Order for Enforcement of the Income Tax Act

The assets specified by Cabinet Order prescribed in Article 39 (Inclusion of Inventory Used to Benefit One's Own Household in Gross Revenue) of the Act are the assets listed in the items of Article 81 (Assets Equivalent to Inventory That Are Not Treated as Giving Rise to Capital Gains) (excluding forests).

The agricultural products specified by Cabinet Order prescribed in Article 41, paragraph (1) (Inclusion of Crop Harvests in Gross Revenue) of the Act are rice, wheat and other grains, potatoes, sweet potatoes, tobacco, vegetables, flowers, seeds and seedlings and other field crops, products of fruit trees and orchards, or horticultural crops produced using greenhouses or other special facilities.

The rights specified by Cabinet Order prescribed in Article 41-2 (Amount of Revenue from Transfer of a Right to Acquire Shares Granted by the Issuing Corporation) of the Act are the rights listed in the items of Article 84, paragraph (3) (Value, etc. of Restricted Shares) for which the provisions of that paragraph would apply if they were exercised (referred to as "share options, etc." in the following paragraph).

The persons specified by Cabinet Order prescribed in Article 41-2 of the Act are persons who have acquired share options, etc. by gift, inheritance, bequest, or transfer and who become able to exercise those share options, etc.

The government subsidies or their equivalent prescribed in Article 42, paragraph (1) (Exclusion of Government Subsidies and Their Equivalent in Gross Revenue) of the Act are, in addition to the subsidies or benefits of the State or local governments, the following grants or subsidies:

grants of the Japan Organization for Employment of the Elderly, Persons with Disabilities and Job Seekers, an incorporated administrative agency, based on Article 49, paragraph (2) (Levy-Related Operations) of the Act to Facilitate the Employment of Persons with Disabilities (Act No. 123 of 1960) that are prescribed in items (ii), (iii), and (v) through (vii) of paragraph (1) of that Article;

grants of the New Energy and Industrial Technology Development Organization, National Research and Development Agency, based on Article 7, item (i) (Operations of the New Energy and Industrial Technology Development Organization, National Research and Development Agency) of the Act on the Promotion of Research, Development and Dissemination of Social Welfare Equipment (Act No. 38 of 1993);

grants of the New Energy and Industrial Technology Development Organization, National Research and Development Agency, based on Article 15, items (iii) and (iii)-2 (Scope of Operations) of the Act on the New Energy and Industrial Technology Development Organization, National Research and Development Agency (Act No. 145 of 2002) (excluding grants for testing and research conducted jointly with a Foreign Corporation, a research institution established in the government or a local government of a foreign country (meaning a laboratory, institute, or other similar institution; the same applies hereinafter in this item), a research institution established in an international organization, or a foreign university or a research institution attached thereto (hereinafter in this item referred to as a "foreign research institution, etc."), or with researchers of a foreign research institution, etc.) and subsidies;

grants of the New Energy and Industrial Technology Development Organization, National Research and Development Agency, based on Article 29, item (i) (Operations of the New Energy and Industrial Technology Development Organization, National Research and Development Agency) of the Act on Promotion of Development, Supply and Introduction of Systems Utilizing Specified Advanced Information and Communications Technology (Act No. 37 of 2020);

supply-securing project subsidies (meaning the grants prescribed in Article 31, paragraph (3), item (i) (Designation and Operations of Stable Supply Securing Support Corporations) of the Act on the Promotion of Ensuring National Security Through Integrated Implementation of Economic Measures (Act No. 43 of 2022); the same applies in item (vii)) of the New Energy and Industrial Technology Development Organization, National Research and Development Agency, based on Article 15, item (xv) of the Act on the New Energy and Industrial Technology Development Organization, National Research and Development Agency;

subsidies of the Agriculture & Livestock Industries Corporation, Independent Administrative Agency, based on Article 10, item (ii) (Scope of Operations) of the Act on the Agriculture & Livestock Industries Corporation, Independent Administrative Agency (Act No. 126 of 2002);

supply-securing project subsidies of the Japan Organization for Metals and Energy Security, Independent Administrative Agency, based on Article 11, paragraph (1), item (xxvii) (Scope of Operations) of the Act on the Japan Organization for Metals and Energy Security, Independent Administrative Agency (Act No. 94 of 2002);

grants for strengthening the production base of leaf tobacco prescribed in Article 2, item (ii) (Definitions) of the Tobacco Business Act (Act No. 68 of 1984) that Japan Tobacco Inc. delivers in accordance with a business plan approved under Article 9 (Business Plan) of the Act on Japan Tobacco Inc. (Act No. 69 of 1984).

The amount calculated pursuant to the provisions of Cabinet Order prescribed in Article 42, paragraph (1) (Exclusion of Government Subsidies and Their Equivalent in Gross Revenue) of the Act is the amount specified in each of the following items for the category of cases listed in that item.

In the case of acquisition of a Depreciable Asset prescribed in Article 42, paragraph (1) of the Act: the amount calculated by multiplying the amount equivalent to the amount of the government subsidy or its equivalent prescribed in that paragraph pertaining to that Depreciable Asset (hereinafter in this Article referred to as "government subsidy or its equivalent") by the ratio that the amount set out in (b) bears to the amount set out in (a):

the amount required for the acquisition of that Depreciable Asset;

the amount obtained by deducting, from the amount required for the acquisition of that Depreciable Asset, the cumulative amount of the depreciation allowance calculated on the basis of that amount, in accordance with the provisions of Article 49, paragraph (1) (Calculating Depreciation Allowances for Depreciable Assets; Depreciation Methods) of the Act, for the period from the date of its acquisition to the date on which return of the government subsidy or its equivalent ceased to be required;

In the case of improvement of a Depreciable Asset prescribed in Article 42, paragraph (1) of the Act: the amount calculated by multiplying the amount equivalent to the amount of the government subsidy or its equivalent pertaining to that Depreciable Asset by the ratio that the amount set out in (b) bears to the amount set out in (a):

the amount required for the improvement of that Depreciable Asset;

the amount obtained by deducting, from the amount required for the improvement of that Depreciable Asset, the cumulative amount of the depreciation allowance calculated on the basis of that amount, in accordance with the provisions of Article 49, paragraph (1) of the Act, for the period from the date of its improvement to the date on which return of the government subsidy or its equivalent ceased to be required.

The calculation of the depreciation allowance prescribed in Article 49, paragraph (1) of the Act that is to be made for a Fixed Asset (including timberland; the same applies hereinafter in this paragraph and in paragraph (2) of the following Article) to which the provisions of Article 42, paragraph (1) or (2) of the Act apply, and the calculation of the amount of business income, amount of timber income, amount of capital gains, or amount of miscellaneous income in the case where there has been a transfer of that Fixed Asset, are as provided in the following items.

With regard to a Fixed Asset to which the provisions of Article 42, paragraph (1) of the Act apply, the Fixed Asset is deemed to have been acquired or improved at the amount obtained by deducting the amount equivalent to the amount of the government subsidy or its equivalent pertaining to that Fixed Asset from the amount required for its acquisition (for timberland, the amount of planting costs; the same applies in the following item and in paragraph (2) of the following Article) or the amount equivalent to the amount of improvement expenses, and the amount equivalent to the amount obtained by deducting the amount specified in item (i) or (ii) of the preceding paragraph from the amount equivalent to the amount of the government subsidy or its equivalent is deemed not to have been included in necessary expenses in calculating the amount of real property income, amount of business income, amount of timber income, or amount of miscellaneous income for each year as that depreciation allowance for the period prescribed in item (i), (b) or item (ii), (b) of that paragraph;

With regard to a Fixed Asset prescribed in Article 42, paragraph (2) of the Act, the amount required for its acquisition is deemed to be nil.