Regulation for Enforcement of the Income Tax Act

The relationships specified by Ministry of Finance Order as prescribed in Article 222-2, paragraph (3), item (iii) (Amount of Foreign Income Tax Not Eligible for Foreign Tax Credit) of the Order are, in the case where there is any of the following relationships between the Resident referred to in that item and the other person referred to in that item, that relationship:

A relationship in which one party holds shares or equity interests in the other party (the other party being limited to a corporation; the same applies in the following item);

A relationship in which one party holds a right to request distribution of the residual assets of the other party (excluding a relationship falling under the relationship listed in the preceding item);

The relationship between one party and the other party in the case where there is a relationship in which that one party has concluded a contract or other arrangement to the effect that it is able to determine the policy for the disposal of the property of the other party (excluding a relationship falling under the relationships listed in the preceding two items);

The relationship (excluding a relationship falling under the relationships listed in the preceding three items) between one party and the other party (limited to a person falling under any of the following);

A person with whom that one party has a relationship in which it holds the person's shares or equity interests, a relationship in which it holds a right to request distribution of the person's residual assets, or a relationship in which it has concluded a contract or other arrangement to the effect that it is able to determine the policy for the disposal of the person's property;

A person with whom a person listed in (a) or (c) has a relationship in which it holds the person's shares or equity interests, a relationship in which it holds a right to request distribution of the person's residual assets, or a relationship in which it has concluded a contract or other arrangement to the effect that it is able to determine the policy for the disposal of the person's property;

A person with whom a person listed in (b) has a relationship in which it holds, directly or indirectly, the person's shares or equity interests, a relationship in which it holds a right to request distribution of the person's residual assets, or a relationship in which it has concluded a contract or other arrangement to the effect that it is able to determine the policy for the disposal of the person's property;

The relationship (excluding a relationship falling under the relationships listed in the preceding items) between that one party and that other party in the case where one party is in a transactional relationship with the other party pertaining to sale, etc. of assets (meaning sale of assets, purchase of assets, provision of services and other transactions; the same applies hereinafter in this item) (including that transactional relationship in the case where one or more persons linked by a chain relationship through a transactional relationship pertaining to sale, etc. of assets intervene between that one party and that other party; the same applies hereinafter in this item) (limited to the case where, among the income arising from sale, etc. of assets that the other party conducts through that transactional relationship, there is a portion pertaining to income arising from sale, etc. of assets that that one party conducted through that transactional relationship);

The relationship between that one party and that other party in the case where there is, between a chain-related person (meaning a person who has, with one party, a relationship listed in item (iv) where the phrase "the other party" in that item is deemed to be replaced with "another person" and the phrase "relationship (excluding a relationship falling under the relationships listed in the preceding three items)" in that item is deemed to be replaced with "relationship") and the other party, a relationship listed in the preceding item where the phrase "one party is in a transactional relationship with the other party" in the preceding item is deemed to be replaced with "the chain-related person prescribed in the following item is in a transactional relationship with the other party" and the phrase "that one party" in the preceding item is deemed to be replaced with "that chain-related person";

Any other relationship similar to the relationships listed in the preceding items.

The relationships specified by Ministry of Finance Order as prescribed in Article 222-2, paragraph (3), item (iv) of the Order are, where there is, between the Resident referred to in that item and the other person referred to in that item, a relationship as relatives, a relationship in which the Resident holds, directly or indirectly, shares or equity interests in a number or amount exceeding 50 percent of the total number or total amount of the issued shares or equity interests of the other person, or any other relationship, those relationships in the case where, under the provisions of laws and regulations on the foreign income tax (meaning the foreign income tax prescribed in Article 95, paragraph (1) of the Act; the same applies hereinafter in this paragraph) of the country or region in which the foreign office or similar establishment of the Resident (meaning a foreign office or similar establishment prescribed in Article 95, paragraph (4), item (i) (Foreign Tax Credit) of the Act; the same applies hereinafter in this paragraph) is located (hereinafter referred to as "country or region where the foreign office is located" in this paragraph), the amount of income that is the tax base of the foreign income tax of the country or region where the foreign office is located is to be calculated by adding, to the amount equivalent to the amount of income that is the tax base of another foreign income tax imposed on income arising from business conducted through the foreign office or similar establishment of the Resident in the country or region where the foreign office is located, the amount, out of the amounts pertaining to payments from the foreign office or similar establishment of the Resident (limited to one located in the country or region where the foreign office is located; the same applies hereinafter in this paragraph) to related persons, etc. of the Resident (meaning the other person (excluding one that has a domicile or residence, head office or principal office, or any similar thing in the country or region where the foreign office is located, or nationality or any similar thing of that country or region) and the business establishment, etc. prescribed in Article 95, paragraph (4), item (i) of the Act of the Resident (excluding those located in the country or region where the foreign office is located); the same applies hereinafter in this paragraph) and the amount of depreciation allowance pertaining to assets that the foreign office or similar establishment of the Resident acquired from related persons, etc. of the Resident, that is included in necessary expenses in calculating the amount of income that is the tax base of that other foreign income tax, or by making other adjustments concerning those amounts.

The documents specified by Ministry of Finance Order as prescribed in Article 95, paragraph (10) (Foreign Tax Credit) of the Act are to be the following:

a document that contains the name and the amount of the tax imposed under foreign laws or regulations for which the person seeks application of the provisions of Article 95, paragraph (1) of the Act, the date on which the payment of the tax was determined and the date of the payment or the date of the scheduled payment, the name of the foreign state or the local government thereof that is imposing the tax, and an explanation as to how the tax falls under the category of a foreign income tax as prescribed in the same paragraph (referred to as "foreign income tax" in the following item);

where the provisions of Article 95, paragraph (9) of the Act apply, a document that contains the amount of reduced foreign income tax in the year pertaining to the tax reduction prescribed in Article 226, paragraph (1) (Special Provisions on Cases Wherein Foreign Income Tax Was Reduced) of the Order and the date on which the reduction was determined, an explanation as to how the amount of the foreign income tax was used as the basis for calculation of the amount to be credited under Article 95, paragraphs (1) to (3) of the Act in each year preceding or including the year prior to the year pertaining to the tax reduction, and the details concerning the calculation of the amount of reduced creditable foreign income tax as prescribed in Article 226, paragraph (1) of the Order;

a copy of the return form for the tax certifying that the tax prescribed in item (i) has been imposed or other alternative documents related to the tax, and when the tax has already been paid, a document certifying the payment thereof.

The amount specified by Ministry of Finance Order as prescribed in Article 95, paragraph (10) of the Act is to be the amount of credit-eligible foreign income tax prescribed in paragraph (1) of the same Article (referred to as the "amount of credit-eligible foreign income tax" in paragraph (3), item (ii) of the following Article); provided, however, that where the provisions of Article 95, paragraph (9) of the Act apply, it is to be the amount after the deduction prescribed in Article 226, paragraph (1) of the Order.