Order for Enforcement of the Income Tax Act

With regard to the procedures where a person who intends to receive the application of Article 137-3, paragraph (1) (Tax Payment Grace Period Where the Special Provisions on Capital Gains and Similar Income If Assets Are Transferred to a Nonresident by Gift or Similar Means Apply) of the Act provides security, in addition to the procedures prescribed in Article 16 (Procedures for Providing Security) of the Order for Enforcement of the Act on General Rules for National Taxes, where the person provides the unlisted share or similar interest as security, the method is to be for that person to submit to the competent district director with jurisdiction over the place for tax payment a document promising that the person will provide that unlisted share or similar interest as security, or other documents specified by Ministry of Finance Order.

Where an unlisted share or similar interest is being provided as security pursuant to the provisions of the preceding paragraph and the district director has released that security, the district director must return to that person the document promising that the person will provide that unlisted share or similar interest as security, or other documents specified by Ministry of Finance Order.

The cases specified by Cabinet Order prescribed in Article 137-3, paragraph (1) of the Act are cases where, owing to the death, by the day on which five years have elapsed from the day of the gift prescribed in that paragraph (or the day on which 10 years have elapsed, where a tax payment grace period under the provisions of paragraph (1) of that Article is being received pursuant to the provisions of paragraph (3) of that Article), of a donee who is a Nonresident pertaining to that gift, there has been a transfer by inheritance (limited to that subject to qualified acceptance) or bequest (limited to a universal legacy subject to qualified acceptance) of the Securities and similar interests prescribed in Article 60-3, paragraph (1) (Special Provisions on Capital Gains upon Transfer of Assets to a Nonresident by Gift or Similar Transfer) of the Act (hereinafter in this Article referred to as "Securities and similar interests"), or of the contracts pertaining to the unsettled margin transactions or similar transactions prescribed in Article 60-3, paragraph (2) of the Act (hereinafter in this Article referred to as "unsettled margin transactions or similar transactions") or the unsettled derivatives transactions prescribed in Article 60-3, paragraph (3) of the Act (hereinafter in this Article referred to as "unsettled derivatives transactions"), in each case transferred to the donee by that gift.

An heir of the decedent whose estate is taxed as a sale prescribed in Article 137-3, paragraph (2) of the Act must, by the time limits listed in the following items, provide security equivalent to the income tax deferred on inheritance specified in the relevant item.

the Filing Deadline prescribed in Article 137-3, paragraph (2) of the Act for the income tax for the year that includes the day of the commencement of the succession prescribed in that paragraph: the income tax deferred on inheritance prescribed in that paragraph (excluding the income tax deferred on inheritance specified in the following item);

the submission deadline prescribed in Article 151-6, paragraph (1) (Special Provisions on Amended Returns upon Division of the Estate or Similar Event) of the Act for an Amended Return under that paragraph pertaining to the income tax for the year that includes the day of the commencement of the succession: the amount of the income tax deferred on inheritance prescribed in Article 137-3, paragraph (2) of the Act that has increased by the submission of that Amended Return.

The provisions of paragraph (1) apply mutatis mutandis to the case where an heir who intends to receive the application of Article 137-3, paragraph (2) of the Act provides the unlisted share or similar interest as security, and the provisions of paragraph (2) apply mutatis mutandis to the case where the district director has released that security, respectively.

Where notice about the tax agent is given pursuant to the provisions of Article 137-3, paragraph (2) of the Act, if there are two or more Nonresidents who acquired the covered assets prescribed in that paragraph, that notice must be given by each Nonresident in a single document bearing their joint signatures; provided, however, that this does not preclude it from being given separately with the names of the other Nonresidents who acquired them added.

A Nonresident who has given the notice referred to in the preceding paragraph by the method under the proviso to that paragraph must, without delay, notify the other Nonresidents who acquired the assets of the outline of the matters stated in the document submitted at the time of that notice.

The provisions of Article 137-3, paragraph (10) of the Act apply mutatis mutandis to the case where a Resident who is an heir of the decedent whose estate is taxed as a sale prescribed in paragraph (2) of that Article is to make a departure from Japan prescribed in Article 60-2, paragraph (1) (Special Provisions on Capital Gains upon Departure from Japan) of the Act (referred to as "departure from Japan" in paragraph (21)).

The cases specified by Cabinet Order prescribed in Article 137-3, paragraph (2) of the Act are cases where, by the day on which five years have elapsed from the day of the commencement of the succession (or the day on which 10 years have elapsed, where the person is receiving a tax payment grace period under the provisions of paragraph (2) of that Article pursuant to the provisions of paragraph (3) of that Article; the same applies in paragraph (12)), owing to the death of all of the donees, heirs, or legatees who are Nonresidents pertaining to that inheritance or bequest (meaning the bequest prescribed in paragraph (2) of that Article; the same applies hereinafter in this paragraph and paragraph (12)), there has been a transfer by inheritance (limited to that subject to qualified acceptance) or bequest (limited to a universal legacy subject to qualified acceptance) of all of the Securities and similar interests, or of all of the contracts pertaining to the unsettled margin transactions or similar transactions or the unsettled derivatives transactions, that were transferred by that inheritance or bequest.

Where there is a fractional amount of less than 100 yen in the income tax deferred on a gift prescribed in Article 137-3, paragraph (1) of the Act, the income tax deferred on inheritance prescribed in paragraph (2) of that Article, or the total of those amounts, or where the full amount is less than 100 yen, that fractional amount or the full amount is to be discarded.

Where an heir of the decedent whose estate is taxed as a sale prescribed in Article 137-3, paragraph (2) of the Act submits an Amended Return under Article 151-6, paragraph (1) of the Act for the income tax for the year that includes the day of the commencement of the succession prescribed in Article 137-3, paragraph (2) of the Act, and intends to receive the application of that paragraph (including where it is applied pursuant to the provisions of paragraph (3) of that Article; the same applies hereinafter in this paragraph) with respect to the income tax deferred on inheritance prescribed in Article 137-3, paragraph (2) of the Act that has increased by the submission of that Amended Return, the heir must state in that Amended Return that the heir intends to receive the application of paragraph (2) of that Article, and must attach a document stating the details of the sale or settlement, deemed to have been made pursuant to the provisions of Article 60-3, paragraphs (1) through (3) of the Act, of the covered assets prescribed in Article 137-3, paragraph (1) of the Act, the details of the calculation of the income tax deferred on inheritance that has increased by the submission of that Amended Return, and other matters specified by Ministry of Finance Order; in this case, the provisions of Article 137-3, paragraph (5) of the Act apply mutatis mutandis to the case where an Amended Return without that statement or attachment is submitted.

The grounds specified by Cabinet Order prescribed in Article 137-3, paragraph (6) of the Act are that, by the day on which five years have elapsed from the day of the commencement of the succession, owing to the death of a donee, heir, or legatee who is a Nonresident pertaining to the inheritance or bequest referred to in that paragraph, there has been a transfer by inheritance (limited to that subject to qualified acceptance) or bequest (limited to a universal legacy subject to qualified acceptance) of a part of the Securities and similar interests, or of a part of the contracts pertaining to the unsettled margin transactions or similar transactions or the unsettled derivatives transactions, that were transferred by that inheritance or bequest.

The amount calculated as specified by Cabinet Order prescribed in Article 137-3, paragraph (6) of the Act is the amount obtained by deducting the amount listed in item (ii) from the amount listed in item (i) (or zero if that amount is less than zero); in this case, where there is a fractional amount of less than 100 yen in the amount so calculated, or where the full amount is less than 100 yen, that fractional amount or the full amount is to be discarded.

the income tax subject to deferral prescribed in Article 137-3, paragraph (4) of the Act (excluding, where paragraph (6) of that Article has already applied, the amount to which that paragraph applied);

the amount obtained by deducting, from the amount listed in Article 120, paragraph (1), item (iii) (Filing an Income Tax Return) of the Act for the year that includes the date of that gift or the date of the commencement of the succession (hereinafter in the following paragraph referred to as the "date of the gift or similar transfer"), the amount listed in that item for that year in the case where, for the applicable gifted assets prescribed in Article 137-3, paragraph (1) of the Act or the applicable inherited assets prescribed in paragraph (2) of that Article (excluding those for which the grounds under paragraph (6) of that Article have already arisen; the same applies in paragraph (15)), the provisions of Article 60-3, paragraphs (1) through (3) of the Act were not applied (or zero if that amount is less than zero).

Where Article 137-2, paragraph (1) (Tax Payment Grace Period Where the Special Provisions on Capital Gains and Similar Income upon Departure from Japan Apply) of the Act applies to the income tax for the year that includes the date of the gift or similar transfer and Article 137-3, paragraph (1) of the Act also applies, the provisions of the preceding paragraph apply mutatis mutandis, notwithstanding the provisions of paragraph (6) of the preceding Article; in this case, the phrase "Article 137-3, paragraph (4)" in item (i) of that paragraph is deemed to be replaced with "Article 137-2, paragraph (1) (Tax Payment Grace Period Where the Special Provisions on Capital Gains and Similar Income upon Departure from Japan Apply) and Article 137-3, paragraph (4)", "income tax subject to deferral" with "total amount of income tax subject to deferral", "paragraph (6) of that Article" with "Article 137-2, paragraph (5) or Article 137-3, paragraph (6) of the Act", and "that paragraph" with "those provisions", and in item (ii) of that paragraph, "the date of that gift" is deemed to be replaced with "the date of that departure from Japan (meaning the departure from Japan prescribed in Article 60-2, paragraph (1) of the Act), the date of the gift", and "the applicable gifted assets prescribed in Article 137-3, paragraph (1) of the Act or" with "the applicable assets prescribed in Article 137-2, paragraph (1) of the Act (excluding those for which the grounds under paragraph (5) of that Article have already arisen), the provisions of Article 60-2, paragraphs (1) through (3) of the Act were not applied, and, for the applicable gifted assets prescribed in Article 137-3, paragraph (1) of the Act or".

Where, with respect to a tax payment grace period under the provisions of Article 137-3, paragraph (1) or (2) of the Act (including where those provisions are applied pursuant to the provisions of paragraph (3) of that Article), the grounds under paragraph (6) of that Article arise, by the gift reference expiry date prescribed in paragraph (1) of that Article or the inheritance reference expiry date prescribed in paragraph (2) of that Article, with respect to the applicable gifted assets or applicable inherited assets that were transferred by gift, inheritance, or bequest, the person using the deferral prescribed in paragraph (7) of that Article must submit to the competent district director with jurisdiction over the place for tax payment, by the day on which four months have elapsed from the day on which those grounds arose, a document stating the type, name or issue, and number of units of the applicable gifted assets or applicable inherited assets for which those grounds arose, the details of the calculation of the amount under paragraph (13) (including where applied mutatis mutandis in the preceding paragraph), and other matters that should serve as reference.

Where the written notice under Article 137-3, paragraph (3) of the Act, the notification of continued application prescribed in paragraph (7) of that Article, or the document under the preceding paragraph (hereinafter in this paragraph and the following paragraph referred to as the "notification for continued application, etc.") is submitted, if there are two or more heirs who receive the application of paragraph (2) of that Article, the notification for continued application, etc. must be submitted by each heir in a single document bearing their joint signatures; provided, however, that this does not preclude it from being submitted separately with the names of the other heirs added.

An heir under the preceding paragraph who has submitted the notification for continued application, etc. by the method under the proviso to that paragraph must, without delay, notify the other heirs of the outline of the matters stated in that notification for continued application, etc.

The grounds specified by Cabinet Order prescribed in Article 137-3, paragraph (11), item (iii) of the Act are that, in the case where the person using the deferral referred to in that item has dismissed the tax agent prescribed in Article 117, paragraph (1) (Tax Agent) of the Act on General Rules for National Taxes or the death or other such fact prescribed in paragraph (8) of the preceding Article has occurred with respect to that tax agent, that person using the deferral has not given notice about the tax agent pursuant to the provisions of Article 117, paragraph (2) of that Act by the day on which four months have elapsed from the day of the dismissal or the day on which six months have elapsed from the day on which that person using the deferral learned that the death or other such fact had occurred with respect to that tax agent.

For an heir of the person using the deferral prescribed in Article 137-3, paragraph (15) of the Act, being an heir who has succeeded to that person's obligation to pay pursuant to the provisions of that paragraph (hereinafter in this Article referred to as an "heir succeeding to deferred tax"), the provisions of Article 137-3 of the Act and this Article apply, deeming that heir to be a person who has received the application of Article 137-3, paragraph (1) of the Act or an heir who has received the application of paragraph (2) of that Article.

An heir succeeding to deferred tax who is a Nonresident must, except where the heir has already given notice about the tax agent pursuant to the provisions of Article 117, paragraph (2) of the Act on General Rules for National Taxes, give notice about the tax agent pursuant to the provisions of that paragraph within four months after the day following the day on which the heir learned that the commencement of the succession had occurred; in this case, the provisions of paragraphs (6) and (7) apply mutatis mutandis to the case where notice about the tax agent is given when there are two or more heirs succeeding to deferred tax who are Nonresidents and are to give that notice, and the provisions of Article 137-3, paragraphs (8), (9), and (14) (limited to the portion pertaining to item (iii)) of the Act apply mutatis mutandis to the case where that notice has not been given by that time limit, respectively.

The provisions of Article 137-3, paragraphs (10) and (14) (limited to the portion pertaining to item (iii)) of the Act apply mutatis mutandis to the case where an heir succeeding to deferred tax who is a Resident makes a departure from Japan.

The provisions of paragraphs (16) and (17) apply mutatis mutandis to the case where an heir succeeding to deferred tax submits the written notice under Article 137-3, paragraph (3) of the Act, the notification of continued application prescribed in paragraph (7) of that Article, or the document under paragraph (15).