This Cabinet Order comes into effect on April 1, 1998.

Except as otherwise provided, the provisions of the Order for Enforcement of the Income Tax Act after the amendment (hereinafter referred to as the "New Order") apply to the income tax for 1998 and thereafter, and for the income tax for 1997 and earlier, the provisions then in force continue to govern.

①Article 20-2 (Nontaxable Commutation Allowances) of the New Order applies to the commutation allowances prescribed in that Article receivable on or after January 1, 1998 (excluding those additionally paid as the difference of those commutation allowances received before that date), and for the commutation allowances prescribed in that Article receivable before that date (including those receivable on or after that date that are additionally paid as the difference of those commutation allowances received before that date), the provisions then in force continue to govern.

②With regard to the application of the provisions of Part IV, Chapter II, Section 1 (Obligation to Withhold Taxes on Salary Income and Amount of Tax Collected) of the Income Tax Act to the commutation allowances referred to in the preceding paragraph that are receivable on or after January 1, 1998 and were received before the date of enforcement of this Cabinet Order (hereinafter referred to as the "Effective Date"), notwithstanding Article 20-2 of the New Order and the preceding paragraph, the provisions then in force continue to govern.

Article 73 (Requirements for Specified Retirement Allowance Mutual Aid Organizations) of the New Order applies to the case where approval under paragraph (1) of that Article (including approval of a change under Article 74, paragraph (5) (Approval of Specified Retirement Allowance Mutual Aid Organizations) of the New Order) is received on or after the Effective Date.

Article 81, item (ii) (Assets Equivalent to Inventory Assets That Are Not a Source of Capital Gains) of the New Order applies to the Depreciable Assets listed in that item that an individual transfers on or after January 1, 1999, and for the Depreciable Assets listed in Article 81, item (ii) (Assets Equivalent to Inventory Assets That Are Not a Source of Capital Gains) of the Order for Enforcement of the Income Tax Act before the amendment (hereinafter referred to as the "Former Order") that an individual transferred before that date, the provisions then in force continue to govern.

①Article 84 (Value of Rights to Acquire Shares, etc.) of the New Order applies to the rights prescribed in that Article that are exercised on or after the Effective Date, and for the rights prescribed in Article 84, paragraph (1) (Value of Rights to Acquire New Shares, etc.) of the Former Order that were exercised before the Effective Date, the provisions then in force continue to govern.

②Article 109, paragraph (1) (Acquisition Cost of Securities) of the New Order applies to the Securities prescribed in that paragraph that are acquired on or after the Effective Date, and for the Securities prescribed in Article 109, paragraph (1) (Acquisition Cost of Securities) of the Former Order that were acquired before the Effective Date, the provisions then in force continue to govern.

Article 120 (Method of Depreciation of Depreciable Assets) of the New Order (limited to the portion pertaining to paragraph (1), item (vii)) applies to the Depreciable Assets that are the subject of a contract pertaining to a lease transaction prescribed in that item that an individual concludes on or after October 1, 1998.

①Article 138 (Inclusion in Necessary Expenses of the Acquisition Cost of Low-Value Depreciable Assets) of the New Order applies to the income tax for 1999 and thereafter, and for the income tax for 1998 and earlier, the provisions then in force continue to govern.

②Article 139 (Inclusion in Necessary Expenses of Lump-Sum Depreciable Assets) of the New Order applies to the income tax for 1999 and thereafter, and for the income tax for 1998 and earlier, the provisions then in force continue to govern.

With regard to the application of Article 145, paragraph (2) of the New Order to the income tax for 1998 and 1999 of a Resident referred to in Article 145, paragraph (1) (Transfer Limit to the Reserve Account for Bad Debts on Loans) of the New Order, in Article 145, paragraph (2) the phrase "January 1, 1998" is deemed to be replaced with "January 1, 1980", the phrase "1998 and 1999" with "1980 and 1981", and the phrase "the sum of the amounts of the collectively assessed loans" with "the sum of the amounts of accounts receivable, loans receivable and other monetary claims equivalent thereto".

In the case where Article 17, paragraph (2) (Transitional Measures Concerning Instalment Sales or Similar Transactions) of the Supplementary Provisions of the Act Partially Amending the Corporation Tax Act, etc. (Act No. 24 of 1998; hereinafter referred to as the "Amending Act") applies to an individual, with regard to the application of Article 150, paragraph (1) (Transfer Limit to the Reserve Account for Returned Goods Adjustment) of the New Order, the phrase "sale on deferred payment terms prescribed in Article 65, paragraph (2) (Sale on Deferred Payment Terms)" in item (i) of that paragraph is deemed to be replaced with "sale on deferred payment terms prescribed in Article 65, paragraph (2) (Sale on Deferred Payment Terms) and instalment sale under the transitional rules prescribed in Article 17, paragraph (2) (Transitional Measures Concerning Instalment Sales or Similar Transactions) of the Supplementary Provisions of the Act Partially Amending the Corporation Tax Act, etc. (Act No. 24 of 1998; hereinafter referred to in this item as the "1998 Amending Act")", the phrase "to which the provisions of the main clause of paragraph (1) of that Article applied" is deemed to be replaced with "to which the provisions of the main clause of Article 65, paragraph (1) of the Act or the provisions of Article 17, paragraph (2) of the Supplementary Provisions of the 1998 Amending Act applied", and the phrase "sale on deferred payment terms prescribed in paragraph (2) of that Article" is deemed to be replaced with "sale on deferred payment terms prescribed in Article 65, paragraph (2) of the Act and instalment sale under the transitional rules prescribed in Article 17, paragraph (2) of the Supplementary Provisions of the 1998 Amending Act".

①The provisions of Articles 154 through 156 (Transfer Limit to the Severance Package Reserves Account, etc.) of the New Order apply to income tax for tax year 1999 and thereafter, and the provisions then in force continue to govern income tax for tax year 1998 and earlier. In this case, with regard to the application of Article 154, paragraph (1), item (ii) and Article 155, paragraph (1), item (ii) of the New Order in calculating the amount of business income of an individual for each of tax years 1999 through 2003, the phrase "20 percent" in Article 154, paragraph (1), item (ii) of the New Order is deemed to be replaced with "37 percent" for tax year 1999, "33 percent" for tax year 2000, "30 percent" for tax year 2001, "27 percent" for tax year 2002, and "23 percent" for tax year 2003.

②With regard to an individual to whom Article 3, paragraph (2) or (3) (Transitional Measures Concerning Reserves for Severance Packages) of the Supplementary Provisions of the Cabinet Order Partially Amending the Order for Enforcement of the Income Tax Act (Cabinet Order No. 40 of 1980; hereinafter referred to as the "1980 Amending Order") (including where these provisions apply mutatis mutandis pursuant to paragraph (5) of that Article) has applied, and who has, in 1999 (hereinafter in this Article referred to as the "year of the amendment"), an excess over the cumulative limit at the amendment (meaning, where the amount of the severance package reserves account prescribed in Article 54, paragraph (2) (Reserves for Severance Packages) of the Income Tax Act carried forward from the preceding year as of December 31 of the year of the amendment (where, through inheritance (including universal legacy) in the year of the amendment, there is an amount of that severance package reserves account deemed to be held by that individual pursuant to Article 157, paragraph (2) (Treatment of the Amount of the Retirement Allowance Reserve Account in the Case of Death) of the New Order, the amount obtained by adding that amount of the severance package reserves account) exceeds the amount equivalent to 40 percent of the sum of the amounts of severance packages calculated pursuant to Article 154, paragraph (1), item (i), (a) of the New Order as of December 31 of the year of the amendment (where that individual dies in the middle of the year, at the time of death; the same applies hereinafter in this paragraph), the amount equivalent to that excess; the same applies in item (ii) of this paragraph), from the year of the amendment, the accumulated limit prescribed in Article 155, paragraph (1), item (ii) of the New Order for each year up to the year preceding the first year in which the balance of the reserve for retirement allowances carried forward (meaning the amount of the severance package reserves account prescribed in Article 54, paragraph (2) of that Act carried forward from the year preceding that year as of December 31 of that year (where, through inheritance (including universal legacy) in that year, there is an amount of that severance package reserves account deemed to be held by that individual pursuant to Article 157, paragraph (2) of the New Order, including that amount of the severance package reserves account); referred to as the "balance of the reserve for retirement allowances carried forward" in item (i)) becomes equal to or less than the transitional accumulated limit (meaning the accumulated limit prescribed in Article 155, paragraph (1), item (ii) of the New Order as calculated as of December 31 of that year without applying this paragraph and by applying the preceding paragraph; referred to as the "transitional accumulated limit" in item (ii)) is, notwithstanding the provisions of item (ii) of that paragraph as applied with replaced readings pursuant to the preceding paragraph, to be whichever is smaller of the amounts listed in item (i) or (ii).

③With regard to the application of Article 156, paragraph (1), item (iii) (Special Provisions on Transfer Limit Where Retirement Allowance Mutual Aid Contracts, etc. Have Been Concluded) of the New Order in each year on or after the year of the amendment to the following individuals, the phrase "the amount specified in item (ii) of paragraph (1) of the preceding Article, calculated without applying this item (hereinafter in this item referred to as the "pre-adjustment excess over the accumulated limit")" in that item is deemed to be replaced with "the pre-adjustment excess over the accumulated limit (in the case of the year that includes the day on which an individual listed in Article 11, paragraph (3), item (i) of the Supplementary Provisions of the Cabinet Order Partially Amending the Order for Enforcement of the Income Tax Act (Cabinet Order No. 104 of 1998; hereinafter in this item referred to as the "1998 Amending Order") came to fall under the case prescribed in the preceding item (hereinafter in this item referred to as the "transition year"), the pre-adjustment excess over the accumulated limit prescribed in Article 156, paragraph (1), item (iii) of the Order for Enforcement of the Income Tax Act as amended by the Cabinet Order Partially Amending the Order for Enforcement of the Income Tax Act (Cabinet Order No. 40 of 1980), as applied with replaced readings pursuant to Article 3, paragraph (4) of the Supplementary Provisions of that Cabinet Order; in the case of the transition year of an individual listed in Article 11, paragraph (3), item (ii) of the Supplementary Provisions of the 1998 Amending Order, the amount specified in Article 155, paragraph (1), item (ii) of the Order for Enforcement of the Income Tax Act before amendment by the 1998 Amending Order (hereinafter in this item referred to as the "Former Order"), calculated without applying Article 156, paragraph (1), item (iii) of the Former Order; and in the case of the transition year of an individual listed in Article 11, paragraph (3), item (iii) of the Supplementary Provisions of the 1998 Amending Order, where the amount of the retirement allowance reserve account prescribed in item (ii) of paragraph (1) of the preceding Article as of December 31 of that transition year exceeds the amount obtained by multiplying the year-end required retirement allowance payments of that transition year by the accumulated limit ratio of the preceding year (meaning the ratio of the accumulated limit prescribed in item (ii) of paragraph (1) of the preceding Article, calculated for the year preceding that transition year by applying Article 11, paragraphs (1) and (2) of the Supplementary Provisions of the 1998 Amending Order and Article 154, paragraph (1), item (ii), to the year-end required retirement allowance payments of that preceding year), the amount equivalent to that excess; the same applies hereinafter in this item)", the phrase "item (ii) of paragraph (1) of the preceding Article, calculated as of that day without applying this item" is deemed to be replaced with "item (ii) of paragraph (1) of the preceding Article, as calculated as of that day without applying this item and by applying Article 11, paragraphs (1) and (2) of the Supplementary Provisions of the 1998 Amending Order and Article 154, paragraph (1), item (ii)", and the phrase "item (ii) of that paragraph" is deemed to be replaced with "item (ii) of paragraph (1) of the preceding Article, as calculated by applying Article 11, paragraphs (1) and (2) of the Supplementary Provisions of the 1998 Amending Order and Article 154, paragraph (1), item (ii)".

④The provisions of Article 156, paragraph (1), item (iii) of the New Order (limited to the part pertaining to (b) of that item) apply to the calculation under (b) of that item of the accumulated limit prescribed in item (iii) of that paragraph where an individual comes to fall under the case prescribed in item (ii) of that paragraph on or after January 1, 1999, and the provisions then in force continue to govern the calculation of the amount equivalent to 40 percent of the year-end required retirement allowance payments prescribed in Article 156, paragraph (1), item (iii) of the Former Order and of the accumulated limit prescribed in Article 156, paragraph (1), item (iii) of the New Order where an individual came to fall under the case prescribed in Article 156, paragraph (1), item (ii) of the Former Order before December 31, 1998.