Income Tax Act

A person paying, in Japan, any of the following remuneration or fees, contract money, or monetary awards to a Resident must withhold income taxes from that remuneration or those fees, contract money, or monetary awards at the time of payment and pay them over to the national government by the 10th day of the month following the month in which the day of withholding falls:

remuneration for manuscripts, illustrations, musical compositions, sound recordings, or designs, fees for broadcasting appearances, royalties for the use of copyrights (including neighboring rights) or industrial property rights, lecture fees, and any other similar remuneration or fees specified by Cabinet Order;

remuneration or fees for the services of attorneys (including registered foreign lawyers), judicial scriveners, land and house investigators, certified public accountants, certified public tax accountants, labor and social security attorneys, patent attorneys, maritime procedure agents, surveyors, architects, real estate appraisers, professional engineers, or any other similar persons specified by Cabinet Order;

medical fees paid pursuant to the provisions of the Act on the Organization for Medical Information Infrastructure and Medical Fee Review and Payment (Act No. 129 of 1948) (including the expenses required for securing medical care in the initial phase of an epidemic prescribed in Article 36-9, paragraph (1) of the Act on the Prevention of Infectious Diseases and Medical Care for Patients with Infectious Diseases (Act No. 114 of 1998), paid by the organization prescribed in paragraph (2) (Measures to Secure Medical Care in the Initial Phase of an Epidemic) of that Article that has been entrusted by a prefectural governor pursuant to the provisions of that paragraph with the affairs concerning the measures to secure medical care in the initial phase of an epidemic prescribed in that paragraph);

remuneration or fees for the services of professional baseball players, professional boxers, jockeys, models, sales representatives, bill collectors, electricity meter readers, or any other similar persons specified by Cabinet Order;

remuneration or fees for appearing in or directing (including conducting, supervising, and anything else specified by Cabinet Order), or for planning, films, plays, or other entertainment specified by Cabinet Order, or radio or television broadcasts, or any other remuneration or fees for the provision of services in connection with a business that consists of providing the services of entertainers specified by Cabinet Order (excluding, among these, those received from an unspecified large number of persons);

remuneration or fees for the services of hostesses or other persons whose business is to attend on customers and entertain them at a cabaret, nightclub, bar, or other similar establishment that has customers dance on the floor or that entertains customers and provides them with amusement or food and drink (hereinafter referred to as "hostesses or similar workers" in this Article);

contract money specified by Cabinet Order which is obtained on a one-time basis by agreeing to provide services;

a monetary award for advertising purposes or a horse racing monetary award received by a racehorse owner, which is specified by Cabinet Order.

The provisions of the preceding paragraph do not apply to the following:

remuneration or fees, contract money, or monetary awards prescribed in the preceding paragraph which fall under salary or other wages prescribed in Article 28, paragraph (1) (Salary Income) (referred to as "salary or other wages" in the following item) or severance pay or other such compensation prescribed in Article 30, paragraph (1) (Retirement Income);

remuneration or fees, contract money, or monetary awards set forth in items (i) through (v) and items (vii) and (viii) of the preceding paragraph which are paid by an individual other than an individual who is required to withhold and pay over income taxes on salary or other wages pursuant to the provisions of Article 183, paragraph (1) (Obligation to Withhold Taxes from Salary Income);

remuneration or fees set forth in item (vi) of the preceding paragraph which are paid by a person other than the operator of an establishment prescribed in that item (hereinafter referred to as the "operator of a bar or similar establishment" in this Article) (excluding those paid through the operator of a bar or similar establishment).

If any of the remuneration or fees set forth in paragraph (1), item (vi) are paid by customers to hostesses or similar workers through the operator of a bar or similar establishment, the provisions of that paragraph apply to that remuneration or those fees by deeming the operator of a bar or similar establishment to be the person making the payment prescribed in that paragraph in connection with that remuneration or those fees, and by deeming the payment to have been made at the time when that remuneration or those fees are delivered to the hostesses or similar workers.

Income taxes must be withheld pursuant to the provisions of paragraph (1) of the preceding Article in the amounts that each of the following items prescribes for the category to which the item refers:

remuneration or fees, or contract money, set forth in item (i), (ii), (iv), or (v), or item (vii) of paragraph (1) of the preceding Article (excluding the remuneration and fees set forth in the following item): the amount calculated by multiplying the amount thereof by a tax rate of 10 percent (or, if the amount paid to the same person at one time exceeds one million yen, by a tax rate of 20 percent for the portion of the amount in excess thereof);

remuneration or fees for the services of judicial scriveners, land and house investigators, or maritime procedure agents set forth in paragraph (1), item (ii) of the preceding Article, medical fees set forth in item (iii) of that paragraph, remuneration or fees for the services of professional boxers, sales representatives, bill collectors, or electricity meter readers set forth in item (iv) of that paragraph, remuneration or fees set forth in item (vi) of that paragraph, or monetary awards set forth in item (viii) of that paragraph: the amount calculated by multiplying the balance remaining after deducting the amount specified by Cabinet Order from the amount thereof (or, if the monetary award is paid in something other than money, the amount calculated pursuant to Cabinet Order as its value at the time of the payment) by a tax rate of 10 percent.

If a Resident who conducts a business prescribed in Article 204, paragraph (1), item (v) and who satisfies the requirements specified by Cabinet Order, such as personally sponsoring and staging theatrical performances, is issued a certificate by the competent district director for the locality in which the Resident pays taxes, pursuant to Cabinet Order, certifying that the Resident satisfies those requirements, and receives payment of remuneration or fees for the provision of personal services set forth in that item by presenting that certificate, while it is in effect, to the person paying the remuneration or fees, the person making that payment is not required to withhold and pay over income taxes on that remuneration or those fees, notwithstanding the provisions of Article 204, paragraph (1).

If a Resident who has been issued the certificate referred to in the preceding paragraph ceases to satisfy the requirements prescribed in that paragraph after being issued it, the Resident must notify the competent district director for the locality in which the Resident pays taxes to that effect without delay after the day on which the Resident ceased to satisfy them, pursuant to Cabinet Order.

The certificate prescribed in paragraph (1) ceases to be effective in the following cases:

if the competent district director for the locality in which the Resident pays taxes has set a period of validity for the certificate and that period of validity has passed;

if a notification under the preceding paragraph has been made;

if the competent district director for the locality in which the Resident pays taxes finds that the Resident who has been issued the certificate has ceased to satisfy the requirements prescribed in paragraph (1) after being issued it, and notifies the Resident to that effect.

A person paying, in Japan, a Resident a pension based on a contract set forth in one of the following items or any other contract concerning a pension specified by Cabinet Order must withhold income taxes from the pension at the time of payment and pay them over to the national government no later than the tenth day of the month after that in which the date of withholding falls.

a contract set forth in Article 76, paragraph (6), items (i) through (iv) (Life Insurance Premium Deduction);

a contract set forth in one of the items of Article 77, paragraph (2) (Earthquake Insurance Premium Deduction);

a contract similar to a contract set forth in the preceding two items which is specified by Cabinet Order.

The amount of income taxes to be withheld pursuant to the preceding Article is the amount calculated by multiplying the amount remaining after deducting, from the amount of a pension paid under a contract prescribed in that Article, the amount calculated pursuant to Cabinet Order as the portion of the insurance premiums or contributions paid under that contract which corresponds to the amount of the pension being paid, by a tax rate of 10 percent.

A person paying any of the following pensions is not required to withhold and pay over income taxes on that pension, notwithstanding the provisions of Article 207 (Obligation to Withhold Taxes):

a pension based on a contract prescribed in Article 207, if the amount remaining after deducting, from the annual amount of the pension, the amount calculated pursuant to Cabinet Order as the portion of the insurance premiums or contributions paid under that contract which corresponds to the pension is less than the amount specified by Cabinet Order;

among pensions based on contracts prescribed in Article 207, a pension based on a contract under which the person receiving payment of the pension differs from the policyholder prescribed in Article 2, item (iii) (Definitions) of the Insurance Act (Act No. 56 of 2008) under that contract, or on any other contract specified by Cabinet Order.

A person paying a Resident, in Japan, compensation for periodic deposits, finance charges, profits, or margin profits as set forth in Article 174, items (iii) through (viii) (Tax Base for a Domestic Corporation's Income Taxes) must withhold income taxes from that compensation for periodic deposits, finance charges, profits, or margin profits at the time of payment and pay them over to the national government no later than the tenth day of the month after that in which the date of withholding falls.

The amount of income taxes to be withheld pursuant to the preceding Article is the amount calculated by multiplying the amount of the compensation for periodic deposits, finance charges, profits, or margin profits prescribed in that Article by a tax rate of 15 percent.

A person making a payment to a Resident, in Japan, for a distribution of profits under a silent partnership agreement (including an agreement specified by Cabinet Order as being equivalent thereto) must withhold income taxes from that distribution of profits at the time of payment and pay them over to the national government no later than the tenth day of the month after that in which the date of withholding falls.

The amount of income taxes to be withheld pursuant to the preceding Article is the amount calculated by multiplying the amount of the distribution of profits paid under an agreement prescribed in that Article by a tax rate of 20 percent.