of the Act, with respect to the income pertaining to foreign source income prescribed in Article 165-6, paragraph (1) of the Act that arose during the period as a Nonresident (or, if that sum exceeds the amount equivalent to the sum listed in (a), the amount equivalent to that sum);

if the total amount of credit-eligible foreign income tax that the person is to pay in each year exceeds the sum of the maximum credit for that year and the maximum local tax credit (meaning the sum of the maximum amount under the provisions of Article 7-19, paragraph (3) (Deduction of Amount of Foreign Income Tax, etc.) of the Order for Enforcement of the Local Tax Act and the maximum amount under the provisions of Article 48-9-2, paragraph (4) (Deduction of Amount of Foreign Income Tax, etc.) of that Order), and there is a maximum carry-over credit prescribed in Article 165-6, paragraph (2) of the Act within the maximum credit prescribed in paragraph (1) of that Article for each year within three years up to and including the year preceding that year (hereinafter in the following item referred to as "each year within the previous three years"), the provisions of Article 95 of the Act apply, deeming that maximum carry-over credit to be the maximum carry-over credit prescribed in Article 95, paragraph (2) of the Act;

if the total amount of credit-eligible foreign income tax that the person is to pay in each year is less than the maximum credit for that year, and there are carry-over, credit-eligible foreign income taxes prescribed in Article 165-6, paragraph (3) of the Act within the amount of credit-eligible foreign income tax prescribed in paragraph (1) of that Article that the person was to pay in each year within the previous three years, the provisions of Article 95 of the Act apply, deeming those carry-over, credit-eligible foreign income taxes to be the carry-over, credit-eligible foreign income taxes prescribed in Article 95, paragraph (3) of the Act.