Income Tax Act

The Income Tax Act (Act No. 27 of 1947) is wholly amended.

This Act provides for taxpayers subject to income taxes, the scope of taxable income, the way of calculating the amount of income taxes, and the procedures for filing income tax returns, making income tax payments, and issuing income tax refunds, as well as making the necessary provisions for ensuring the proper performance of income tax payment obligations.

In this Act, the meanings of the terms set forth in the following items are as prescribed in those items:

In Japan:the place where this Act is enforced;

Outside Japan:outside the place where this Act is enforced;

Resident:an individual domiciled in Japan or residing continuously in Japan for one year or more;

Non-Permanent Resident:a Resident who is without Japanese citizenship and who has been domiciled or resident in Japan for a total of no more than five of the past ten years;

Nonresident:an individual other than a Resident;

Domestic Corporation:a corporation with a head office or principal office in Japan;

Foreign Corporation:a corporation other than a Domestic Corporation;

Association or Foundation without Legal Personality:an association or foundation that is not a corporation and that provides for a representative or administrator;

Shareholder, Member, or Other Investor:a shareholder, the member of a general partnership company, limited partnership company, or limited liability company, or any other investor in a corporation;

Trust Subject to Corporate Taxation:a trust subject to corporation taxation as prescribed in Article 2, item (xxix)-2 (Definitions) of the Corporation Tax Act (Act No. 34 of 1965);

Permanent establishment: any of the following; provided, however, that if a convention for the avoidance of double taxation or the prevention of tax evasion with respect to taxes on income concluded by Japan contains provisions different from the following, for a Nonresident or Foreign Corporation to which that convention applies, it is to be what is specified as a permanent establishment in that convention (limited to one in Japan):

a branch, a factory, or any other fixed place in Japan at which a Nonresident or Foreign Corporation conducts business, that Cabinet Order specifies;

a place in Japan at which a Nonresident or Foreign Corporation conducts construction or installation work or provides services supervising such work, or anything else that Cabinet Order specifies as equivalent thereto;

a person that a Nonresident or Foreign Corporation places in Japan who has the authority to conclude contracts on its behalf, or any other equivalent person, that Cabinet Order specifies.

Public and Corporate Bond:a public bond or a corporate bond (including bonds that a corporation other than a company issues pursuant to a special law);

Deposits and Savings:monetary deposits and savings (including anything that Cabinet Order specifies as equivalent thereto);

Jointly Managed Trust: a cash trust undertaken by a trust company (including a financial institution as prescribed in Article 1, paragraph (1) (Approval for Additional Business) of the Act on Engagement in Trust Business by Financial Institutions (Act No. 43 of 1943) which is engaged in trust business as prescribed in that paragraph pursuant to that Act), with trust property from multiple settlors not acting in concert which the trust company manages jointly (other than an Investment Trust managed without instructions from the settlor prescribed in Article 2, paragraph (2) (Definitions) of the Act on Investment Trusts and Investment Corporations (Act No. 198 of 1951), a foreign Investment Trust equivalent thereto (meaning a foreign Investment Trust as prescribed in paragraph (24) of that Article; the same applies in item (xii)-2 and item (xiii)), and other trusts that Cabinet Order prescribes as not having multiple settlors, in actuality);

Loan Trust:a loan trust as prescribed in Article 2, paragraph (1) (Definitions) of the Loan Trust Act (Act No. 195 of 1952);

Investment Trust:an investment trust or a foreign investment trust as prescribed in Article 2, paragraph (3) of the Act on Investment Trusts and Investment Corporations;

Securities Investment Trust:a Securities Investment Trust as prescribed in Article 2, paragraph (4) of the Act on Investment Trusts and Investment Corporations, or a foreign investment trust equivalent thereto;

Open-Ended Securities Investment Trust:a Securities Investment Trust that allows a person to place additional principal in trust;

Bond Investment Trust:a Securities Investment Trust whose trust property is used to invest in Public and Corporate Bonds but is not used to invest in shares (including units of investment prescribed in Article 2, paragraph (14) of the Act on Investment Trusts and Investment Corporations; the same applies in Article 24 (Dividend Income), Article 25 (Amounts Deemed to Constitute Dividends), Article 57-4, paragraph (3) (Special Provisions on Capital Gains Due to Share Exchange), Article 176, paragraph (1) and paragraph (2) (Special Provisions on Taxation of Interest and Similar Income from Trust Property), Article 224-3, paragraph (2), item (i) (Notice by Persons Receiving Consideration for a Share Transfer), and Article 225, paragraph (1), item (ii) (Payment Reports and Notice of Payment)) and is not used to invest in capital contributions;

Bond-Based Investment Trust: an Investment Trust other than a Securities Investment Trust, which Cabinet Order prescribes as one with monies taken in as trust property which are used to invest in public and corporate bonds or similar interests (meaning public and corporate bonds, negotiable instruments, or other assets prescribed by Cabinet Order);

Bond-Based Investment Trust Under Public Offering:a Bond-Based Investment Trust (but only one falling under the category of an Investment Trust as set forth in Article 2, item (xxix), (b)2. of the Corporation Tax Act) in whose establishment persons are solicited to subscribe for a beneficial interest through a public offering (meaning through a solicitation of offers to acquire as prescribed in Article 2, paragraph (3) (Definitions) of the Financial Instruments and Exchange Act (Act No. 25 of 1948) which is prescribed by Cabinet Order as falling under the case set forth in item (i) of that paragraph);

Specified-Purpose Trust:a specified-purpose trust as prescribed in Article 2, paragraph (13) (Definitions) of the Act on Securitization of Assets (Act No. 105 of 1998);

Specified Trust That Issues Beneficiary Certificates:a specified trust that issues beneficiary certificates as prescribed in Article 2, item (xxix), (c) of the Corporation Tax Act;

Inventory: the commodities, finished products, half-finished products, products in progress, and raw materials of a business undertaking that is meant to generate business income, and any other asset (excluding Securities, crypto-assets (meaning crypto-assets as prescribed in Article 2, paragraph (49) of the Financial Instruments and Exchange Act; the same applies in Article 33, paragraph (3) (Capital Gains), Article 48-2 (Calculation of the Cost of Transfer of Crypto-Assets and Method of Valuation) and Article 69, paragraph (2) (Aggregation of Profits and Losses)), and forested land) that Cabinet Order prescribes should be considered Inventory;

Securities:securities as prescribed in Article 2, paragraph (1) of the Financial Instruments and Exchange Act and anything equivalent thereto that is prescribed by Cabinet Order;

Fixed Asset:a piece of land (including any right on land), Depreciable Asset, telephone subscription right, or other asset (but not forested land) that is prescribed by Cabinet Order;

Depreciable Asset:a building, structure, piece of machinery, device, ship, vehicle or equipment, tool, apparatus or appliance, mining right, or anything else prescribed by Cabinet Order as an asset that should be depreciated, which generates real property income or miscellaneous income or which is used in business operations that are meant to generate real property income, business income, timber income, or miscellaneous income ;

Deferred Asset:an expenditure as prescribed by Cabinet Order which an individual makes in connection with business operations that are meant to generate real property income, business income, timber income, or miscellaneous income, and which will continue to have an effect one year or more after the day of the expenditure;

Each Class of Income:interest income, dividend income, real property income, business income, salary income, retirement income, timber income, capital gains, occasional income, and miscellaneous income, as prescribed in Part II, Chapter II, Section 2, Subsection 1 (Classes of Income and Income in Each Class);

Income in Each Class:the amounts of interest income, dividend income, real property income, business income, salary income, retirement income, timber income, capital gains, occasional income, and miscellaneous income, as prescribed in Part II, Chapter II, Section 2, Subsection 1;

Fluctuating Income: income arising from catching fish, income from royalties for a copyright, or any other income whose amount varies significantly from year to year which is prescribed by Cabinet Order;

Ad Hoc Income:income from a signing bonus that the taxpayer obtains on a one-time basis based on an agreement to provide services or any other income arising on an occasional or temporary basis which is prescribed by Cabinet Order;

Net Loss:any part of the loss prescribed in Article 69, paragraph (1) that is not fully offset when the provisions of that Article are applied;

Casualty Loss:any amount by which the total loss provided for in Article 72, paragraph (1) (Casualty Loss Deduction) exceeds the amount that is set forth in any of the items of that paragraph for the category of case set forth in the item;

Disaster:an earthquake, storm, flood, or fire, or a disaster provided for by Cabinet Order;

Person with a Disability:a person that, at all times, lacks the ability to function on a rational basis due to a mental disability; a person who is blind; or any other person with a mental or physical disability for whom Cabinet Order provides;

Person with a Particular Disability:a Person with a Disability who is mentally or physically disabled to a significant extent, and for whom Cabinet Order provides;

Widow: a person as follows who does not fall under the category of a single parent:

a person who has not remarried following a divorce from the husband, and who satisfies the following requirements:

the person has a dependent;

the person's gross income, retirement income, and timber income as prescribed in Article 22 (Tax Base) add up to a total (hereinafter referred to as the "total income" in this Article) of five million yen or less when calculated without applying the provisions of Article 70 (Deduction for Carryover of Net Loss) and Article 71 (Deduction for Carryover of Casualty Loss);

there is no person specified by Ministry of Finance Order as a person who is found to be in circumstances equivalent to a de facto marital relationship with the person.

a person who has not remarried following the death of the husband, or a person whose husband's whereabouts are unknown and who is provided for by Cabinet Order, who satisfies the requirements set forth in (a)(2) and (3).

Single parent: a person who is not currently married, or a person whose spouse's whereabouts are unknown and who is provided for by Cabinet Order, who satisfies the following requirements:

the person has a child provided for by Cabinet Order whose living expenses are paid from the same resources as the person;

the person's total income is five million yen or less;

there is no person specified by Ministry of Finance Order as a person who is found to be in circumstances equivalent to a de facto marital relationship with the person.

Working student: a person as follows earning business income, salary income, retirement income, or miscellaneous income from the person's own work (hereinafter referred to as "salary income, etc." in this item), whose total income is 890,000 yen or less, and whose total income other than the salary income, etc. is 100,000 yen or less:

a student or child at a school prescribed in Article 1 (Scope of Schools) of the School Education Act (Act No. 26 of 1947);

a student or pupil enrolled in a course of study prescribed by Cabinet Order at a vocational school prescribed in Article 124 (Vocational Schools) of the School Education Act or school for specialized education prescribed in Article 134, paragraph (1) (Schools for Specialized Education) of that Act which has been established by the national or local government, by a school corporation prescribed in Article 3 (Definitions) of the Private Schools Act (Act No. 270 of 1949), by a corporation incorporated pursuant to Article 152, paragraph (5) of that Act (Private Vocational Schools and Similar Schools), or by any other person prescribed by Cabinet Order as equivalent thereto;

a person enrolled in a course of study prescribed by Cabinet Order and undergoing accredited vocational training as prescribed in Article 24, paragraph (3) (Accreditation of Vocational Training) of the Human Resources Development Promotion Act (Act No. 64 of 1969) which is provided by a vocational training corporation.

Spouse in the same household: the spouse of a Resident whose living expenses are paid from the same resources as the Resident (other than a spouse falling under the category of a relative employed only by a blue-return filer as prescribed in Article 57, paragraph (1) (Special Provisions on Necessary Expenses If Relatives Work Exclusively for a Resident) who receives a salary as prescribed in that paragraph, and other than a spouse falling under the category of a relative employed only by the Resident prescribed in paragraph (3) of that Article (referred to as a "relative employed only by a blue-return filer or similar person" in item (xxxiii)-4)) and whose total income is 620,000 yen or less;

Claimable Spouse: a spouse in the same household who is the spouse of a Resident whose total income is 10 million yen or less;

Claimable Elderly Spouse:a Claimable Spouse who is 70 years of age or older;

Spouse for withholding deduction: the spouse of a Resident (limited to a Resident whose total income is nine million yen or less) whose living expenses are paid from the same resources as the Resident (other than a relative employed only by a blue-return filer or similar person) and whose total income is 950,000 yen or less;

Dependent: the relative of a Resident (other than the Resident's spouse), a child placed with a foster parent as prescribed in Article 6-4 (Definitions) of the Child Welfare Act (Act No. 164 of 1947) pursuant to Article 27, paragraph (1), item (iii) (Measures to Be Taken by Prefectures) of that Act, or an elderly person placed with a nursing care provider as prescribed in Article 11, paragraph (1), item (iii) (Measures to Be Taken by Municipalities) of the Act on Social Welfare for the Elderly (Act No. 133 of 1963) pursuant to that item, whose living expenses are paid from the same resources as the Resident (other than one falling under the category of a relative employed only by the blue-return filer as prescribed in Article 57, paragraph (1) who receives a salary as prescribed in that paragraph, and other than a person falling under the category of a relative employed only by the Resident as prescribed in paragraph (3) of that Article (referred to as a "relative employed only by a blue-return filer or similar person" in item (xxxiv)-5)) and whose total income is 620,000 yen or less;

Claimable dependent: a dependent who is the person specified below for the category of person set forth below to which the dependent belongs:

a Resident: a person 16 years of age or older;

a Nonresident: a person 16 years of age or older but younger than 30, a person 70 years of age or older, and a person 30 years of age or older but younger than 70 who falls under any of the following:

a person who has ceased to have a domicile and residence in Japan due to studying abroad;

a Person with a Disability;

a person who receives payments of 380,000 yen or more from the Resident in that year to be used for living expenses or educational expenses.

Specified dependent: a claimable dependent who is 19 years of age or older and younger than 23 years of age;

Elderly dependent: a claimable dependent who is 70 years of age or older;

Relative for withholding deduction: a person from among claimable dependents, and the relatives of a Resident (other than the Resident's spouse) and children placed with a foster parent as prescribed in Article 6-4 of the Child Welfare Act pursuant to Article 27, paragraph (1), item (iii) of that Act, whose living expenses are paid from the same resources as the Resident (other than a relative employed only by a blue-return filer or similar person), who is 19 years of age or older and younger than 23 years of age and whose total income is one million yen or less (limited to a person who does not fall under the category of a claimable dependent);

Special Farming Income Earner: a person whose Farming Income (meaning income arising from a business involving the production or cultivation of rice, wheat, tobacco, fruits, vegetables, or flowers; the raising of silkworms; or any other business that Cabinet Order prescribes as being equivalent thereto; hereinafter the same applies in this item) in a given year accounts for over 70% of the person's gross income, and whose Farming Income arising on or after September 1 of that year exceeds 70% of the person's total Farming Income for the year;

Tax Prepayment: an amount of income tax that must be paid pursuant to Article 104, paragraph (1) (Making Tax Prepayments) or Article 107, paragraph (1) (Tax Prepayments by Special Farming Income Earners) (including as applied mutatis mutandis pursuant to Article 166 (Filing of Returns, Payment of Taxes, and Issuance of Refunds));

Tax Return:a return form as under Part II, Chapter V, Section 2, Subsection 1 or Subsection 2 (Tax Returns) (including as applied mutatis mutandis pursuant to Article 166) (this includes a return filed after the deadline using such a return form);

Return filed after the deadline: a return filed after the deadline as prescribed in Article 18, paragraph (2) (Filing After the Deadline) of the Act on General Rules for National Taxes (Act No. 66 of 1962);

Amended Return: an Amended Return as prescribed in Article 19, paragraph (3) (Amended Return) of the Act on General Rules for National Taxes;

Blue Return:a Tax Return filed with a blue-colored return form pursuant to the provisions of Article 143 (Blue Returns) and any related Amended Return (including as applied mutatis mutandis pursuant to Article 166);

request for Reassessment: a request for Reassessment as prescribed in Article 23, paragraph (3) (Request for Reassessment) of the Act on General Rules for National Taxes;

Filing Deadline: the deadline for filing a return as under Article 120, paragraph (1) (Filing Income Tax Returns) (including as applied mutatis mutandis pursuant to Article 166); if the taxpayer dies partway through the year, the term refers to the deadline for filing a return under Article 125, paragraph (1) (Filing a Tax Return If the Taxpayer Has Died Partway Through the Year), and in the case of the taxpayer's Absence From Japan partway through the year, the term refers to the deadline for filing a return pursuant to Article 127, paragraph (1) (Filing a Tax Return If the Taxpayer Will Become Absent From Japan Partway Through the Year) (including as applied mutatis mutandis pursuant to Article 166);

Absence From Japan: a Resident ceasing to be domiciled or reside in Japan without informing the relevant parties of a tax agent under Article 117, paragraph (2) (Tax Agents) of the Act on General Rules for National Taxes, or a Nonresident ceasing to reside in Japan without informing the relevant parties of a tax agent under that paragraph (for a Nonresident not residing in Japan who has a permanent establishment, the term refers to the Nonresident ceasing to have a permanent establishment, and for a Nonresident not residing in Japan who does not have a permanent establishment, the term refers to the Nonresident discontinuing the business prescribed in Article 161, paragraph (1), item (vi) (Domestic Source Income) that the Nonresident conducts in Japan);

Reassessment:a Reassessment pursuant to the provisions of Article 24 (Reassessment) or Article 26 (Further Reassessment) of the Act on General Rules for National Taxes;

Determination: except in the cases under Article 19 (Effect of Returns and Other Filings If a Disposition Designating the Locality for Paying Over Taxes Is Revoked), Article 44-2 (Exclusion from Gross Revenue of Economic Benefits from Debt Forgiveness Received Due to an Order Granting Discharge or Similar), Article 52 (Bad Debt Reserves), Article 57-4 (Special Provisions on Capital Gains Due to Share Exchange), Article 151-4 (Special Provisions on Amended Returns If There Is a Change in the Acquisition Cost of Securities or Similar Assets Acquired by Inheritance), Article 159 (Refunding Taxes Withheld, Based on Reassessment or Similar), Article 160 (Refunding of Prepaid Taxes Based on Reassessment or Similar), and Article 228-2 (Report on the Exercise of Share Options), a determination pursuant to the provisions of Article 25 (Determination) of the Act on General Rules for National Taxes;

Withholding:the withholding and payment of income tax pursuant to the provisions of Part IV, Chapter I through Chapter VI (Withholding);

Punitive Tax:a punitive tax as prescribed in Article 2, item (iv) (Definitions) of the Act on General Rules for National Taxes;

Appropriation:appropriation under Article 57, paragraph (1) (Appropriation) of the Act on General Rules for National Taxes, except as set forth in Article 190 (Year-End Adjustment) and Article 191 (Refund of Amounts Overpaid).

(Refund) Interest:interest on refunds as prescribed in Article 58, paragraph (1) (Interest on Refunds) of the Act on General Rules for National Taxes.

In this Act, "heir" is to include a universal legatee, and "decedent" is to include a universal testator.

A national public officer or local public officer (other than one without Japanese citizenship and any person prescribed by Cabinet Order) is deemed to be domiciled in Japan even during a period in which such a public officer is not domiciled in Japan, and the provisions of this Act (other than Article 10 (Nontaxability of Interest Income from Small Amounts of Deposits Held by Persons with Disabilities and Other Eligible Persons), Article 15 (Locality for Paying Taxes), and Article 16 (Special Provisions on the Locality for Paying Taxes)) apply thereto.

Beyond what is prescribed in the preceding paragraph, Cabinet Order provides for the necessary particulars concerning the classification of Residents and Nonresidents and for the reaching of a determination as to whether an individual is domiciled in Japan.

An Association or Foundation without Legal Personality is deemed to be a corporation, and the provisions of this Act (other than Appended Table I) apply to it.

A Resident is liable to pay income taxes pursuant to this Act.

A Nonresident is liable to pay income taxes pursuant to this Act if:

the Nonresident has domestic source income as prescribed in Article 161, paragraph (1) (Domestic Source Income) (referred to as "domestic source income" in the following item) (other than in a case as set forth in that item);

the Nonresident receives, in Japan, payments constituting the taxable income of a Domestic Corporation (meaning any interest and similar income, dividends and similar income, compensation for periodic deposits, finance charges, profits, margin profits, distributions of profits, or monetary awards as set forth in the items of Article 174 (Tax Base for a Domestic Corporation's Income Taxes); hereinafter the same applies in this Article) which is attributable to the trust property of a Trust Subject to Corporate Taxation for which the Nonresident has undertaken to act as trustee, or receives payments constituting the taxable income of a Foreign Corporation which is attributable to such trust property (meaning any domestic source income as set forth in Article 161, paragraph (1), item (iv) through (xi) and item (xiii) through (xvi); hereinafter the same applies in this Article).

A Domestic Corporation is liable to pay income taxes pursuant to this Act if it receives, in Japan, payments constituting the taxable income of a domestic corporation, or if it receives payments constituting the taxable income of a foreign corporation which is attributable to the trust property of a Trust Subject to Corporate Taxation for which it has undertaken to act as trustee.

A Foreign Corporation is liable to pay income taxes pursuant to this Act if it receives payments constituting the taxable income of a foreign corporation, or if it receives, in Japan, payments constituting the taxable income of a domestic corporation which is attributable to the trust property of a Trust Subject to Corporate Taxation for which it has undertaken to act as trustee.

A person that pays salary or other wages as prescribed in Article 28, paragraph (1) (Salary Income), or any other person that makes a payment as prescribed in Part IV, Chapter I through Chapter VI (Withholding), is obligated under this Act to perform withholding on the amount of that payment.

The trustee of a Trust Subject to Corporate Taxation is deemed to be one person in respect of trust assets and other holdings of the Trust Subject to Corporate Taxation (meaning trust property assets and liabilities as well as proceeds and expenses attributable to trust property; hereinafter the same applies in this Chapter) and a different person in respect of personal assets and other holdings (meaning assets and liabilities, as well as proceeds and expenses, which are other than the trust assets and other holdings of a Trust Subject to Corporate Taxation; the same applies in the following Article), and the provisions of this Act (other than the preceding Chapter (Tax Payment Obligations), Chapter V (Locality for Paying Taxes), and Part VI (Penal Provisions); the same applies in the following Article) apply.

In a case as referred to in the preceding paragraph, trust assets and other holdings of a Trust Subject to Corporate Taxation and the trustee's personal assets and other holdings are separately attributed to each of the persons deemed to be different from one another pursuant to the provisions of that paragraph.

When the provisions of this Act are applied to a trust corporation (meaning a corporation that is the trustee of a Trust Subject to Corporate Taxation (or the individual who is the trustee of such a trust, if such is the case) to which the provisions of this Act apply because the trust assets and other holdings of the Trust Subject to Corporate Taxation are attributed to that corporation pursuant to the provisions of the preceding Article; hereinafter the same applies in this Article), or to the settlor or beneficiary of a Trust Subject to Corporate Taxation, they apply as follows:

if a business office or other office or a place of business equivalent thereto (referred to as a "business office" in the following item) with which the Trust Subject to Corporate Taxation is entrusted is located in Japan, the trust corporation handling the Trust Subject to Corporate Taxation is a Domestic Corporation;

if a business office with which the Trust Subject to Corporate Taxation is entrusted is not located in Japan, the trust corporation handling the Trust Subject to Corporate Taxation is a Foreign Corporation;

the trust corporation (but only one that is not a company) is deemed to be a company;

a beneficial interest in a Trust Subject to Corporate Taxation (but not a beneficial interest in any Bond-Based Investment Trust other than a Bond-Based Investment Trust Under Public Offering, and not a company bond-type beneficial interest (meaning a company bond-type beneficial interest as prescribed in Article 230, paragraph (1), item (ii) (Specified-Purpose Trust Contracts) of the Act on the Securitization of Assets; the same applies in Article 24, paragraph (1) (Dividend Income); Article 176, paragraph (1) and paragraph (2) (Special Provisions on Taxation of Interest and Similar Income from Trust Property); Article 224-3 (Notice by Persons Receiving Consideration for a Share Transfer); and Article 225, paragraph (1) (Payment Reports))) is deemed to be a share or capital contribution, and a beneficiary of the Trust Subject to Corporate Taxation is included as a Shareholder, Member, or Other Investor thereof. Be that as it may, shares or capital contributions to a corporation that is the trustee of a Trust Subject to Corporate Taxation are deemed not to be shares or capital contributions in a trust corporation handling that Trust Subject to Corporate Taxation, and a Shareholder, Member, or Other Investor of the corporation that is the trustee is not a Shareholder, Member, or Other Investor of the trust corporation;

if a Trust Subject to Corporate Taxation is terminated or if a Trust Subject to Corporate Taxation (but only one as set forth in Article 2, item (xxix)-2, (b) (Definitions) of the Corporation Tax Act) has come to have a beneficiary as prescribed in Article 13, paragraph (1) (Attribution of Trust Property Assets and Liabilities and of Proceeds and Expenses Attributable to Trust Property) (or a person deemed to be a beneficiary as prescribed in paragraph (1) of that Article pursuant to the provisions of paragraph (2) of that Article; referred to as a "beneficiary or deemed beneficiary" in the following item and item (vii)) (unless the trust falls under a category of trust set forth in Article 2, item (xxix)-2, (a) or (c) of that Act), the trust corporation handling the Trust Subject to Corporate Taxation is deemed to have been dissolved;

when the settlor of a Trust Subject to Corporate Taxation (other than a trust as set forth in Article 2, item (xxix)-2, (b) of the Corporation Tax Act; hereinafter the same applies in this item) places the assets thereof in trust, or if a trust with a beneficiary or deemed beneficiary that is deemed to hold trust property assets and liabilities pursuant to the provisions of Article 13, paragraph (1) comes to fall under the category of a Trust Subject to Corporate Taxation, a capital contribution is deemed to have been made to the trust corporation handling the Trust Subject to Corporate Taxation;

when the settlor of a Trust Subject to Corporate Taxation (but only a trust as set forth in Article 2, item (xxix)-2, (b) of the Corporation Tax Act; hereinafter the same applies in this item) places the assets thereof in trust, or if a trust with a beneficiary or deemed beneficiary that, pursuant to the provisions of Article 13, paragraph (1), is deemed to have assets and liabilities constituting trust property comes to fall under the category of a Trust Subject to Corporate Taxation, the assets are deemed to have devolved to the trust corporation handling the Trust Subject to Corporate Taxation by way of a gift;

a distribution of proceeds from a Trust Subject to Corporate Taxation is deemed to be a dividend of surplus that causes no decrease in capital surplus, and a return of the principal of a Trust Subject to Corporate Taxation is deemed to be a dividend of surplus that does cause a decrease in capital surplus;

beyond what is prescribed the preceding items, Cabinet Order provides for the necessary particulars concerning the application of this Act to trust corporations and to the settlors and beneficiaries of Trusts Subject to Corporate Taxation.

Income taxes are imposed on the income that each of the following items prescribes for the category of person set forth in the item:

a Resident other than a Non-Permanent Resident: all income;

a Non-Permanent Resident: income other than foreign source income as prescribed in Article 95, paragraph (1) (Foreign Tax Credit) (including income that Cabinet Order prescribes as income arising from the transfer of Securities located outside Japan; referred to as "foreign source income" in this item), and foreign source income that is paid in Japan or remitted from outside Japan;

a Nonresident: domestic source income as prescribed in each of the items of Article 164, paragraph (1) and paragraph (2) (How Nonresidents Are Taxed) for the category of Nonresident set forth in the relevant item of Article 164, paragraph (1);

a Domestic Corporation: interest and similar income, dividends and similar income, compensation for periodic deposits, finance charges, profits, margin profits, distributions of profits, and monetary awards set forth in the items of Article 174 (Tax Base for a Domestic Corporation's Income Taxes), which it is paid in Japan;

a Foreign Corporation: domestic source income as prescribed in Article 161, paragraph (1) (Domestic Source Income) which is set forth in items (iv) through (xi) and items (xiii) through (xvi) of that paragraph.

Cabinet Order provides for the necessary particulars concerning the scope of income set forth in item (ii) of the preceding paragraph.

If, in the relevant year, an individual falls under two or more of the categories of "Resident other than a Non-Permanent Resident", "Non-Permanent Resident", and any one class of "Nonresident as set forth in an item of Article 164, paragraph (1)" (How Nonresidents Are Taxed), income taxes are imposed separately for each period in that year during which the individual is a Resident other than a Non-Permanent Resident, Non-Permanent Resident, or any one class of Nonresident as set forth in an item of Article 164, paragraph (1), on the income set forth in paragraph (1), item (i) through (iii) of the preceding Article which arises during that period.

Income taxes are not imposed on the following income:

interest on current deposits (other than interest specified by Cabinet Order);

interest on Deposits and Savings (other than as provided in the preceding item) as provided by Cabinet Order which have been deposited by a child or student at an elementary school, junior high school, compulsory education school, high school, or school for secondary education as prescribed in Article 1 (Scope of Schools) of the School Education Act, or in the elementary, junior high, or high school section of a school for special needs education as prescribed in Article 76 (Sections of Schools for Special Needs Education) of that Act, as instructed by the school principal; and distributions of proceeds from a Jointly Managed Trust as provided by Cabinet Order into which such a child or student has placed assets as instructed by the school principal;

public retirement packages, pensions, and equivalent benefits as follows:

a supplementary retirement package as prescribed in the Public Officers Pension Act (Act No. 48 of 1923) (which includes any ordinary retirement package paid together with a supplementary retirement package) or an invalidity grant or any other equivalent benefit as prescribed by Cabinet Order that the taxpayer receives for an injury incurred or illness contracted in the course of public duty or on the job;

a public retirement package or pension that the bereaved family receives (but only one paid based on the employment of the deceased);

benefits that a person receives based on a mutual aid system provided for by Cabinet Order which a local government implements for persons with mental or physical disabilities pursuant to the provisions of Prefectural Ordinance.

money and valuables that are found to be necessary for travel under ordinary circumstances, which are provided so as to cover the travel expenses that are necessary if a person with salary income travels to a location away from the workplace in order to perform the duties thereof; if such a person changes residences due to a transfer of workplace; or if a person hired or separated from employment, or the surviving family of a person separated from employment at death, changes residences due to that employment event;

that which Cabinet Order prescribes, in respect of any commutation allowance (or anything similar thereto) that a person with salary income who commutes to work (hereinafter referred to as a "commuter" in this item) receives, in addition to ordinary pay, to cover the expenses that the commuter pays to use the transportation facilities or transportation equipment necessary for the commute (including expenses paid to use facilities for parking automobiles or other transportation equipment), as the part of such a commutation allowance that the average commuter is found to need under ordinary circumstances;

anything other than money that a person with salary income receives from the employer (including any economic benefit) which Cabinet Order prescribes as being indispensable due to the nature of the person's duties;

any service allowance (or any similar special allowance) provided for by Cabinet Order which a Resident working outside Japan is to receive for work in addition to ordinary pay when working in Japan;

salary, compensation, wages, annual allowances, bonuses, and any other pay of a similar nature that a person as prescribed by Cabinet Order who works for a foreign government, for the local government of a foreign state, or for an international organization as prescribed by Cabinet Order, and who satisfies the requirements prescribed by Cabinet Order receives for work (pay received by a person working for a foreign government or for the local government of a foreign state is only nontaxable if the foreign state refrains from imposing any taxes equivalent to income taxes on the pay received by a Japanese national or local public officer who works in that state and satisfies requirements equivalent to the aforementioned requirements prescribed by Cabinet Order);

income arising from a transfer of ownership in furniture, household appliances, clothes, and other assets prescribed by Cabinet Order that the person in question or the spouse or other relatives thereof use in day-to-day life;

income arising from a transfer of assets based on compulsory realization proceedings as prescribed in Article 2, item (x) (Definitions) of the Act on General Rules for National Taxes and other income specified by Cabinet Order as being similar thereto (other than income falling under the provisions of Article 33, paragraph (2), item (i) (Capital Gains)), if the taxpayer is facing extreme difficulty in performing on obligations due to a loss of financial resources;

any part of a distribution of proceeds from an Open-Ended Securities Investment Trust which Cabinet Order prescribes as corresponding to a return of trust-property principal;

benefits that a person receives pursuant to the provisions of Article 4, paragraph (1) (Daily Expenses of the Inner Court) and Article 6, paragraph (1) (Expenses of the Imperial Family) of the Imperial Household Finance Act (Act No. 4 of 1947);

the following types of pension, money, and valuables:

a pension as under Article 3, paragraph (1) (Pension) of the Cultural Merit Pension Act (Act No. 125 of 1951);

money and valuables which are issued by the Japan Academy as an Imperial Prize or Japan Academy Award;

money and valuables which are issued by the Japan Art Academy as an Imperial Prize or Japan Art Academy Award;

money and valuables designated by the Minister of Finance, which are granted as an award for significant academic or artistic contributions or as an incentive to encourage academic research of significant value (other than pay or anything else in the nature of consideration), and which are issued by the national or local government or by a body or fund designated by the Minister of Finance;

money and valuables issued by the Nobel Foundation as a Nobel Prize;

anything issued by a foreign state, international organization, or international body, or by a foreign body or fund designated by the Minister of Finance, which is similar to a pension, money, or valuables set forth in (a) through (e) (other than pay or anything else in the nature of consideration), and which is as designated by the Minister of Finance.

money and valuables designated by the Minister of Finance from among money and valuables that are granted, as awards to persons who have achieved particularly outstanding results at the Olympic Games or the Paralympic Games, by the Japanese Olympic Committee, an incorporated foundation (meaning the corporation established on August 7, 1989 under the name Japanese Olympic Committee, an incorporated foundation), the Japan Sports Association for the Disabled, an incorporated foundation (meaning the corporation established on May 24, 1965 under the name Japan Sports Association for the Physically Disabled, an incorporated foundation), or any other organization affiliated with these corporations that Cabinet Order specifies;

money and valuables with which a person is provided to cover school expenses (other than pay or anything else in the nature of consideration (but, as regards what a person with salary income receives from the person's employer, not including anything that is received in addition to ordinary pay and that does not fall under any of the following cases)), and money and valuables with which persons with a duty to support one another provide one another in order to fulfill their duty of support;

if an employer that is a corporation provides it to cover the school expenses of an officer of that corporation (meaning an officer as prescribed in Article 2, item (xv) (Definitions) of the Corporation Tax Act; the same applies in (b));

if an employer that is a corporation provides it to cover the school expenses of the spouse of an employee of that corporation (including an officer of that corporation) or of any other person who has a special relationship with the employee as specified by Cabinet Order;

if an employer that is an individual provides it to cover the school expenses of the individual's spouse or other relative who is engaged in the business that the individual operates (other than a person whose living expenses are paid from the same resources as the individual);

if an employer that is an individual provides it to cover the school expenses of the spouse of an employee of the individual (including the individual's spouse or other relative who is engaged in the business that the individual operates) or of any other person who has a special relationship with the employee as specified by Cabinet Order (other than a person falling under the category of the individual's spouse or other relative whose living expenses are paid from the same resources as the individual).

money and valuables provided, under a program in which the national government or a local government subsidizes childcare or other child-rearing or under any other similar program specified by Ministry of Finance Order, to cover the costs of using a service that provides childcare or other assistance necessary for daily life at the residence of the user of the service or at any other place specified by Ministry of Finance Order, or of using a facility as prescribed in Article 59-2, paragraph (1) (Notification of Unauthorized Childcare Facilities) of the Child Welfare Act or any other facility specified by Ministry of Finance Order (other than money and valuables provided to cover school expenses as prescribed in the preceding item);

income acquired by way of hereditary succession, legacy, or inter vivos gift (this includes income deemed to have been acquired by way of hereditary succession, legacy, or inter vivos gift pursuant to the provisions of the Inheritance Tax Act (Act No. 73 of 1950), but excludes income falling under the category of property received as a benefit from a public interest trust as prescribed in Article 21-3, paragraph (1), item (i) (Property Exempt from Gift Tax) of that Act);

insurance benefits and compensation for damages (or anything similar thereto) paid based on an insurance contract concluded by a non-life insurance company as prescribed in Article 2, paragraph (4) (Definitions) of the Insurance Business Act (Act No. 105 of 1995) or by a foreign non-life insurance company or similar as prescribed in paragraph (9) of that Article, which a person acquires because of mental or physical damage incurred or because of damage to property incurred as a result of unforeseen circumstances, or any other insurance benefit or compensation for damages specified by Cabinet Order;

money, objects, and any other financial benefits that a candidate for election to public office acquires as a gift from an election campaign corporation in connection with an election to which the Election to Public Office Act (Act No. 100 of 1950) is applicable, which have been reported as under Article 189 of that Act (Submission of Reports on Revenue and Expenditures for Election Campaigns).

The following amounts are deemed not to exist for the purpose of applying the provisions of this Act:

if the amount of revenue from the transfer of assets prescribed in item (ix) of the preceding paragraph is less than the sum of the acquisition cost of those assets as prescribed in Article 33, paragraph (3) and the amount of the expenses required for the transfer (hereinafter referred to as the "acquisition cost and selling expenses" in this paragraph), the amount of the shortfall;

if the amount of revenue from the transfer of assets prescribed in item (x) of the preceding paragraph is less than the acquisition cost and selling expenses of those assets or the necessary expenses prescribed in Article 32, paragraph (3) (Timber Income), the amount of the shortfall.

If an individual domiciled in Japan who has been issued a proof of physical disability passbook as prescribed in Article 15, paragraph (4) (Proof of Physical Disability Passbooks) of the Act on Welfare of Physically Disabled Persons (Act No. 283 of 1949); a wife domiciled in Japan who is eligible for the basic survivors' pension as prescribed in Article 37-2, paragraph (1) (Scope of Surviving Family) of the National Pension Act (Act No. 141 of 1959); a wife domiciled in Japan as prescribed in Article 49, paragraph (1) (Conditions for Payment) of that Act who is eligible for a widow's pension as prescribed in that paragraph; or any other person that Cabinet Order prescribes as being equivalent to such an eligible person (hereinafter referred to as a "Person with a Disability or other eligible person" in this Article) places money into Deposits and Savings (other than Deposits and Savings falling under the provisions of paragraph (1), item (i) or item (ii) of the preceding Article and other Deposits and Savings prescribed by Cabinet Order; hereinafter the same applies in this Article), places assets into a Jointly Managed Trust (other than one falling under the provisions of item (ii) of that paragraph and other than a trust as prescribed by Cabinet Order; hereinafter the same applies in this Article) or Bond-Based Investment Trust Under Public Offering (but only an Investment Trust managed without instructions from the settlor as prescribed in Article 2, paragraph (2) (Definitions) of the Act on Investment Trusts and Investment Corporations, and other than a trust as prescribed by Cabinet Order; hereinafter referred to as a "specific form of Bond-Based Investment Trust Under Public Offering" in this Article), or purchases Securities (limited to public and corporate bonds and beneficial interests as prescribed by Cabinet Order in Investment Trusts (other than Investment Trusts managed without instructions from the settlor as prescribed in that paragraph) and specified-purpose trusts; hereinafter the same applies in this Article), at the business office or other office of a financial institution or other person that accepts Deposits and Savings or undertakes to act as the trustee of a trust, the business office or office of a financial instruments business operator, the business office or office of a registered financial institution as provided by Cabinet Order, or any other place equivalent to the business office or office of such a person (hereinafter referred to as "the business office of a financial institution or other such place" in this Article) (hereinafter such an action is referred to in this Article as a "placement"), and the Person with a Disability or other eligible person submits a paper document at the time of the placement pursuant to Cabinet Order, indicating that the person seeks to apply the provisions of this paragraph to the Deposits and Savings, Jointly Managed Trust, specific form of Bond-Based Investment Trust Under Public Offering, or Securities; giving the person's name, date of birth, and domicile; indicating the person to be a Person with a Disability or other eligible person; and giving any other necessary information (hereinafter such a paper document is referred to as an "application to exempt savings from taxation" in this Article), no income taxes are imposed on what each of the following items prescribes, but only in the case set forth in the item in question:

if, throughout the period for calculating the interest on the Deposits and Savings, the sum of the principal of the Deposits and Savings and the principal of any other Deposits and Savings that the person has deposited at the business office of a financial institution or other such place concerned and in respect of which the person has submitted an application to exempt savings from taxation does not exceed the maximum limitation set forth in paragraph (3), item (iii) which appears in the statement of tax-exempt savings prescribed in that paragraph that the person submits via the business office of a financial institution or other such place concerned (on and after the day on which the person submits a declaration of change to the tax-exempt savings limit prescribed in paragraph (4), this means the maximum limitation after the change; hereinafter the same applies in this paragraph): interest on the Deposits and Savings during that period of calculation;

if, throughout the period for calculating distributions of proceeds from the Jointly Managed Trust or specific form of bond-based investment trust under public offering (hereinafter referred to as a "jointly managed or similar type of trust" in this item), the sum of the principal of the jointly managed or similar type of trust and the principal of any other jointly managed or similar types of trusts into which the person places assets at the business office of the financial institution or other such place and submits an application to exempt savings from taxation with respect to does not exceed the maximum limitation set forth in paragraph (3), item (iii) which appears in the statement of tax-exempt savings prescribed in that paragraph that the person submits via the business office of the financial institution or other such place (if the jointly managed or similar type of trust is a Loan Trust or a specific form of bond-based investment trust under public offering, this only applies if the jointly managed or similar type of trust is managed by way of entries or records in a transfer account book provided for in the Act on the Book-Entry Transfer of Bonds and Shares (Act No. 75 of 2001) or by any other method prescribed by Cabinet Order):distributions of proceeds from the jointly managed or similar type of trust during that period of calculation;

if, throughout the period for calculating the interest, distributions of proceeds, or dividends of surplus (meaning dividends of surplus as prescribed in Article 24, paragraph (1) (Dividend Income); hereinafter the same applies in this item), the Securities are managed by way of entries or records in a transfer account book provided for in the Act on the Book-Entry Transfer of Bonds and Shares or by any other method prescribed by Cabinet Order (if Securities are purchased partway through the period of calculation, this means throughout the period from the day of the purchase to the final day of the period of calculation; hereinafter the same applies in this item), and if, throughout the period of calculation, the sum of the face values of the Securities or the amount prescribed by Cabinet Order as being equivalent thereto (hereinafter referred to as the "face value or equivalent amount" in this Article) and the face values and equivalent amounts of other Securities that the person purchases at the business office of the financial institution or other such place and submits an application to exempt savings from taxation with respect to does not exceed the maximum limitation set forth in paragraph (3), item (iii) which appears in the statement of tax-exempt savings prescribed in that paragraph that the person submits via the business office of the financial institution or other such place:interest, distributions of proceeds, and dividends of surplus from the Securities during that period of calculation.

An application to exempt savings from taxation may be submitted only to the business office of the financial institution or other such place through which a person has submitted a statement of tax-exempt savings as prescribed in the following paragraph, and upon submitting the application, the person must present to the director of the business office of the financial institution or other such place the proof of physical disability passbook issued to the person pursuant to the provisions of Article 15, paragraph (4) of the Act on Welfare of Physically Disabled Persons, the basic survivors' pension certificate set forth in Article 15, item (iii) (Types of Benefits) of the National Pension Act, or any other document specified by Cabinet Order, or, in lieu of presenting those documents, transmit, in the manner specified by Cabinet Order, an electronic certificate for signature or similar record (meaning an electronic certificate for signature as prescribed in Article 3, paragraph (1) (Issuance of Electronic Certificates for Signature for Individual Number Cards) of the Act on Certification Business of the Japan Agency for Local Authority Information Systems in Relation to Electronic Signatures, etc. (Act No. 153 of 2002) (referred to as an "electronic certificate for signature" in paragraph (5)) or any other electronic or magnetic record (meaning a record used in computerized information processing which is created in electronic form, magnetic form, or any other form that cannot be perceived by the human senses; the same applies in paragraph (5)) that is specified by Ministry of Finance Order).

The provisions of paragraph (1) apply only if an individual submits a paper-based statement giving the following information (hereinafter referred to as a "statement of tax-exempt savings" in this Article) by the day of the placement, as regards the Deposits and Savings, Jointly Managed Trust, specific form of Bond-Based Investment Trust Under Public Offering, or Securities to which the person seeks to apply the provisions of that paragraph for the first time, to the competent district director for the person's domicile, via the business office of a financial institution or other such place where the person makes the placement:

the submitter's name, date of birth, domicile, and individual number (meaning an individual number as prescribed in Article 2, paragraph (5) (Definitions) of the Act on the Use of Numbers to Identify a Specific Individual in Administrative Procedures (Act No. 27 of 2013); the same applies hereinafter), the fact that the submitter is a Person with a Disability or other eligible person, and the name and location of the business office of a financial institution or other such place concerned;

whether the submitter seeks to apply the provisions of paragraph (1) to Deposits or Savings, to a Jointly Managed Trust, to a specific form of bond-based investment trust under public offering, or to Securities;

the maximum limitation for the current balance of the Deposits or Savings, Jointly Managed Trust, specific form of bond-based investment trust under public offering, or Securities (for Securities, this means the current balance of Securities calculated based on their face value or equivalent amount) to which the submitter seeks to apply the provisions of paragraph (1) as regards the submitter's deposits, placements into trust, or purchases at the business office of the financial institution or other such place;

the name of any other business office of a financial institution or other such place via which the person has already submitted a statement of tax-exempt savings, and the maximum limitation as referred to in the preceding item which has been given in any such statement (if the person has submitted a statement as under the following paragraph, this means the maximum limitation after the change).

If an individual who has submitted a statement of tax-exempt savings seeks to change the maximum limitation set forth in item (iii) of the preceding paragraph that has been given in the statement (if the person has already submitted a statement as under this paragraph, this means the maximum limitation which is given in that statement as after the change), the individual must submit a paper-based statement indicating this; indicating the sum of the maximum limitation set forth in item (iii) of the preceding paragraph and the maximum limitation set forth in item (iv) of that paragraph after the change; and giving any other necessary information (hereinafter referred to as a "declaration of change to the tax-exempt savings limit" in this Article), to the competent district director for the individual's domicile, via the business office of a financial institution or other such place through which the individual has submitted the statement of tax-exempt savings, pursuant to Cabinet Order.

Before submitting a statement of tax-exempt savings or a declaration of change to the tax-exempt savings limit, the individual submitting it must present the director of the business office of a financial institution or other such place prescribed in paragraph (3) or the preceding paragraph with the proof of physical disability passbook issued thereto pursuant to Article 15, paragraph (4) of the Act on Welfare of Physically Disabled Persons, basic survivors' pension certificate set forth in Article 15, item (iii) of the National Pension Act, or other documents specified by Cabinet Order, or, in lieu of presenting such documents, transmit, in the manner specified by Cabinet Order, an electronic certificate for signature or similar record (meaning an electronic certificate for signature or any other electronic or magnetic record that is specified by Ministry of Finance Order); notify the director of the individual's name, date of birth, domicile, and individual number and that the individual is a Person with a Disability or other eligible person; and obtain confirmation of the information of which the individual has notified the director, pursuant to Cabinet Order.

In a case referred to in paragraph (3) or paragraph (4), once the statement of tax-exempt savings or the declaration of change to the tax-exempt savings limit has been submitted to the district director prescribed in those provisions, it is deemed to have been submitted on the day that it was accepted at the business office of a financial institution or other such place prescribed in those provisions.

An individual as prescribed in paragraph (1) may not submit a statement falling under a category of statement of tax-exempt savings or declaration of change to the tax-exempt savings limit which is as follows, and the director of the business office of a financial institution or other such place prescribed in paragraph (3) or paragraph (4) may not accept such a statement nor may the director accept any further statement of tax-exempt savings submitted by an individual from whom the director has already accepted a statement of tax-exempt savings (other than as prescribed by Cabinet Order):

a statement of tax-exempt savings or declaration of change to the tax-exempt savings limit that gives a maximum limitation as set forth in paragraph (3), item (iii) (for a declaration of change to the tax-exempt savings limit, this means the maximum limitation as set forth in that item as after the change) that exceeds three million yen, or a statement of tax-exempt savings or declaration of change to the tax-exempt savings limit that gives a sum for that maximum limitation and the maximum limitations as set forth in item (iv) of that paragraph that exceeds three million yen;

a statement of tax-exempt savings or declaration of change to the tax-exempt savings limit for which the confirmation under paragraph (5) has not been obtained.

In lieu of submitting an application or statement under the provisions of paragraph (1), paragraph (3), or paragraph (4), an individual as prescribed in those provisions may provide the business office of a financial institution or other such place prescribed in those provisions with the information required to be given in the application or statement by electronic or magnetic means (meaning a means that uses an electronic data processing system or any other means that uses information and communications technology). In such a case, the individual is deemed to have submitted the application or statement to the business office of a financial institution or other such place concerned.

When the provisions of the preceding paragraph apply, for the purpose of applying the provisions of paragraph (6), the phrase "the statement of tax-exempt savings or the declaration of change to the tax-exempt savings limit" in that paragraph is deemed to be replaced with "the information required to be given in the statement of tax-exempt savings or the information required to be given in the declaration of change to the tax-exempt savings limit", and the phrase "the day that it was accepted" is deemed to be replaced with "the day that it was provided".

Beyond what is prescribed in paragraph (2) through the preceding paragraph, Cabinet Order provides for the way of calculating the principal and face value or equivalent amount set forth in paragraph (1); the particulars of the submission, keeping on file, and management of applications to exempt savings from taxation; the particulars of the submission of statements of tax-exempt savings; the particulars of reporting if there has been a change in the information that an individual submitting a statement of tax-exempt savings has given in the statement or if the individual seeks to stop being subject to the provisions of that paragraph after having submitted a statement; and other necessary particulars concerning the application of that paragraph.

Income taxes are not imposed on interest and similar income, dividends and similar income, compensation for periodic deposits, finance charges, profits, margin profits, and distributions of proceeds set forth in the items of Article 174 (Tax Base for a Domestic Corporation's Income Taxes) paid to a Domestic Corporation as set forth in Appended Table I (as regards distributions of proceeds from a beneficial interest in a Loan Trust, the non-imposition of income taxes is limited to the part equivalent to the amount of monies calculated pursuant to Cabinet Order as coming from a period during which the Domestic Corporation continuously held the beneficial interest).

Income taxes are not imposed on income arising from the trust property of a public interest trust as prescribed in Article 2, paragraph (1), item (i) (Definitions) of the Act on Public Interest Trusts (Act No. 30 of 2024) (referred to as a "public interest trust" in Article 59, paragraph (1), item (i) (Special Provisions on Capital Gains and Gifts), Article 60, paragraph (1), item (i) (Acquisition Costs of Assets Acquired as Gifts), Article 60-2, paragraph (6) (Special Provisions on Capital Gains upon Departure from Japan), Article 60-3, paragraph (6) (Special Provisions on Capital Gains If Assets Are Transferred to a Nonresident by Gift or Similar), Article 67-3, paragraph (10) (Calculation of the Amount of Income Relating to Trusts), and Article 78, paragraph (2), item (iv) (Donation Deduction)) or of a participant protection trust as prescribed in Article 2, paragraph (11) (Definitions) of the Act on Book-Entry Transfer of Corporate Bonds and Shares (as regards income relating to distributions of proceeds from a beneficial interest in a Loan Trust, the non-imposition of income taxes is limited to the part equivalent to the amount of monies calculated pursuant to Cabinet Order as coming from a period during which the beneficial interest continuously belonged to the trust property of the public interest trust or the participant protection trust).

The part of the provisions of the preceding two paragraphs that relates to interest, distributions of proceeds, or dividends of surplus prescribed in Article 24, paragraph (1) (Dividend Income) (hereinafter referred to as "interest and similar income" in this paragraph) from public and corporate bonds or from any beneficial interest in a Loan Trust, Investment Trust, or specified-purpose trust as provided by Cabinet Order (hereinafter referred to as a "public and corporate bond or similar interest" in this paragraph) applies only if a Domestic Corporation or the trustee of a public interest trust or participant protection trust as prescribed in these provisions manages the public and corporate bond or similar interest through entries or records in a transfer account book as prescribed in the Act on Book-Entry Transfer of Corporate Bonds and Shares or by other means prescribed by Cabinet Order, and has submitted a statement to the district director, pursuant to Cabinet Order, indicating its intention to seek the application of these provisions to interest and similar income from the public and corporate bond or similar interest and giving other information provided for by Ministry of Finance Order, via the person paying the interest and similar income from the public and corporate bond or similar interest (referred to as the "payer" in the following paragraph).

In lieu of submitting a statement under the provisions of the preceding paragraph, a Domestic Corporation or the trustee of a public interest trust or participant protection trust as prescribed in that paragraph may provide the payer referred to in that paragraph with the information required to be given in the statement by the electronic or magnetic means prescribed in paragraph (8) of the preceding Article. In such a case, the Domestic Corporation or the trustee of the public interest trust or participant protection trust is deemed to have submitted the statement to the payer.

If the person to whom proceeds arising from assets or business seem to be legally attributed is the holder of those proceeds in name alone and has no enjoyment thereof, but someone other than that person does have enjoyment of those proceeds, the proceeds are to be attributed to the person with actual enjoyment thereof, and the provisions of this Act apply.

The beneficiary of a trust (but only one who actually has rights as a beneficiary) is deemed to be the one holding the trust property's assets and liabilities; the proceeds and expenses attributable to the trust property are deemed to be the proceeds and expenses of the beneficiary; and the provisions of this Act apply; provided, however, that this does not apply to the trust property assets and liabilities of a group investment trust, retirement pension trust, or Trust Subject to Corporate Taxation, nor does it apply to proceeds and expenses attributable to the trust property thereof.

A person who actually has the authority to make changes to a trust (other than what Cabinet Order prescribes as the authority to make minor changes) and who is meant to benefit from the trust property (other than a beneficiary) is deemed to be a beneficiary as prescribed in the preceding paragraph, and the provisions of that paragraph apply.

In paragraph (1), the meaning of a term as set forth in one of the following items is as prescribed in the item:

group investment trust:a Jointly Managed Trust, Investment Trust (but only a trust as set forth in Article 2, item (xxix), (b) (Definitions) of the Corporation Tax Act), or Specified Trust That Issues Beneficiary Certificates;

retirement pension trust: a trust under an investment contract for defined-benefit pension assets, investment contract for defined-benefit pension fund assets, investment contract for defined-contribution pension assets, benefit contract for worker asset-building, or benefit contract for a worker asset-building fund as prescribed in Article 84, paragraph (1) (Calculation of the Amount of Retirement Pension Funds) of the Corporation Tax Act; under a contract as prescribed in Article 128, paragraph (3) (Business of the Fund) or Article 137-15, paragraph (4) (Business of the Association) of the National Pension Act which is concluded by the National Pension Fund or the National Pension Fund Association; or under any similar contract involving a retirement pension which is prescribed by Cabinet Order.

Cabinet Order provides for the application of the provisions of paragraph (1) if there are two or more beneficiaries, for the reaching of a determination as to whether someone falls under the category of a person who is meant to benefit from trust property as prescribed in paragraph (2), and for other necessary particulars concerning the application of paragraph (1) and paragraph (2).

The locality for paying over income taxes is the place that each of the following items prescribes, according to which of the cases set forth in those items the taxpayer falls under:

if the taxpayer is domiciled in Japan: the place of domicile;

if the taxpayer is not domiciled in Japan but has a residence there: the place of residence;

if the taxpayer is a Nonresident that has a permanent establishment, other than in a case set forth in the preceding two items: the location of the office, place of business, or any other equivalent place relating to the business that the Nonresident conducts through the permanent establishment (or the location of the principal one, if there are two or more such places);

if a person whose locality for paying over taxes was determined under the provisions of item (i) or item (ii) ceases to be domiciled or reside in Japan, and at the time of so ceasing the person does not have an office, place of business, or any other equivalent place relating to the business prescribed in the preceding item, and a relative of the person or any other person specified by Cabinet Order as having a special relationship with the person continues to reside, or resides in place of the person, at the place that had been the person's locality for paying over taxes: the place that had been the locality for paying over taxes;

if the taxpayer receives consideration as set forth in Article 161, paragraph (1), item (vii) (Domestic Source Income) (other than consideration for the lending of a ship or aircraft), other than in a case set forth in any of the preceding items: the location of the assets relating to the consideration (or the location of the principal assets, if there are two or more such assets);

in any case other than those set forth in the preceding items: the place specified by Cabinet Order.

Notwithstanding the provisions of item (i) of the preceding Article, a taxpayer that has a residence in Japan in addition to a domicile (other than a taxpayer for whom a locality for paying over taxes has been designated pursuant to the provisions of Article 18, paragraph (1) (Designation of Locality for Paying Over Taxes); the same applies in the following paragraph) may make the place of residence, in lieu of the place of domicile, the locality for paying over taxes.

Notwithstanding the provisions of item (i) or item (ii) of the preceding Article, a taxpayer that has a domicile or residence in Japan and that has a place of business or any other equivalent place relating to the business that the taxpayer operates (hereinafter referred to as a "place of business or similar place" in this paragraph) at a place other than the place of domicile or place of residence may make the location of the place of business or similar place (or the location of the principal place of business or similar place, if there are two or more such places) the locality for paying over taxes, in lieu of the place of domicile or place of residence.

If a taxpayer dies, the locality for paying over the income taxes of the deceased is the locality for paying over the income taxes of the deceased at the time of death, regardless of the locality for paying over the heir's income taxes.

The locality in which a person paying a salary or other wage as prescribed in Article 28, paragraph (1) (Salary Income), or a person making any other payment as prescribed in Part IV, Chapter I through Chapter VI (Withholding) (hereinafter referred to as a "person paying salary" in this Article) is to pay over the income taxes to be collected through withholding from those payments is the locality, as of the payment date, of the office, place of business, or any other equivalent place of the person paying salary that handles those payments (hereinafter referred to as an "office or similar place" in this Article) (or, if on or after the payment date the person paying salary relocates the office or similar place in Japan, the location of the office or similar place after the relocation or any other place specified by Cabinet Order); provided, however, that the locality for paying over the income taxes to be collected through withholding from interest on public and corporate bonds, dividends of surplus as prescribed in Article 24, paragraph (1) (Dividend Income) which are paid by a Domestic Corporation (or by a trust corporation that is deemed to be a Domestic Corporation pursuant to the provisions of Article 6-3, item (i) (Application of This Act to Trust Corporations) as prescribed in that Article), or any other payment prescribed by Cabinet Order is the locality of the head office or principal office of the person making the payment or any other place provided for by Cabinet Order.

If the locality for paying over taxes under the provisions of Article 15 (Locality for Paying Over Taxes) or Article 16 (Special Provisions on the Locality for Paying Over Taxes) is found to be inappropriate as the locality for paying over income taxes in view of the taxpayer's income circumstances, the regional commissioner for that locality (or the Commissioner of the National Tax Agency, in a case specified by Cabinet Order; the same applies hereinafter in this Article) may designate the locality for paying over the income taxes, notwithstanding those provisions.

Notwithstanding the provisions of the preceding Article, if the locality for paying over taxes as under the preceding Article is found to be inappropriate as the locality for the person to pay over the income taxes referred to in that Article in view of clerical considerations attending payment by the person paying the salary or other wage as prescribed in that Article or other circumstances, the regional commissioner for the locality in which the person is to pay over the taxes may designate the locality for the person to pay over the income taxes.

When the regional commissioner has designated the locality for paying over income taxes pursuant to the provisions of the preceding two paragraphs, the regional commissioner notifies the taxpayer or the person making the payment prescribed in those provisions of this in writing.

Even if a disposition designating the locality for paying over taxes under the provisions of paragraph (1) or paragraph (2) of the preceding Article is revoked by a determination on a request for reinvestigation, a ruling on a request for review, or a judgment, the revocation is not to affect the validity of any return, application, request, notification, or other submission of documents or any payment, or of any disposition by the Commissioner of the National Tax Agency, a regional commissioner, or a district director (other than the disposition that was revoked), that was made during the period from the time of the revoked disposition until the time of the revocation with regard to the income taxes of the taxpayer prescribed in paragraph (1) of that Article or the income taxes referred to in paragraph (2) of that Article of the person making the payment prescribed in that paragraph, treating the locality for paying over taxes that was the subject of the revocation as the locality for paying over taxes to which the disposition related.

The income taxes imposed on a Resident are calculated based on the following order of calculations:

the Resident's income is classified, pursuant to the provisions of Section 2 of the following Chapter (Calculating Income in Each Class), into the categories of interest income, dividend income, real property income, business income, salary income, retirement income, timber income, capital gains, occasional income, and miscellaneous income, and the amounts of income in each category are calculated separately;

the Resident's gross income, retirement income, and timber income as prescribed in the following Article are calculated based on the amounts of income referred to in the preceding item, pursuant to the provisions of the following Article and Section 3 of the following Chapter (Aggregation of Profits and Losses and Deductions for Carryover of Losses);

the basic personal exemption and other deductions are taken, pursuant to the provisions of Section 4 of the following Chapter (Deductions from Income), from the Resident's gross income, retirement income, or timber income as referred to in the preceding item, to calculate the Resident's taxable gross income, taxable retirement income, or taxable timber income as prescribed in Article 89, paragraph (2) (Tax Rates);

the Resident's income taxes are calculated pursuant to Chapter III, Section 1 (Tax Rates) based on the Resident's taxable gross income, taxable retirement income, or taxable timber income as referred to in the preceding item;

if the Resident is taking a dividend tax credit, a credit for the equivalent of foreign taxes adjusted at the time of distribution, or a foreign tax credit pursuant to Chapter III, Section 2 (Tax Credits), the Resident's income taxes are the amount that remains after any such credit is applied against the equivalent of what the preceding item refers to as the Resident's income taxes.

In the case referred to in the preceding paragraph, if the Resident falls under the provisions of Chapter IV (Special Provisions on Calculating the Amount of Taxes), the income taxes imposed on the Resident are as prescribed in that Chapter.

The tax base for the income taxes imposed on a Resident is the Resident's gross income, retirement income, and timber income.

Gross income is the sum total of the following amounts as calculated pursuant to the provisions of the following Section (Calculating Income in Each Class) (or the sum of the amounts arrived at through the application of the provisions of Article 70, paragraph (1) or paragraph (2) (Deduction for Carryover of Net Loss) or Article 71, paragraph (1) (Deduction for Carryover of Casualty Loss), if those provisions apply):

the total of a Resident's interest income, dividend income, real property income, business income, salary income, capital gains (but only the part constituting income set forth in Article 33, paragraph (3), item (i) or (iii) (Capital Gains)), and miscellaneous income (or the amount arrived at through the application of Article 69 (Aggregation of Profits and Losses), if those provisions apply);

an amount that represents half of the sum total of capital gains (but only the part constituting income set forth in Article 33, paragraph (3), item (ii)) plus occasional income (or the amount arrived at through the application of Article 69, if those provisions apply).

Retirement income and timber income are calculated separately pursuant to the provisions of the following Section (or are arrived at through the application of Article 69, Article 70, or Article 71, if those provisions apply).

Interest income means income from interest on public and corporate bonds and Deposits and Savings (other than interest on public and corporate bonds that were the interest portion of public and corporate bonds whose principal portion and interest portion have been separated and are each traded independently), and from distributions of proceeds from Jointly Managed Trusts, Bond Investment Trusts, and Bond-Based Investment Trusts Under Public Offering (hereinafter referred to as "interest and similar income" in this Article).

Interest income is the amount of revenue arising from interest and similar income in the year.

Dividend income means income from dividends of surplus (these are limited to dividends from shares or capital contributions (including any beneficial interest in a Bond-Based Investment Trust other than a Bond-Based Investment Trust Under Public Offering, and including a company bond-type beneficial interest; the same applies in the following Article), and exclude any dividends that result from a decrease in capital surplus, any dividends that are based on a split (meaning a company split by split-off as prescribed in Article 2, item (xii)-9 of the Corporation Tax Act, and including a trust split in connection with a Trust Subject to Corporate Taxation; hereinafter the same applies in this paragraph and the following Article), and any share distribution (meaning a share distribution as prescribed in Article 2, item (xii)-15-2 of that Act; hereinafter the same applies in this paragraph and the following Article)), dividends of profits (these include distributions of monies as prescribed in Article 115, paragraph (1) (Interim Dividends) of the Act on the Securitization of Assets, and exclude dividends based on a split-off and any share distribution), distributions of surplus (but only those related to capital contributions), distributions of monies under Article 137 (Distribution of Monies) of the Act on Investment Trusts and Investment Corporations (other than those specified by Ministry of Finance Order as distributions of monies accompanying a decrease in the total amount of capital contributions or similar (referred to as a "distribution that reduces contributions" in paragraph (1), item (iv) of the following Article)), and interest on funds (meaning interest on funds as prescribed in Article 55, paragraph (1) (Restrictions on Payment of Interest on Funds) of the Insurance Business Act), as well as distributions of proceeds from an Investment Trust (other than a Bond Investment Trust or Bond-Based Investment Trust Under Public Offering) or Specified Trust That Issues Beneficiary Certificates (other than those relating to a qualified distribution in kind as prescribed in Article 2, item (xii)-15 of the Corporation Tax Act; hereinafter referred to as "dividends and similar income" in this Article), which the taxpayer receives from a corporation (other than a corporation in the public interest, etc. as prescribed in Article 2, item (vi) (Definitions) of the Corporation Tax Act or an Association or Foundation without Legal Personality).

Dividend income is the amount of revenue arising from dividends and similar income for the year; provided, however, that if there is any interest paid in the year on a debt that the taxpayer needed to incur in order to acquire shares or other principal that is meant to generate dividend income (other than any interest on a debt that the taxpayer needed to incur in order to acquire Securities which have generated business income or miscellaneous income or anything else specified by Cabinet Order; hereinafter the same applies in this paragraph), the dividend income is the amount of revenue arising from dividends and similar income in the year, less the total amount calculated pursuant to Cabinet Order as the part of the interest payable on the debt in the period during which the taxpayer held the principal in that year.

If monies or any other assets are issued to a Shareholder, Member, or Other Investor in a corporation (other than a corporation in the public interest, etc. as prescribed in Article 2, item (vi) (Definitions) of the Corporation Tax Act or an Association or Foundation without Legal Personality; hereinafter the same applies in this paragraph) due to any of the following circumstances involving the corporation, and the sum total of the monies and the value of assets other than monies (or, for assets relating to a qualified distribution in kind as prescribed in item (xii)-15 of that Article, the amount equivalent to the book value of those assets of the corporation immediately before the issuance) exceeds the part of the corporation's amount of stated capital, etc. as prescribed in item (xvi) of that Article which comes from the shares in or capital contributions to the corporation upon which the issuance of the monies and assets is founded, for the purpose of applying the provisions of this Act, the part of the monies or other assets in excess is deemed to be a dividend of surplus, dividend of profits, distribution of surplus, or distribution of monies as prescribed in paragraph (1) of the preceding Article:

the merger of the corporation (this includes a merger of trusts which involves a Trust Subject to Corporate Taxation but excludes a qualified merger as prescribed in Article 2, item (xii)-8 of the Corporation Tax Act);

a split-off from the corporation (other than a qualified company split by split-off as prescribed in Article 2, item (xii)-12 of the Corporation Tax Act);

a share distribution by the corporation (other than a qualified share distribution as prescribed in Article 2, item (xii)-15-3 of the Corporation Tax Act);

redemption of the corporation's stated capital (meaning the issuance of dividends of surplus in connection with shares (but only if this causes a decrease in capital surplus) other than due to a split-off or a share distribution, and a distribution that reduces contributions) or the distribution of residual assets due to the dissolution of the corporation;

the corporation's acquisition of treasury shares or capital contributions to itself (other than acquisition through a purchase on a market operated by a financial instruments exchange as prescribed in Article 2, paragraph (16) (Definitions) of the Financial Instruments and Exchange Act or any other type of acquisition which is provided for by Cabinet Order, and other than acquisition of shares or capital contributions set forth in Article 57-4, paragraph (3), item (i) through (iii) (Special Provisions on Capital Gains Due to Share Exchange) in a case falling under the category of case prescribed in that paragraph);

cancellation of capital contributions to the corporation (other than the cancellation of acquired capital contributions), refunding of capital contributions to the corporation, refunding of equity due to a member's or other contributor's withdrawal from the corporation, or extinguishment of shares in or capital contributions to the corporation without the corporation's acquiring them;

entity conversion by the corporation (but only one on the occasion of which assets other than shares in or capital contributions to the corporation undergoing the entity conversion are issued).

Even if a merging corporation (meaning a merging corporation as prescribed in Article 2, item (xii) of the Corporation Tax Act; hereinafter the same applies in this paragraph) or a splitting corporation (meaning a splitting corporation as prescribed in item (xii)-2 of that Article; hereinafter the same applies in this paragraph) has not issued shares (including capital contributions; hereinafter the same applies in this paragraph) or other assets through a merger or split-off to any Shareholder, Member, or Other Investor of the merged corporation (meaning a merged corporation as prescribed in item (xi) of that Article) or to any Shareholder, Member, or Other Investor of the splitting corporation, if the merger or split-off falls under a merger or split-off specified by Cabinet Order as one in which the issuance of shares of the merging corporation or the successor corporation in a company split (meaning a successor corporation in a company split as prescribed in item (xii)-3 of that Article; hereinafter the same applies in this paragraph) is found to have been omitted, the provisions of the preceding paragraph apply by deeming, pursuant to Cabinet Order, each such Shareholder, Member, or Other Investor to have been issued shares of the merging corporation or successor corporation in a company split.

Cabinet Order prescribes the way of calculating the amount of stated capital, etc. coming from shares and capital contributions as prescribed in paragraph (1) and provides for other necessary particulars concerning the application of the provisions of the preceding two paragraphs.

Real property income means income arising from renting out real property, a right on real property, a vessel, or an aircraft (hereinafter referred to as "real estate and other such property" in this paragraph) (this includes establishing a superficies right or farming right or doing something else that gives another person the use of real estate or other such property) (other than anything falling under the category of business income or capital gains).

Real property income is gross revenues constituting real property income in the relevant year, less necessary expenses.

Business income means income arising from commercial farming, fishing, manufacturing, wholesale activities, retail sales, the service industry, or any other commercial activity prescribed by Cabinet Order (other than anything falling under the category of timber income or capital gains).

Business income is gross revenues constituting business income in the relevant year, less necessary expenses.

Salary income means income from pay, compensation, wages, annual allowances, bonuses, or salary of a similar nature (hereinafter referred to as a "salary or other wage" in this Article).

Salary income is the amount remaining after the salary income deduction is applied against revenue from a taxpayer's salary and other wages in the relevant year.

The salary income deduction prescribed in the preceding paragraph is the amount that each of the following items prescribes for the category of case set forth in the item:

if the taxpayer's revenue as prescribed in the preceding paragraph is 3,600,000 yen or less: the sum total of 80,000 yen plus 30% of the taxpayer's revenue (or 690,000 yen, if that sum total is less than 690,000 yen);

if the taxpayer's revenue as prescribed in the preceding paragraph is over 3,600,000 yen but not more than 6,600,000 yen: the sum total of 1,160,000 yen plus 20% of the difference arrived at when 3,600,000 yen is deducted from the taxpayer's revenue;

if the taxpayer's revenue as prescribed in the preceding paragraph is over 6,600,000 yen but not more than 8,500,000 yen: the sum total of 1,760,000 yen plus 10% of the difference arrived at when 6,600,000 yen is deducted from the taxpayer's revenue;

if the taxpayer's revenue as prescribed in the preceding paragraph is over 8,500,000 yen: 1,950,000 yen.

Notwithstanding the provisions of the preceding two paragraphs, if the taxpayer's revenue from salary and other wages in the year is less than 6,600,000 yen, that revenue is taken to be the "amount of salary and other wages" to which Appended Table V refers, and the taxpayer's salary income arising from salary and other wages is equivalent to the amount that, using the Table, a person finds to be the "amount of salary and other wages after the salary income deduction" that the Table gives for the taxpayer's salary and other wages.

Retirement income means income arising from severance pay, a lump-sum early retirement package, other compensation received on a one-time basis due to separation from employment, and compensation of a similar nature (hereinafter referred to as "severance pay and other such compensation" in this Article).

Retirement income is equivalent to 50% of the amount remaining after the retirement income deduction is applied against revenue from severance pay and other such compensation in the year (or, if the severance pay and other such compensation is short-term severance pay, the amount that each of the following items prescribes for the category of case set forth in the item, and if it is specified officers' severance pay, the amount equivalent to the amount remaining after the retirement income deduction is applied against the revenue from the severance pay and other such compensation).

if the amount remaining after the retirement income deduction is applied against the revenue from the severance pay and other such compensation is 3,000,000 yen or less: the amount equivalent to 50% of the remaining amount;

in a case other than that set forth in the preceding item: the sum total of 1,500,000 yen plus the amount remaining after the sum of 3,000,000 yen and the retirement income deduction is deducted from the revenue from the severance pay and other such compensation.

The retirement income deduction prescribed in the preceding paragraph is the amount that each of the following items prescribes for the category of case set forth in the item:

if the taxpayer has 20 or fewer years of service as prescribed by Cabinet Order (hereinafter referred to as "years of service" in this paragraph and paragraph (7)): the amount calculated as 400,000 yen times the taxpayer's years of service;

if the taxpayer has over 20 years of service:the sum total calculated when 20 years are subtracted from the taxpayer's years of service, the difference is multiplied by 700,000 yen, and 8,000,000 yen is added to the product thereof.

The short-term severance pay prescribed in paragraph (2) means severance pay and other such compensation that is received from the person paying the severance pay and other such compensation as severance pay and other such compensation corresponding to short-term years of service (meaning the years of service prescribed in item (i) of the preceding paragraph in which the years of service specified by Cabinet Order as a person other than an officer or similar person prescribed in the following paragraph are five years or less; the same applies in paragraph (7)), and that does not fall under the category of specified officers' severance pay prescribed in the following paragraph.

The specified officers' severance pay prescribed in paragraph (2) means severance pay and other such compensation that a person whose years of service specified by Cabinet Order as an officer or similar person (meaning a person set forth in any of the following items) (hereinafter referred to as "years of service as an officer" in this paragraph and paragraph (7)) are five years or less receives from the person paying the severance pay and other such compensation as severance pay and other such compensation corresponding to those years of service as an officer:

an officer as prescribed in Article 2, item (xv) (Definitions) of the Corporation Tax Act;

a member of the Diet or a member of the assembly of a local government;

a national public employee or local public employee.

Notwithstanding the provisions of paragraph (3), if circumstances fall under one of the cases set forth in the following items, the retirement income deduction provided for in paragraph (2) is the amount prescribed in the relevant item:

a case as prescribed by Cabinet Order, in which the taxpayer has been paid other severance pay and other such compensation in or before the previous year: the amount calculated pursuant to paragraph (3), less the amount that is calculated for the other severance pay and other such compensation when the provisions of that paragraph are applied pursuant to Cabinet Order;

a case in which the amount calculated pursuant to the provisions of paragraph (3) and the preceding item is less than 800,000 yen (other than in a case falling under the following item): 800,000 yen;

a case as prescribed by Cabinet Order in which the taxpayer is found to have left employment as a direct result of becoming a Person with a Disability: the amount calculated pursuant to the provisions of paragraph (3) and item (i) (or 800,000 yen, if the amount so calculated is less than 800,000 yen), plus 1,000,000 yen.

If a taxpayer has, in the year, two or more kinds of severance pay and other such compensation from among general severance pay or other such compensation (meaning severance pay and other such compensation that falls under neither short-term severance pay (meaning the short-term severance pay prescribed in paragraph (4); hereinafter the same applies in this paragraph) nor specified officers' severance pay (meaning the specified officers' severance pay prescribed in paragraph (5); hereinafter the same applies in this paragraph); hereinafter the same applies in this paragraph), short-term severance pay, and specified officers' severance pay, and there is an overlapping period in the years of service for the general severance pay or other such compensation, the short-term years of service for the short-term severance pay, or the years of service as an officer for the specified officers' severance pay, Cabinet Order provides for the calculation of the retirement income.

For the purpose of applying this Act, the following lump-sum payments are deemed to constitute severance pay and other such compensation as prescribed in paragraph (1) of the preceding Article:

a lump-sum payment based on the National Pension Act, Employees' Pension Insurance Act (Act No. 115 of 1954), National Public Officers Mutual Aid Association Act (Act No. 128 of 1958), Local Public Officers, etc. Mutual Aid Association Act (Act No. 152 of 1962), Private School Personnel Mutual Aid Association Act (Act No. 245 of 1953), or Act on the Farmers Pension Fund, Independent Administrative Agency (Act No. 127 of 2002), or any other lump-sum or one-time payment provided for by Cabinet Order which is based on a system similar to the social insurance or mutual aid systems under these Acts (including any similar payment; hereinafter the same applies in this Article);

Timber income means income arising from the felling of trees in forested land or a transfer of forested land.

Income arising from the felling of trees in forested land or a transfer of forested land within five years after the date of its acquisition is not included in timber income.

Timber income is the amount arrived at when the special timber income deduction is applied against the amount remaining after necessary expenses are deducted from gross revenue constituting timber income in the relevant year.

The special timber income deduction provided for in the preceding paragraph is 500,000 yen (or the remaining amount provided for in that paragraph, if this is less than 500,000 yen).

Capital gains means income arising from a transfer of assets (including the establishment of a superficies right or a right of lease to allow another person to own a building or structure, or an act provided for by Cabinet Order which gives another person long-term use of a piece of land pursuant to a contract; hereinafter the same applies in this Article).

The following income is not included in capital gains:

income arising from a transfer of Inventory (including anything that Cabinet Order prescribes as assets equivalent thereto) or from a person's continuous transfer of other assets on a commercial basis;

income arising from the felling of trees in forested land or a transfer of forested land, beyond that which falls under the preceding item.

Capital gains is the amount arrived at by first treating each of the following items separately as regards the income set forth therein and calculating the sum total of the acquisition costs of assets generating the income set forth in the item plus the cost to transfer those assets, subtracting this sum from gross revenues constituting the income set forth in that item in the year, adding together the net balances from those calculations (or, if gross revenues constituting the income set forth in either one of the following items alone is less than the sum total of the acquisition costs of the assets generating that income and the cost to transfer those assets, the sum total of the amounts for the income set forth in the other items after successively offsetting the net balances calculated for the income set forth in those other items by an amount equivalent to the negative balance, in the order prescribed by Cabinet Order; hereinafter such an amount is referred to as "net gain" in this Article), then applying the special capital gains deduction against the net gain:

income arising from a transfer of assets (other than crypto-assets; the same applies in the following item) (other than a transfer falling under the provisions of the preceding paragraph; the same applies in that item and item (iii)) that was made within five years after the date of the acquisition thereof (other than income prescribed by Cabinet Order);

income arising from a transfer of assets, other than income as set forth in the preceding item.

income arising from a transfer of crypto-assets.

The special capital gain deduction provided for in the preceding paragraph is the amount that each of the following items prescribes for the category of case set forth in the item:

a case other than that set forth in the following item: 500,000 yen;

if the sum total of the part of the net gain that comes from income set forth in item (i) of the preceding paragraph and the part of the net gain that comes from income set forth in item (ii) of that paragraph is less than 500,000 yen: that sum total.

When a special capital gain deduction as prescribed in paragraph (3) is applied against a net gain pursuant to the provisions of that paragraph, the deduction is first applied against the part of the net gain that comes from income set forth in item (i) of that paragraph, and if any amount remains that is not fully deducted, it is applied against the part of the net gain that comes from income set forth in item (ii) of that paragraph.

Occasional income means income outside of interest income, dividend income, real property income, business income, salary income, retirement income, timber income, and capital gains; which does not constitute income from one-time payments arising from continuous activities undertaken on a commercial basis; and which does not have the nature of compensation for work or other services or for the transfer of assets.

Occasional income is the amount arrived at when the amounts expended to gain the revenue arising from occasional income for the year are added together (but only amounts that were directly needed to bring about the undertaking of acts that generated the revenue or to provoke the occurrence of causes that generated the revenue), the sum total thereof is deducted from gross revenues constituting occasional income in the relevant year, and the special occasional income deduction is applied against the net balance.

The special occasional income deduction provided for in the preceding paragraph is 500,000 yen (or the net balance provided for in that paragraph, if this is less than 500,000 yen).

Miscellaneous income means income not falling under the category of interest income, dividend income, real property income, business income, salary income, retirement income, timber income, capital gains, or occasional income.

Miscellaneous income is the sum total of the amounts set forth in the following items:

the amount remaining after the public pension deduction is applied against the revenue from public pensions and retirement packages in the year;

the amount arrived at when the necessary expenses are deducted from gross revenues constituting miscellaneous income in the relevant year (other than income from public pensions and retirement packages).

The public pensions and retirement packages that the preceding paragraph provides for means:

public retirement packages (other than lump-sum early retirement packages) and pensions based on past service which are paid by a former employer;

The public pension deduction prescribed in paragraph (2) is the amount that each of the following items prescribes for the category of case set forth in the item:

if the taxpayer's total income as prescribed in Article 2, paragraph (1), item (xxx) (Definitions), calculated as if there were no revenue from public pensions and retirement packages in the year (referred to as the "total income other than miscellaneous income from public pensions and retirement packages" in the following item and item (iii)), is 10,000,000 yen or less: the sum total of the following amounts (or 600,000 yen, if that sum total is less than 600,000 yen):

400,000 yen;

the amount that each of the following prescribes for the category of case set forth therein, as it applies to the amount remaining after 500,000 yen is deducted against the taxpayer's revenue from public pensions and retirement packages in the year:

if the remaining amount is 3,600,000 yen or less:25% of the remaining amount;

if the remaining amount is over 3,600,000 yen but not more than 7,200,000 yen: the sum total of 900,000 yen and 15% of the difference arrived at when 3,600,000 yen is deducted from the remaining amount;

if the remaining amount is over 7,200,000 yen but not more than 9,500,000 yen: the sum total of 1,440,000 yen and 5% of the difference arrived at when 7,200,000 yen is deducted from the remaining amount;

if the remaining amount is over 9,500,000 yen: 1,555,000 yen.

if the taxpayer's total income other than miscellaneous income from public pensions and retirement packages for the year is over 10,000,000 yen but not more than 20,000,000 yen: the sum total of the following amounts (or 500,000 yen, if that sum total is less than 500,000 yen):

300,000 yen;

the amount set forth in (b) of the preceding item.

if the taxpayer's total income other than miscellaneous income from public pensions and retirement packages for the year is over 20,000,000 yen: the sum total of the following amounts (or 400,000 yen, if that sum total is less than 400,000 yen):

200,000 yen;

the amount set forth in item (i), (b).

If the sum total of the salary income deduction prescribed in Article 28, paragraph (2) for the salary or other wage prescribed in paragraph (1) of that Article (Salary Income) for the year and the public pension deduction prescribed in the preceding paragraph for the public pension or retirement package prescribed in paragraph (3) for the year exceeds 2,800,000 yen, the public pension deduction prescribed in paragraph (2) is, notwithstanding the provisions of the preceding paragraph, the amount remaining after deducting the amount of the excess from an amount equivalent to the amount calculated pursuant to that paragraph.

Except as provided otherwise, an amount is to be treated as part of the revenue that is used to calculate the Income in Each Class for the year or is to be included in the gross revenue that is used to calculate the same, if it is to be ascribed to revenues during the year (and the value of anything other than monies, rights, or any other economic benefit is to be treated as such or included therein, if it is ascribed to revenues during the year).

The value of a thing other than monies, rights, or any other economic benefit as referred to in the preceding paragraph is its value at the time the thing or rights are acquired or at the time the benefit is enjoyed.

Notwithstanding the provisions of paragraph (1), an amount is to be treated as a part of the amount of revenue that is used to calculate the interest income or dividend income for the year from interest on a bearer public and corporate bond; dividend of surplus (meaning a dividend of surplus as prescribed in Article 24, paragraph (1) (Dividend Income)) from a bearer share (including a bearer beneficiary certificate of a Bond-Based Investment Trust other than a Bond-Based Investment Trust Under Public Offering, and a beneficiary certificate linked to a bearer company bond-type beneficial interest; referred to as a "bearer share or similar interest" in Article 169, item (ii) (Income Tax Base for Separate Taxation), Article 224, paragraph (1) and paragraph (2) (Notice by Recipients of Interest, Dividends, and Similar Income), and Article 225, paragraph (1) and paragraph (2) (Payment Reports and Notice of Payment)); or distribution of proceeds linked to a bearer beneficiary certificate from a Loan Trust, Investment Trust, or Specified Trust That Issues Beneficiary Certificates, if the taxpayer is paid that amount during the year.

Except as provided otherwise, the amounts that are to be included in the necessary expenses that are used to calculate the real property income, business income, or miscellaneous income for the year (other than any business income or miscellaneous income arising from the felling of trees in forested land or the transfer of forested land, and other than miscellaneous income arising from a public pension or retirement package as prescribed in Article 35, paragraph (3) (Definition of Public Pensions and Retirement Packages)) are the costs of goods sold to generate the gross revenue in that income type or other expenses directly necessary to the taxpayer's acquisition of gross revenue in that income type, as well as sales expenses, general administrative expenses, and other expenses for business operations in the year that are meant to generate that type of income (excluding any expense, other than a depreciation allowance, for which the taxpayer's liability does not become fixed during that year).

Except as provided otherwise, the amounts that are to be included in the necessary expenses that are used to calculate business income, timber income, or miscellaneous income are planting expenses, acquisition costs, maintenance expenses, felling expenses, and any other expenses needed to cultivate or transfer forested land (excluding any expense, other than a depreciation allowance, for which the taxpayer's liability does not become fixed during that year).

Except as provided otherwise, the asset acquisition costs that are deducted to calculate capital gains are the sum total of the amount needed to acquire the assets plus the amounts of equipment expenses and improvement expenses.

If an asset generating capital gains is a house or other asset that depreciates due to use or with the passage of time, the asset acquisition costs provided for in the preceding paragraph are the amount arrived at when the sum total of the amounts set forth in each of the following items for the category of period between the acquisition date and the transfer date which is set forth in the item is deducted from an amount equal to the sum total provided for in the preceding paragraph:

any period during which the assets are used in business operations that are meant to generate real property income, business income, timber income, or miscellaneous income:the cumulative amount of the depreciation allowances for those assets which, pursuant to the provisions of Article 49, paragraph (1) (Calculating Depreciation Allowances for Depreciable Assets; Depreciation Methods), are included in necessary expenses that are used to calculate the real property income, business income, timber income, or miscellaneous income for each of the years that contain days within that period;

any period other than as set forth in the preceding item:the amount of depreciation in those assets during that period, as calculated pursuant to Cabinet Order and in accordance with the provisions of Article 49, paragraph (1).

If a Resident uses Inventory (including anything that Cabinet Order prescribes to be an equivalent asset) to benefit the household, or fells trees in forested land and uses them to benefit the household, an amount equal to the value of those assets at the time of use is included in the gross revenue that is used to calculate the Resident's business income, timber income, or miscellaneous income for the year in which the date of use falls.

If Inventory owned by a Resident (including forested land generating business income or anything that Cabinet Order prescribes as an asset equivalent to Inventory; hereinafter the same applies in this Article) has devolved due to circumstances as set forth in one of the following items, an amount equal to what is set forth in the applicable item is included in the gross revenue that is used to calculate the Resident's business income or miscellaneous income for the year in which the day that the circumstances occur falls:

an inter vivos gift (other than a gift to an heir that becomes effective on the death of a donor leaving an estate) or legacy (other than a universal legacy and other than a particular legacy left to an heir):the value of the Inventory at the time of the inter vivos gift or legacy;

a transfer for consideration at a conspicuously low value:the part of the difference between the amount of consideration and the value of the Inventory at the time of the transfer which is found, in essence, to have been given as a gift.

Calculation of business income, timber income, capital gains, or miscellaneous income if a Resident transfers Inventory acquired through an inter vivos gift, legacy, or transfer as set forth in the items of the preceding paragraph is as follows:

Inventory acquired through an inter vivos gift or legacy as set forth in item (i) of the preceding paragraph is deemed to have been acquired for the amount set forth in that item;

Inventory acquired through a transfer as set forth in item (ii) of the preceding paragraph is deemed to have been acquired for the sum total of the consideration for the transfer and the amount set forth in that item.

If a Resident engaged in agriculture harvests crops (but only rice, barley, wheat, or a crop prescribed by Cabinet Order), an amount equal to the value of the crops at the time of the harvest (hereinafter referred to as the "value of the harvest" in this Article) is included in the gross revenue that is used to calculate the Resident's business income for the year in which the date of the harvest falls.

The Resident is deemed to acquire a crop as referred to in the preceding paragraph for the value of the harvest at the time prescribed in that paragraph.

If a Resident has been granted by the issuing corporation a right that Cabinet Order specifies as a right to acquire shares without compensation or at an advantageous price, and the Resident, the Resident's heir, or any other person specified by Cabinet Order transfers the right to the issuing corporation, the provisions of this Act (other than Article 224-3 (Notice by Recipients of Consideration for Transferring Shares), Article 225 (Payment Reports and Notice of Payment), Article 228 (Report on Consideration for Transfer of Shares Received by the Person of Record), and the penal provisions relating to these provisions) apply by deeming the amount arrived at when the acquisition cost of the right is deducted from the amount of the consideration for the transfer to be the amount of revenue relating to business income, the amount of revenue from salary or other wages prescribed in Article 28, paragraph (1) (Salary Income), the amount of revenue from severance pay and other such compensation prescribed in Article 30, paragraph (1) (Retirement Income), the amount of revenue relating to occasional income, or the amount of revenue relating to miscellaneous income (other than that relating to public pensions and retirement packages prescribed in Article 35, paragraph (3) (Miscellaneous Income)), paid by the issuing corporation.

If, in any year, a Resident is issued a national or local government subsidy or benefit or anything that Cabinet Order prescribes as being equivalent thereto (hereinafter referred to as a "government subsidy or its equivalent" in this Article and the following Article) which is meant to be allocated to acquiring or improving Fixed Assets (including forested land; hereinafter the same applies in this Article and the following Article) (but only if the final decision that the Resident need not return the government subsidy or its equivalent is reached by December 31 of that year (or by the time of the Resident's death or Absence From Japan, if the Resident dies or the Resident's Absence From Japan occurs partway through the year; hereinafter the same applies in this paragraph and paragraph (1) of the following Article)), and the Resident acquires or improves Fixed Assets in line with the purpose for which it is issued by December 31 of that year, an amount equal to the amount of the government subsidy or its equivalent issued (or, if the Fixed Assets are Depreciable Assets acquired or improved in a year before that year, the amount calculated pursuant to Cabinet Order based on the amount of the government subsidy or its equivalent) is not included in the gross revenue that is used to calculate that Resident's Income in Each Class.

If, in any year, a Resident is issued Fixed Assets in lieu of a government subsidy or its equivalent, an amount equal to the value of those Fixed Assets is not included in the gross revenue that is used to calculate that Resident's Income in Each Class.

The provisions of the preceding two paragraphs apply only if the Tax Return indicates recourse to the application of those provisions, indicates the amount that is not being included in gross revenue pursuant to those provisions, and gives the information prescribed by Ministry of Finance Order.

Even if no Tax Return is filed or if a Tax Return is filed that is not filled out as referred to in the preceding paragraph, the district tax office director may apply the provisions of paragraph (1) or paragraph (2) on finding there to be unavoidable circumstances for the Resident's failure to file the Tax Return or fill it out in that manner.

Cabinet Order provides for the necessary particulars concerning the calculation of the depreciation allowance provided for in Article 49, paragraph (1) (Calculating Depreciation Allowances for Depreciable Assets; Depreciation Methods) for Fixed Assets that have been subject to the provisions of paragraph (1) or for Fixed Assets as prescribed in paragraph (2) that are acquired by a Resident subject to the provisions of paragraph (1) or paragraph (2); and provides for the necessary particulars concerning the calculation of business income, timber income, capital gains, or miscellaneous income in the event that such a Resident transfers those Fixed Assets.

If, in any year, a Resident is issued a government subsidy or its equivalent that is meant to be allocated to acquiring or improving Fixed Assets, and the final decision that the Resident need not return the government subsidy or its equivalent has not been reached by December 31 of the relevant year, an amount equal to the government subsidy or its equivalent is not included in the gross revenue that is used to calculate that Resident's Income in Each Class for the year.

If the final decision is reached that a Resident subject to the provisions of the preceding paragraph need not return the whole or a part of the government subsidy or its equivalent referred to in that paragraph which the Resident has been issued, an amount equal to the part of the government subsidy or its equivalent which is subject to the final decision, less the part that Cabinet Order prescribes out of the amount allocated to acquiring or improving Fixed Assets in line with the purpose for which the government subsidy or its equivalent has been issued, is included in the gross revenue that is used to calculate that Resident's Income in Each Class for the year in which the date of the final decision falls.

If it is determined that a Resident subject to the provisions of the preceding paragraph needs to return the whole or a part of the government subsidy or its equivalent referred to in that paragraph which the Resident has been issued, an amount equal to the part of the government subsidy or its equivalent that is subject to the final decision is not included in the necessary expenses or amounts expended that are used to calculate that Resident's Income in Each Class for the year in which the date of the determination falls.

The provisions of paragraph (1) apply only if a Tax Return indicates recourse to the application of the provisions of that paragraph, indicates the amount that is not being included in gross revenue pursuant to that paragraph, and gives the information prescribed by Ministry of Finance Order.

Even if no Tax Return is filed or if a Tax Return is filed that is not filled out as referred to in the preceding paragraph, the district tax office director may apply the provisions of paragraph (1) on finding there to be unavoidable circumstances for the Resident's failure to file the Tax Return or fill it out in that manner.

Cabinet Order provides for the necessary particulars concerning the calculation of a depreciation allowance as prescribed in Article 49, paragraph (1) (Calculating Depreciation Allowances for Depreciable Assets; Depreciation Methods) for Fixed Assets that a Resident subject to the provisions of paragraph (1) uses a government subsidy or its equivalent to acquire or improve; and provides for the necessary particulars concerning the calculation of business income, timber income, capital gains, or miscellaneous income in the event that such a Resident transfers those Fixed Assets.

If a Resident is issued a national or local government subsidy that is meant to cover the expenses of an administratively necessary relocation, reconstruction, or removal of the Resident's assets or any other similar action (other than the improvement of a Fixed Asset or an action as prescribed by Cabinet Order; hereinafter referred to as the "relocation, reconstruction, or removal" of assets in this paragraph), or is issued an amount of money that is meant to cover the expenses of a relocation, reconstruction, or removal of the Resident's assets due to an expropriation under the Land Expropriation Act (Act No. 219 of 1951) or the occurrence of any other compelling reason prescribed by Cabinet Order, and the Resident allocates the money issued thereto to cover the relocation, reconstruction, or removal of assets for which it has been issued, the amount allocated to cover those expenses is not included in the gross revenue that is used to calculate that Resident's Income in Each Class; provided, however, that this does not apply to an amount equal to the part of the monies allocated to cover expenses which is included in the necessary expenses that are used to calculate the Income in Each Class or the part of the monies so allocated which is found to have been a necessary transfer expense.

If a Resident receives forgiveness of a debt that the Resident owes in a case where there has been an order granting discharge as prescribed in Article 252, paragraph (1) (Requirements for an Order Granting Discharge) of the Bankruptcy Act (Act No. 75 of 2004) or an order confirming a rehabilitation plan, or in any other case where the Resident has lost financial resources and has extreme difficulty in paying debts, the value of the economic benefit received through that forgiveness is not included in the gross revenue that is used to calculate that Resident's Income in Each Class.

In the case referred to in the preceding paragraph, the provisions of that paragraph do not apply to the part of the value of the economic benefit received through the forgiveness of the debt referred to in that paragraph that is equivalent to the sum total of the amounts that the following items prescribe for the categories of case set forth in those items that apply to the Resident referred to in that paragraph (for the amounts prescribed in items (i) through (iv), the amounts calculated as if there were no value of the economic benefit, and for the amount prescribed in item (v), the amount arrived at if gross income, retirement income, and timber income are calculated as if the provisions of that paragraph did not apply):

if the Resident receives forgiveness of a debt relating to an operation that is meant to generate real property income: the amount of loss arising in the calculation of real property income for the year that includes the date on which the Resident received the forgiveness;

if the Resident receives forgiveness of a debt relating to a business undertaking that is meant to generate business income: the amount of loss arising in the calculation of business income for the year that includes the date on which the Resident received the forgiveness;

if the Resident receives forgiveness of a debt relating to an operation that is meant to generate timber income: the amount of loss arising in the calculation of timber income for the year that includes the date on which the Resident received the forgiveness;

if the Resident receives forgiveness of a debt relating to an operation that is meant to generate miscellaneous income: the amount of loss arising in the calculation of miscellaneous income for the year that includes the date on which the Resident received the forgiveness;

if there is a Net Loss to be deducted, pursuant to the provisions of Article 70, paragraph (1) or paragraph (2) (Deduction for Carryover of Net Loss), in calculating the gross income, retirement income, or timber income for the year that includes the date on which the Resident received the forgiveness of the debt: the amount of the Net Loss so deducted.

The provisions of paragraph (1) apply only if the Tax Return states that the provisions of that paragraph are to be applied, the amount not included in gross revenue pursuant to the provisions of that paragraph, and any other information specified by Ministry of Finance Order.

Even if no Tax Return is filed or if a Tax Return is filed that is not filled out as referred to in the preceding paragraph, the district director may apply the provisions of paragraph (1) on finding there to be unavoidable circumstances for the Resident's failure to file the Tax Return or fill it out in that manner.

If a reduction is made to the amount of foreign income taxes as prescribed in Article 95, paragraph (1) (Foreign Tax Credit) which is used as the basis for calculating the amount to be credited pursuant to the provisions of Article 95, paragraphs (1) through (3) in any of the seven years beginning in the year after that in which a Resident is subject to the provisions of those paragraphs, the amount that Cabinet Order prescribes as corresponding to the part of the reduction to foreign income taxes which is pertinent to the application of the foreign tax credit under that Article in the year in which the date of the decision to reduce those taxes falls is not included in gross revenue that is used to calculate the Resident's real property income, business income, timber income, occasional income, or miscellaneous income for the year. In such a case, the amount arrived at when the amount specified by that Cabinet Order is deducted from the amount of the reduction is included in the gross revenue that is used to calculate the Resident's miscellaneous income for the year.

The expenses set forth as follows which a Resident expends or pays to the government are not included in the necessary expenses that are used to calculate the Resident's real property income, business income, timber income, or miscellaneous income:

household expenses and related expenses provided for by Cabinet Order;

income taxes (other than what Cabinet Order prescribes as the tax levied as interest under Article 131, paragraph (3) (Tax Levied as Interest for Postponing Payment of Taxes That Are to Be Paid Upon Filing), Article 136 (Tax Levied as Interest for Deferring Payment of Income Taxes on Assets Transferred on a Deferred-Payment Basis), Article 137-2, paragraph (12) (Tax Levied as Interest on a Tax Payment Grace Period Where Special Provisions on Capital Gains upon Departure from Japan Apply), or Article 137-3, paragraph (14) (Tax Levied as Interest on a Tax Payment Grace Period Where Special Provisions on Capital Gains If Assets Are Transferred to a Nonresident by Gift or Similar Apply) which is paid by a Resident engaged in a business undertaking that is meant to generate real property income, business income, or timber income, in an amount that corresponds to the Resident's income taxes for income from such a business undertaking);

any tax on delinquency, additional tax for underreporting, additional tax for failure to file, additional tax for non-payment, or compounded additional tax, and any tax for omission or failure under the provisions of the Stamp Tax Act (Act No. 23 of 1967), levied against national taxes other than income taxes;

the forest environment tax under the provisions of the Act on the Forest Environment Tax and the Forest Environment Transfer Tax (Act No. 3 of 2019) and delinquency charges relating to the forest environment tax;

prefectural inhabitants' tax and municipal inhabitants' tax (including Tokyo inhabitants' tax and special ward inhabitants' tax) under the Local Tax Act (Act No. 226 of 1950);

delinquency charges, additional charges for underreporting, additional charges for failure to file, or compounded additional charges under the Local Tax Act;

anything that Cabinet Order prescribes as being equivalent to what is set forth in the preceding item;

a criminal or petty fine (including anything equivalent to a criminal or petty fine under an administrative notification and anything equivalent to a criminal or petty fine imposed by a foreign state or a local government thereof) or a non-criminal fine;

compensation for damage (or anything similar to this) as prescribed by Cabinet Order;

a surcharge or delinquency charge under the Act for Emergency Measures to Stabilize the Lives of the People (Act No. 121 of 1973);

a surcharge or delinquency charge under the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade (Act No. 54 of 1947) (including any similar surcharge or delinquency charge that a foreign state, a local government thereof, or an international organization orders the Resident to pay);

a surcharge or delinquency charge under Chapter VI-2 (Surcharges) of the Financial Instruments and Exchange Act;

a surcharge or delinquency charge under the Certified Public Accountant Act (Act No. 103 of 1948).

a surcharge or delinquency charge under the Act against Unjustifiable Premiums and Misleading Representations (Act No. 134 of 1962);

a surcharge or delinquency charge under the Act on Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices (Act No. 145 of 1960);

a surcharge or delinquency charge under the Act on Promotion of Competition for Specified Smartphone Software (Act No. 58 of 2024).

A bribe as prescribed in Article 198 (Bribes) of the Penal Code (Act No. 45 of 1907), monies as prescribed in Article 18, paragraph (1) (Prohibition on Supplying Foreign Public Officials with Illicit Gains) of the Unfair Competition Prevention Act (Act No. 47 of 1993), or other monies in the nature of a gain paid by a Resident, and the value of any article other than monies or of any right or economic benefit that a Resident supplies (and any additional expenses needed to provide them), is not included in the necessary expenses that are used to calculate the Resident's real property income, business income, timber income, or miscellaneous income.

If a Resident who in the year conducts an operation that is meant to generate real property income, business income, or timber income, or a Resident who in the year conducts an operation that is meant to generate miscellaneous income and whose revenue relating to that operation for the year before the previous year exceeds 3,000,000 yen, has filed a Tax Return (other than a return filed after the deadline that was filed in anticipation that a determination would be made regarding the income taxes as a result of an investigation of the income taxes pertaining to the return; hereinafter the same applies in this paragraph) based on an act of concealment or disguise (meaning concealing or disguising all or part of the facts that should form the basis for calculating the amount of income or the amount of income tax), or has not filed a Tax Return, the cost of sales relating to the gross revenue of such income for the year to which the Tax Return relates and other expenses directly required to obtain that gross revenue (other than the amounts specified by Cabinet Order as the amounts directly required to acquire assets in the sale or transfer of those assets and as the amounts directly required to acquire assets in the provision of services requiring the delivery of those assets; hereinafter referred to as the "cost of sales" in this paragraph), and the selling expenses, general administrative expenses, and other expenses incurred in the year in connection with the operation that is meant to generate such income (if the Resident has filed a Tax Return for the year, other than the part of those amounts that formed the basis for calculating the amount set forth in Article 120, paragraph (1), item (i) (Filing an Income Tax Return) stated in that Tax Return, or the tax base or other amounts set forth in Article 19, paragraph (4), item (i) (Amended Return) of the Act on General Rules for National Taxes stated in an Amended Return relating to that Tax Return (other than an Amended Return filed after the Resident came to anticipate that a Reassessment would be made regarding the income taxes as a result of an investigation of the income taxes pertaining to the return)), are not included in the necessary expenses that are used to calculate the Resident's real property income, business income, timber income, and miscellaneous income for each year; provided, however, that this does not apply to the cost of sales or expenses that fall under any of the following cases:

if the fact that the transactions giving rise to the cost of sales or expenses were conducted and the amounts thereof are clear from the following (including if the Resident proves that, due to a Disaster or other unavoidable circumstances, the Resident was unable to keep the books and documents set forth in (a) relating to those transactions):

books and documents that the Resident keeps as specified by Ministry of Finance Order as prescribed in Article 148, paragraph (1) (Books and Documents of Blue Return Taxpayers) or Article 232, paragraph (1) or paragraph (2) (Keeping of Books and Documents by Persons with Business Income or Similar Income);

beyond what is set forth in (a), books and documents or other items that the Resident keeps at the Resident's place of domicile or any other place specified by Ministry of Finance Order.

if the counterparty to the transaction giving rise to the cost of sales or expenses is made clear by what is set forth in (a) or (b) of the preceding item, or it is otherwise clear or presumed that the transaction was conducted (other than in the case set forth in that item), and the district director finds, through an investigation of the counterparty or by other means, that the transaction was conducted and those amounts were incurred.

An outlay as set forth in items (ii) through (viii) of paragraph (1), any monies prescribed in paragraph (2), and the value of any article other than monies or of any right or other economic benefit prescribed in that paragraph is not included in the amounts expended that are used to calculate the occasional income of a Resident as referred to in paragraph (1) or paragraph (2).

If a Resident has recourse to the application of the provisions of Article 95, paragraph (1) (Foreign Tax Credit) or Article 138, paragraph (1) (Refunding Tax Withheld) as regards credit-eligible foreign income taxes as prescribed in Article 95, paragraph (1), the credit-eligible foreign income taxes are not included in the necessary expenses or amounts expended that are used to calculate the Resident's real property income, business income, timber income, miscellaneous income, or occasional income.

In the calculation of the amount that, pursuant to the provisions of Article 37, paragraph (1) (Necessary Expenses), is included, in association with the Inventory of a Resident, in the necessary expenses that are used to calculate the Resident's business income, the value of Inventory held by the Resident on December 31 of the relevant year (or at the time of the Resident's death or Absence From Japan, if the Resident dies or the Resident's Absence From Japan occurs partway through the year; the same applies in this Article through Article 50) which is used as the basis for that calculation (hereinafter referred to as "closing Inventory" in this paragraph) is the amount of money assessed based on the valuation method that the Resident has selected for the closing Inventory from among the method of taking the average acquisition cost of Inventory as the assessed value of the Inventory held on December 31 of that year and the other valuation methods prescribed by Cabinet Order (or based on the valuation method prescribed by Cabinet Order, if the Resident does not select a valuation method or if the value is not assessed based on the selected valuation method).

Cabinet Order provides for special provisions on the selectable valuation methods referred to in the preceding paragraph, the way of selecting a valuation method, the acquisition cost of Inventory to be used as the basis for calculating the assessed value of Inventory, and other necessary particulars concerning the valuation of Inventory.

In the calculation of the amount that, pursuant to the provisions of Article 37, paragraph (1) (Necessary Expenses), is included, in association with a Security that a Resident holds, in the necessary expenses that are used to calculate the Resident's business income, the value of a Security held by the Resident on December 31 of the relevant year which is used as the basis for that calculation is the amount of money assessed based on the valuation method that the Resident has selected for Securities (or based on the valuation method prescribed by Cabinet Order, if the Resident does not select a valuation method or if the value of the Security is not assessed based on the selected valuation method).

Cabinet Order provides for the types of the selectable valuation methods referred to in the preceding paragraph, the way of selecting a valuation method, and other necessary particulars concerning the valuation of Securities.

The amount that, pursuant to the provisions of Article 37, paragraph (1), is included, in association with a Security of the same class that the Resident acquires on two or more occasions, in the necessary expenses that are used to calculate the amount of a Resident's miscellaneous income, or that, pursuant to the provisions of Article 38, paragraph (1) (Acquisition Costs Deducted to Calculate Capital Gains) is included, in association with such a Security, in the acquisition costs that are used to calculate the Resident's capital gains, is the value assessed pursuant to Cabinet Order and in accordance with the provisions of paragraph (1), based on the amount needed to acquire the Security on each occasion.

In the calculation of the amount that, pursuant to the provisions of Article 37, paragraph (1) (Necessary Expenses), is included, in association with the crypto-assets of a Resident, in the necessary expenses that are used to calculate the Resident's business income or miscellaneous income, or the amount that, pursuant to the provisions of Article 38, paragraph (1) (Acquisition Costs Deducted to Calculate Capital Gains), is included, in association with the crypto-assets of a Resident, in the acquisition costs that are used to calculate the Resident's capital gains, the value of crypto-assets held by the Resident on December 31 of the relevant year which is used as the basis for that calculation is the amount of money assessed based on the valuation method that the Resident has selected for crypto-assets (or based on the valuation method prescribed by Cabinet Order, if the Resident does not select a valuation method or if the value is not assessed based on the selected valuation method).

Cabinet Order provides for the types of selectable valuation methods referred to in the preceding paragraph, the way of selecting a valuation method, and other necessary particulars concerning the valuation of crypto-assets.

The amount that, pursuant to the provisions of Article 37 (Necessary Expenses), is included in the necessary expenses that are used to calculate a Resident's real property income, business income, timber income, or miscellaneous income, as the depreciation allowance for a Depreciable Asset held by the Resident on December 31 of the relevant year is the amount calculated pursuant to Cabinet Order based on the depreciation method that the Resident has selected for the asset from among the method under which the depreciation allowance is the same every year, the method under which the depreciation allowance decreases every year at a fixed rate, and the other depreciation methods prescribed by Cabinet Order by date of acquisition and asset category (or based on the depreciation method prescribed by Cabinet Order, if the Resident does not select a depreciation method).

Cabinet Order establishes special provisions on the selectable depreciation methods referred to in the preceding paragraph and provides for the way of selecting a depreciation method, the acquisition costs of Depreciable Assets that are to be used as the basis of the calculation of the depreciation allowance, special provisions under which the amount corresponding to the part of an amount expended on a Depreciable Asset that extends its usable life or similar is treated as the acquisition cost of a Depreciable Asset, and other particulars that need to be prescribed concerning the depreciation of Depreciable Assets.

The amount that, pursuant to the provisions of Article 37 (Necessary Expenses), is included in the necessary expenses that are used to calculate a Resident's real property income, business income, timber income, or miscellaneous income, as the depreciation allowance for a Deferred Asset that a Resident possesses on December 31 of the relevant year is the amount calculated pursuant to Cabinet Order on the basis of the period during which the expenses for the Deferred Assets continue to affect the calculation.

Beyond what is provided for in the preceding paragraph, Cabinet Order provides for the necessary particulars concerning the depreciation of Deferred Assets.

A loss incurred due to circumstances such as the demolition, removal, or destruction (including a decrease in value due to damage) of a Fixed Asset, or of any other equivalent asset as provided by Cabinet Order, which is used in a business run by a Resident that is meant to generate real property income, business income, or timber income (other than any part of the loss covered by insurance benefits, compensation for damage, or anything similar to these, and excluding loss due to or related to the transfer of an asset) is included in the necessary expenses that are used to calculate the Resident's real property income, business income, or timber income for the year in which the day of the loss falls.

A loss incurred in the course of business due to accounts receivable, loans, advance payments, or bad debt claims equivalent to these, or due to other circumstances as provided by Cabinet Order, in a business run by a Resident which is meant to generate real property income, business income, or timber income is included in the necessary expenses that are used to calculate the Resident's real property income, business income, or timber income for the year in which the day of the loss falls.

A loss due to Disaster, robbery, or misappropriation involving forested land owned by a Resident (other than any part of the loss covered by insurance benefits, compensation for damage, or anything similar to these) is included in the necessary expenses that are used to calculate the Resident's business income or timber income for the year in which the day of the loss falls.

A loss involving assets (other than forested land and assets prescribed in Article 62, paragraph (1) (Loss of Assets Not Ordinarily Necessary in Everyday Life, Due to Disaster)) used in the business operations of a Resident which are meant to generate real property income or miscellaneous income or are the basis of such income (other than any part of the loss covered by insurance benefits, compensation for damage, or anything similar to these; other than any loss due to or related to the transfer of an asset; and other than any loss prescribed in paragraph (1) or paragraph (2) or Article 72, paragraph (1) (Casualty Loss Deduction)) is included in the necessary expenses that are used to calculate the Resident's real property income or miscellaneous income for the year in which the day of the loss falls, up to the amount of the real property income or miscellaneous income for the year (meaning the amount of real property income or miscellaneous income for the year as calculated without applying the provisions of this paragraph).

Cabinet Order provides for the necessary particulars concerning the calculation of the loss prescribed in paragraph (1) and the preceding two paragraphs.

If a Resident running a business that is meant to generate real property income, business income, or timber income has accounts receivable, lendings, advance payments, or equivalent monetary claims (other than those that are to be represented by bonds; the same applies in the following paragraph) arising in the course of business (hereinafter referred to as "lendings and other claims" in this paragraph), any amount that the Resident transfers into the reserve account for bad debts in each year (other than a year in which the day of a complete business transfer or discontinuation falls; the same applies in the following paragraph) as the expected amount of the loss on those lendings and other claims on part of which a loss due to a bad debt or other equivalent circumstances is expected because a fact prescribed by Cabinet Order has occurred, such as their repayment being subject to a grace period or being made in installments based on a decision confirming a reorganization plan (this includes any other lendings and other claims held against the debtor associated with the lendings and other claims in question; hereinafter referred to as "individually assessed loans or other claims" in this paragraph and the following paragraph), is included in the necessary expenses that are used to calculate the Resident's real property income, business income, or timber income for the year, up to the amount calculated pursuant to Cabinet Order based on the part of the amount transferred which, as of December 31 of the relevant year (or as of the time of the Resident's death, if the Resident dies partway through the year; the same applies in the following paragraph), there is found to be no prospect of collecting or having repaid with regard to the individually assessed loans or other claims; provided, however, that this does not apply if the Resident dies and the heir does not take over the business.

The amount that a Blue-Return-filing Resident running a business that is meant to generate business income transfers into the reserve account for bad debts in any year as the expected amount of losses due to bad debts in accounts receivable, lendings, and equivalent monetary claims arising in the course of business (other than individually assessed lendings and other claims; hereinafter referred to as "collectively assessed loans" in this paragraph) is included in the necessary expenses that are used to calculate the Resident's business income for the year, up to the amount calculated pursuant to Cabinet Order based on the amount of collectively assessed loans that the Resident holds as of December 31 of the relevant year; provided, however, this does not apply if the Resident dies and the heir does not take over the business, and does not apply in any other case as prescribed by Cabinet Order.

The part of a reserve account for bad debts which is included in the necessary expenses that are used to calculate the real property income, business income, or timber income for the year in which that amount is transferred into the account pursuant to the provisions of the preceding two paragraphs is included in the gross revenue that is used to calculate the real property income, business income, or timber income for the year following that in which the amount is transferred into the account.

The provisions of paragraph (1) and paragraph (2) apply only if a Tax Return gives the details of the inclusion of the amount transferred into the reserve account for bad debts in necessary expenses.

Even if a Tax Return is filed that is not filled out as referred to in the preceding paragraph, the district tax office director may apply the provisions of paragraph (1) or paragraph (2) on finding there to be unavoidable circumstances for the Resident's failure to fill out the Tax Return in that manner.

Cabinet Order provides for the necessary particulars concerning the handling, in the event of the death of a Resident as prescribed in paragraph (1) or paragraph (2), of any amount of a reserve account for bad debts that has been included in the necessary expenses that are used to calculate the real property income, business income, or timber income for the year in which the date of the Resident's death falls.

If a Blue-Return-filing Resident running a business that is meant to generate business income has established rules for severance packages as prescribed by Cabinet Order, the amount that the Resident transfers to the severance package reserves account in any year to cover severance packages that are paid to employees of the business (other than a spouse or other relative whose living expenses are paid from the same resources as the Resident; hereinafter the same applies in this Article) upon their separation from employment is included in the necessary expenses that are used to calculate the Resident's business income for the year, up to the amount calculated pursuant to Cabinet Order based on the amount of any increase that is found to have arisen in the year in the estimated amount that the Resident would have to pay in severance packages if all employees of the business that the Resident employs as of December 31 of that year (or as of the time of Resident's death, if the Resident dies partway through the year) were to resign of their own accord.

A Resident holding monies under a severance package reserves account (but only amounts of monies included in the necessary expenses that are used to calculate business income for the year in which that amount is transferred into the account pursuant to the provisions of the preceding paragraph; this excludes any monies that it has already been established must be withdrawn pursuant to the provisions of this paragraph; hereinafter the same applies in this Article) must withdraw the monies under the severance package reserves account if an employee as referred to in the preceding paragraph separates from employment, if approval to file a Blue Return is rescinded, or in any other case prescribed by Cabinet Order.

An amount of monies under a severance package reserves account which it has been established must be withdrawn pursuant to the provisions of the preceding paragraph is included in the gross revenue that is used to calculate the amount of business income for the year in which the day it was established that the amount was to have been withdrawn falls; and any amount of monies under a severance package reserves account which is withdrawn even though it does not fall under the provisions of that paragraph is included in the gross revenue that is used to calculate business income for the year in which the day it is withdrawn falls.

The provisions of paragraph (1) apply only if a Tax Return gives the details of the inclusion of the amount transferred into the severance package reserves account in necessary expenses.

Even if a Tax Return is filed that is not filled out as referred to in the preceding paragraph, the district tax office director may apply the provisions of paragraph (1) on finding there to be unavoidable circumstances for the Resident's failure to fill out the Tax Return in that manner.

Beyond what is prescribed in paragraph (2) to the preceding paragraph, Cabinet Order provides for the handling of amounts of monies under severance package reserves accounts following the death of the Resident holding them and for other necessary particulars concerning the application of the provisions of paragraph (1).

If, due to reasons such as being employed in a business run by a Resident which is meant to generate real property income, business income, or timber income, the spouse or any other relative whose living expenses are paid from the same resources as a Resident is paid a consideration by that business, an amount equal to that consideration is not to be included in the necessary expenses that are used to calculate the real property income, business income, or timber income from the Resident's business, and any amount that is to be included in the necessary expenses that are used to calculate the relative's Income in Each Class from that consideration is included in the necessary expenses that are used to calculate the real property income, business income, or timber income from the Resident's business. In such a case, the amount of the consideration paid to the relative and amounts to be included in the necessary expenses that are used to calculate the relative's Income in Each Class from consideration are deemed not to be a part of the calculation of the relative's Income in Each Class.

Notwithstanding the provisions of the preceding Article, if the spouse or other relative (other than one under 15 years of age) whose living expenses are paid from the same resources as a Resident that the director of the district tax office has approved to file a Blue Return, who works exclusively in a business as prescribed in the preceding Article which is run by the Resident (hereinafter referred to as a "relative employed only by a blue-return filer" in this Article) is paid a salary by the business of up to the amount stipulated in the document referred to in the following paragraph and in the way that is stipulated in that document, the part of the salary that, in light of the period, nature, and extent of the relative's service; the type and size of the business; salaries ordinarily paid in the same type and similar size of business; and any other circumstances provided for by Cabinet Order, is found to be appropriate as consideration for the relative's work, is included in the necessary expenses that are used to calculate the real property income, business income, or timber income from the Resident's business for the year in which the salary is paid, and is treated as the annual revenue constituting salary income of the relative employed only by the blue-return filer.

A Resident seeking to apply the provisions of the preceding paragraph to income taxes in and after the current year must submit a document to the competent district tax office director for the locality in which the Resident pays taxes, giving the names of relatives employed only by the blue-return filer, the details of their duties, the amounts of their salaries, the pay periods for those salaries, and the information prescribed by Ministry of Finance Order, no later than March 15 of the relevant year (or within two months from the day on which the Resident starts a business as referred to in that paragraph, if this is on or after January 16 of that year).

If a Resident (other than one as prescribed in paragraph (1)) has a spouse or other relative whose living expenses are paid from the same resources as the Resident (excluding a relative under 15 years of age) and who works exclusively in a business as prescribed in the preceding Article which is run by the Resident (hereinafter referred to as a "relative employed only by the Resident" in this Article), whichever is the lower of the following amounts is deemed to constitute the necessary expenses for each relative employed only by the Resident which are used to calculate the real property income, business income, or timber income from that business of the Resident for the year:

the amount prescribed in each of the following clauses for the category of relative employed only by the Resident set forth in the clause:

a relative employed only by the Resident who is the spouse of the Resident:860,000 yen;

a relative employed only by the Resident other than the person set forth in (a):500,000 yen.

the amount calculated by dividing the real property income, business income, or timber income from that business for the year (meaning the amount calculated without applying the provisions of this paragraph) by one more than the number of relatives employed only by the Resident in that business.

If the provisions of the preceding paragraph are applied, the amount deemed to be the necessary expenses for each of the relatives employed only by the Resident pursuant to the provisions of that paragraph is deemed to be the revenue constituting salary income of each of the relatives employed only by the Resident which is used to calculate their Income in Each Class for the year.

The provisions of paragraph (3) do not apply unless a Tax Return indicates recourse to the application of the provisions of that paragraph and gives information about the amounts that are deemed to be necessary expenses pursuant to the provisions of that paragraph.

Even if no Tax Return is filed or if a Tax Return is filed that is not filled out as referred to in the preceding paragraph, the district tax office director may apply the provisions of paragraph (3) on finding there to be unavoidable circumstances for the Resident's failure to file the Tax Return or fill it out in that manner.

In a case as referred to in paragraph (1) or paragraph (3), whether a relative as prescribed in those provisions is under 15 years of age is determined by the relative's age as of December 31 of the relevant year (or as of the time of the Resident's death or the start of the Resident's Absence From Japan, if the Resident prescribed in these provisions dies or becomes Absent From Japan partway through the year); provided, however, that if such a relative has already died as of that point in time, whether that relative was under 15 years of age is determined by the relative's age as of the time of death.

Cabinet Order prescribes procedures for if the details of the requirements for a relative employed only by a blue-return filer or relative employed only by a Resident change and for if information that has been given in the document referred to in paragraph (2) changes, and provides for other necessary particulars concerning the application of the provisions of paragraph (1) and paragraph (3).

Notwithstanding the provisions of Article 28, paragraph (2) and paragraph (4), if a Resident has specific expenses in any year and the sum of the specific expenses for the year exceeds an amount equivalent to half of the salary income deduction prescribed in Article 28, paragraph (2) (Salary Income), the salary income prescribed in that paragraph for the year is the amount arrived at when the amount by which such expenses exceed that amount is deducted from the remaining amount that is referred to in paragraph (2) of that Article.

The specific expenses prescribed in the preceding paragraph means the following expenses of a Resident (excluding, if any part of the expenses is reimbursed by the person who pays the Resident a salary or other wage as prescribed in Article 28, paragraph (1) (hereinafter referred to as the "person paying the salary or other wage" in this paragraph) and income tax is not imposed on the reimbursed part, that reimbursed part, and, if any part of the expenses is covered by the payment of an education and training benefit as prescribed in Article 10, paragraph (5), item (i) (Unemployment Benefits, etc.) of the Employment Insurance Act (Act No. 116 of 1974), a single mother household self-reliance support education and training benefit as prescribed in Article 31, item (i) (Single Mother Household Self-Reliance Support Benefits) of the Act on Welfare of Mothers and Fathers with Dependents and Widows (Act No. 129 of 1964), or a single father household self-reliance support education and training benefit as prescribed in that item as applied mutatis mutandis pursuant to Article 31-10 (Single Father Household Self-Reliance Support Benefits) of that Act, that part so covered):

that which Cabinet Order prescribes, in respect of any expenses that the Resident incurs to use the transportation facilities or transportation equipment necessary for a commute via routes and means of transportation that the person paying the salary or other wage attests to, pursuant to Ministry of Finance Order, as being the most economical and reasonable in light of the fare, commute time, distance of the commute, and any other circumstances of the Resident's commute, as the part of such expenses that the average commuter is found to need under ordinary circumstances;

expenses prescribed by Cabinet Order which are necessary under ordinary circumstances for travel that the person paying the salary or other wage attests to, pursuant to Ministry of Finance Order, as being travel directly necessary for the Resident to perform the Resident's duties away from the workplace;

what is prescribed by Cabinet Order as the expenses that are found to be necessary under ordinary circumstances for a change of residence that the person paying a salary or other wage attests to, pursuant to Ministry of Finance Order, as being connected with a transfer of workplace;

expenses for training that the person paying the salary or other wage has attested to, pursuant to Ministry of Finance Order, as being taken for the purpose of acquiring skills or knowledge directly necessary to perform the Resident's duties (other than training for obtaining a qualification), or expenses for such training that a career consultant (meaning a career consultant prescribed in Article 30-3 (Duties) of the Vocational Abilities Development Promotion Act; the same applies in the following item) has so attested to (limited to the part relating to education and training (meaning education and training prescribed in Article 60-2, paragraph (1) (Education and Training Benefits) of the Employment Insurance Act; the same applies in that item));

expenses for obtaining a qualification that the person paying the salary or other wage has attested to, pursuant to Ministry of Finance Order, as being directly necessary for the Resident to perform the Resident's duties, or that a career consultant has so attested to (limited to the part relating to education and training);

expenses prescribed by Cabinet Order which are necessary for travel under ordinary circumstances between the Resident's workplace or residence and the place where the spouse or other family member of the Resident resides, in circumstances that the person paying the salary or other wage attests to, pursuant to Ministry of Finance Order, as falling under a case in which a transfer of workplace has caused the Resident to live constantly apart from the spouse thereof whose living expenses are paid from the same resources as the Resident, or as falling under circumstances that Cabinet Order prescribes as being equivalent thereto.

the following expenses (limited to expenses up to 650,000 yen, if the total amount of those expenses exceeds 650,000 yen) that the person paying the salary or other wage attests to, pursuant to Ministry of Finance Order, as being directly necessary for the Resident to perform the Resident's duties:

expenses to purchase books, periodicals, and other publications that Cabinet Order specifies as relating to the Resident's duties, and uniforms, office wear, and other clothing required to be worn at the workplace that Cabinet Order specifies;

entertainment expenses, hospitality expenses, and other expenses spent on entertaining, hosting, giving gifts to, or other similar acts toward customers, suppliers, or other persons having business relationships with the person paying the salary or other wage.

The provisions of paragraph (1) apply only if a Tax Return, Amended Return, or request for Reassessment (referred to as a "Tax Return or similar filing" in the following paragraph) indicates recourse to the application of the provisions of paragraph (1) and gives the sum of the amount of specific expenses prescribed in that paragraph, and is accompanied by a detailed statement of the specific expenses set forth in each of the items of the preceding paragraph and the certifying documents prescribed in those items.

When filing a Tax Return or similar filing indicating recourse to the application of the provisions of paragraph (1), the filer must include with that Tax Return or similar filing a document prescribed by Cabinet Order as evidencing the fact that the Resident has incurred the specific expenses prescribed in that paragraph and the amount spent, or must present such a document at the time of filing that Tax Return or similar filing.

Beyond what is prescribed in the preceding three paragraphs, Cabinet Order provides for the details of the scope of specific expenses prescribed in paragraph (2) and for other necessary particulars concerning the application of the provisions of paragraph (1).

If a Resident makes a transaction in a foreign currency (meaning that the Resident sells or purchases assets, provides services, borrows or lends monies, or conducts any other transaction involving payment in a foreign currency; hereinafter the same applies in this Article), the yen equivalent of that transaction (meaning the amount arrived at when the amount of the foreign-currency-denominated transaction is converted into a Japanese-currency-denominated amount; the same applies in the following paragraph) is the amount arrived at when the amount of the transaction is converted into yen based on the foreign exchange rate as of the time of the foreign-currency transaction, and this is used to calculate the Resident's Income in Each Class for the year.

If a Resident conducting business that is meant to generate real property income, business income, timber income, or miscellaneous income fixes the yen equivalent of assets acquired or liabilities incurred through a transaction in a foreign currency based on a foreign exchange futures contract or similar contract (meaning what is provided for by Ministry of Finance Order as a contract that fixes the yen equivalent of assets acquired or liabilities incurred through a transaction in a foreign currency; hereinafter the same applies in this paragraph) and enters an indication of this, pursuant to Ministry of Finance Order, in the books and documents connected with the Resident's business or in any other document prescribed by Ministry of Finance Order, as on the day that the foreign exchange futures contract or similar contract is concluded, the yen equivalent of the assets or liabilities is treated as the amount arrived at via the conversion into yen pursuant to the preceding paragraph, and this is used to calculate the Resident's real property income, business income, timber income, or miscellaneous income for each year.

Beyond what is prescribed in the preceding paragraph, Cabinet Order establishes special provisions on the conversion of transactions in a foreign currency and provides for other necessary particulars concerning the application of the provisions of the preceding two paragraphs.

If, in any year, due to a share exchange implemented by a corporation issuing shares that a Resident holds (hereinafter referred to as "old shares" in this paragraph) (such a share exchange is limited to one in which the shareholders of the corporation are not issued assets other than the shares (including capital contributions; hereinafter the same applies in this paragraph) of any one corporation from among a wholly owning parent corporation resulting from a share exchange which is as prescribed in Article 2, item (xii)-6-3 (Definitions) of the Corporation Tax Act (hereinafter referred to as a "wholly owning parent corporation resulting from a share exchange" in this paragraph) and the corporations that are related to the wholly owning parent corporation resulting from the share exchange in a way that Cabinet Order prescribes as constituting a relationship whereby they directly or indirectly hold all the issued shares or capital contributions in the wholly owning parent corporation resulting from the share exchange (other than the treasury shares or capital contributions that the wholly owning parent corporation resulting from the share exchange holds itself) (monies and other assets issued to the shareholders as dividends of surplus and monies and other assets issued to any shareholder dissenting from the share exchange as a consideration based on an exercise of appraisal rights are not considered to be assets other than such shares)), the Resident transfers old shares to the wholly owning parent corporation resulting from the share exchange and is issued those shares, or if the Resident ceases to hold the old shares due to a specified share exchange without consideration implemented by the corporation that issued the old shares (meaning a share exchange in which the shareholders of the corporation are not issued the shares of the wholly owning parent corporation resulting from a share exchange or other assets, and which Cabinet Order prescribes as a share exchange in which the issuance of the shares of the wholly owning parent corporation resulting from a share exchange to the shareholders of the corporation is found to have been omitted), for the purpose of applying Article 27 (Business Income), Article 33 (Capital Gains), Article 35 (Miscellaneous Income), or Article 59 (Special Provisions on Capital Gains and Gifts), the transfer or gift of the old shares is deemed not to have taken place.

If, in any year, due to a share transfer implemented by a corporation issuing shares that a Resident holds (hereinafter referred to as "old shares" in this paragraph) (such a share transfer is limited to one in which the shareholders of the corporation are not issued assets other than shares in a wholly owning parent corporation resulting from a share transfer as prescribed in Article 2, item (xii)-6-6 of the Corporation Tax Act (hereinafter referred to as a "wholly owning parent corporation resulting from a share transfer" in this paragraph) (monies and other assets issued to any shareholder dissenting from the share transfer as a consideration based on an exercise of appraisal rights are not considered to be assets other than such shares)), the Resident transfers old shares to the wholly owning parent corporation resulting from the share transfer and is issued shares therein, for the purpose of applying Article 27, Article 33, and Article 35, the transfer of the old shares is deemed not to have taken place.

If, in any year, a Resident transfers Securities as set forth in one of the following items due to the cause prescribed in the item, and is issued shares (including capital contributions; hereinafter the same applies in this paragraph) or share options in the corporation making the acquisition provided for in that item due to that cause (unless the value of the shares or share options issued thereto is found not to be close to the value of the transferred Securities), for the purpose of applying Article 27, Article 33, and Article 35, the transfer of the Securities is deemed not to have taken place:

shares with a put option (meaning shares with a feature that a corporation provides for with respect to all or some of the shares it issues, entitling a Shareholder, Member, or Other Investor to demand that the corporation acquire those shares):the exercise of the put option associated with those shares, if only shares in the acquiring corporation are issued as the consideration for the acquisition;

shares subject to call (meaning shares with a feature that a corporation provides for with respect to all or some of the shares it issues, entitling the corporation to acquire those shares conditional upon the occurrence of certain causes (hereinafter referred to as the "grounds to acquire" in this item)): the occurrence of the grounds to acquire shares subject to call, if only shares in the acquiring corporation are issued to each Shareholder, Member, or Other Investor whose shares it acquires, as the consideration for the acquisition (if all classes of shares subject to the acquisition are acquired, this includes if only shares and share options in the acquiring corporation are issued to each Shareholder, Member, or Other Investor whose shares it acquires, as the consideration for the acquisition);

shares subject to class-wide call (meaning shares in a class which the issuing corporation indicates it will acquire all of through a resolution at a shareholders meeting or any equivalent mechanism (hereinafter referred to as the "resolution to acquire" in this item)):a resolution to acquire the shares subject to class-wide call, if no assets other than shares in the acquiring corporation (including share options in the acquiring corporation which are issued along with such shares) are issued to the Shareholders, Members, and Other Investors whose shares it acquires, as the consideration for the acquisition (monies and other assets issued based on a petition for the court to determine an acquisition price are not considered to be assets other than such shares);

bonds with embedded share options:the exercise of the share options embedded into those bonds, if shares in the acquiring corporation are issued as the consideration for the acquisition;

share options subject to call (meaning any share options that the corporation issuing them has indicated it is entitled to acquire conditional upon the occurrence of certain causes (hereinafter referred to as the "grounds to acquire" in this item); this excludes share options issued to the issuee under particularly favorable conditions or at a particularly favorable price, and any other share options as provided by Cabinet Order):the occurrence of grounds to acquire, if only shares in the acquiring corporation are issued to the share option holders whose the share options it acquires, as the consideration for the acquisition;

bonds with embedded share options subject to call (meaning any share options that the corporation issuing them has indicated it is entitled to acquire conditional upon the occurrence of certain causes (hereinafter referred to as "grounds to acquire" in this item)):the occurrence of grounds to acquire, if only shares in the acquiring corporation are issued to the share option holders whose share options it acquires, as the consideration for the acquisition.

Cabinet Order prescribes the calculation of the acquisition costs for Securities that a Resident acquires subject to the application of the preceding three paragraphs and provides for other necessary particulars concerning the application of the preceding three paragraphs.

If, in any year, a Resident exchanges a Fixed Asset that the Resident has held for at least one year and which is as set forth in one of the following items, for a Fixed Asset held by another person for at least one year which is as set forth in the item (other than one that the other person is found to have acquired solely for the purpose of the exchange) and uses the asset as set forth in the item which the Resident acquires in the exchange (hereinafter referred to as the "acquired asset" in this Article) for the same purpose as that for which the asset as set forth in the item which the Resident has transferred in the exchange (hereinafter referred to as the "transferred asset" in this Article) was used immediately prior to the transfer, for the purpose of applying Article 33 (Capital Gains), the transferred asset (other than a part thereof that is equivalent to the value of any monies or other assets acquired along with the acquired assets) is deemed not to have been transferred:

land (including superficies and leasehold rights for the purpose of owning buildings or structures, and rights relating to cultivation (including the cultivation of crops deemed to constitute cultivation pursuant to the provisions of Article 43, paragraph (1) of the Cropland Act) on cropland as prescribed in Article 2, paragraph (1) (Definitions) of the Cropland Act (Act No. 229 of 1952) (including cropland as prescribed in Article 2, paragraph (1) of that Act to which that Act applies by deeming the cultivation of crops to constitute cultivation pursuant to the provisions of Article 43, paragraph (1) (Special Provisions on Facilities for Advanced Crop Cultivation) of that Act));

a building (including any attached facilities and structures);

machinery and equipment;

a vessel;

a mining right (this includes a mining lease right, a right of quarrying, or any other right to dig or quarry soil and stone).

The provisions of the preceding paragraph do not apply if the difference between the value of the acquired asset and that of the transferred asset at the time of the exchange referred to in that paragraph exceeds 20% of whichever asset is of greater value.

The provisions of paragraph (1) apply only if a Tax Return indicates recourse to the application of the provisions of that paragraph, indicates the values of the acquired asset and transferred asset, and gives any other information prescribed by Ministry of Finance Order.

Even if no Tax Return is filed or if a Tax Return is filed that is not filled out as referred to in the preceding paragraph, the district tax office director may apply the provisions of paragraph (1) on finding there to be unavoidable circumstances for the Resident's failure to file the Tax Return or fill it out in that manner.

A Cabinet Order provides for the necessary particulars concerning the calculation of the depreciation allowance prescribed in Article 49, paragraph (1) (Calculating Depreciation Allowances for Depreciable Assets; Depreciation Methods) which is required to be made for an acquired asset by a Resident subject to the application of paragraph (1), as well as for the necessary particulars concerning the calculation of the amount of capital gains in the event that such a Resident transfers the acquired asset.

If forested land that a Resident owns (excluding forested land generating business income) or assets generating capital gains have devolved due to any of the following circumstances, such assets are deemed to have been transferred to the Resident, with an amount equivalent to their value as of the time the circumstances arose being used in the calculation of the Resident's timber income, capital gains, or miscellaneous income:

an inter vivos gift (but only a gift to a corporation and a gift to an individual who is the trustee of a public interest trust (but only one made in order for the property to become trust property of that trust)), hereditary succession (but only hereditary succession subject to qualified acceptance), or a legacy (but only a legacy left to a corporation, a legacy left to an individual who is the trustee of a public interest trust (but only one made in order for the property to become trust property of that trust), or a universal legacy left to an individual which is associated with a qualified acceptance);

a transfer at a price that Cabinet Order prescribes as a consideration at a conspicuously low value (but only a transfer to a corporation).

If a Resident transfers an asset as prescribed in the preceding paragraph to an individual at a price as prescribed in item (ii) of that paragraph and the amount of the consideration is less than the sum total of the necessary expenses or acquisition costs and transfer costs which are deducted to calculate timber income, capital gains, or miscellaneous income from the transfer of that asset, there is deemed to be no such negative balance when timber income, capital gains, or miscellaneous income is calculated.

If a Resident transfers an asset as prescribed in paragraph (1) of the preceding Article which was acquired due to any of the following circumstances, the Resident is deemed to continue to possess that asset as regards the calculation of business income, timber income, capital gains, or miscellaneous income:

an inter vivos gift (other than a gift to the trustee of a public interest trust (but only one made in order for the property to become trust property of that trust; the same applies in paragraph (6), item (ii) of the following Article and in Article 60-3, paragraph (6), item (ii) (Special Provisions on Capital Gains upon Transfer of Assets to a Nonresident by Gift or Similar Transfer))), hereditary succession (other than hereditary succession subject to qualified acceptance), or a legacy (other than a legacy left to the trustee of a public interest trust (but only one made in order for the property to become trust property of that trust; the same applies in paragraph (6), item (iii) of the following Article and in Article 60-3, paragraph (6), item (iii)) and a universal legacy which is associated with a qualified acceptance);

a transfer falling under paragraph (2) of the preceding Article.

In the case referred to in the preceding paragraph, when an asset set forth in one of the following items that was acquired through hereditary succession or a legacy set forth in item (i) of that paragraph is transferred, the acquisition cost of the asset is as prescribed in that item, notwithstanding the provisions of that paragraph:

a building subject to a spouse's right to reside: the amount arrived at by deducting the amount that would be the acquisition cost of the spouse's right to reside pursuant to the provisions of the following paragraph if the spouse's right to reside had been extinguished at the time the building was transferred, from the amount that would be calculated as the acquisition cost of the building pursuant to the provisions of the preceding paragraph at the time the building was transferred if no spouse's right to reside had been established on the building;

land used as the site of a building subject to a spouse's right to reside (including rights existing on land; hereinafter the same applies in this item and in item (ii) of the following paragraph): the amount arrived at by deducting the amount that would be the acquisition cost of the right to use the land based on the spouse's right to reside pursuant to the provisions of the following paragraph if that right had been extinguished at the time the land was transferred, from the amount that would be calculated as the acquisition cost of the land pursuant to the provisions of the preceding paragraph at the time the land was transferred if no spouse's right to reside had been established on the building.

In the case referred to in paragraph (1), when a right set forth in one of the following items that was acquired through hereditary succession or a legacy set forth in item (i) of that paragraph is extinguished, the calculation of the amount of capital gains is as prescribed in that item, notwithstanding the provisions of that paragraph. In such a case, the provisions of Article 38, paragraph (2) (Acquisition Costs Deducted to Calculate Capital Gains) do not apply.

spouse's right to reside: the spouse's right to reside is deemed to have been acquired, at the time it was acquired through that hereditary succession or legacy, for the amount calculated pursuant to Cabinet Order as the part corresponding to the amount equivalent to the value of the spouse's right to reside at that time, out of the amount that would be calculated as the acquisition cost of the building subject to the spouse's right to reside if the building had been transferred at that time, and the amount arrived at by deducting from that amount the amount calculated pursuant to Cabinet Order based on the period for which the spouse's right to reside continues is the acquisition cost of the spouse's right to reside as prescribed in Article 38, paragraph (1);

the right to use land used as the site of a building subject to a spouse's right to reside, based on that spouse's right to reside: the right is deemed to have been acquired, at the time it was acquired through that hereditary succession or legacy, for the amount calculated pursuant to Cabinet Order as the part corresponding to the amount equivalent to the value of the right at that time, out of the amount that would be calculated as the acquisition cost of the land if the land had been transferred at that time, and the amount arrived at by deducting from that amount the amount calculated pursuant to Cabinet Order based on the period for which the spouse's right to reside continues is the acquisition cost of the right as prescribed in Article 38, paragraph (1).

If a Resident transfers an asset acquired through an inter vivos gift, hereditary succession, or a legacy as set forth in Article 59, paragraph (1), item (i), the Resident is deemed to have acquired the asset, with an amount equivalent to the value thereof at the time the Resident acquired it being used in the calculation of business income, timber income, capital gains, or miscellaneous income.

If a Resident who makes a departure from Japan (meaning ceasing to have a domicile or residence in Japan; the same applies hereinafter in this Article) holds, at the time of that departure from Japan, Securities or an equity interest in a contribution under a silent partnership contract prescribed in Article 174, item (ix) (Tax Base for a Domestic Corporation's Income Taxes) (excluding Securities that represent the right to acquire shares without contribution or at an advantageous price and that would generate domestic source income prescribed in Article 161, paragraph (1) (Domestic Source Income), and other Securities prescribed by Cabinet Order; hereinafter referred to as "Securities and similar interests" in this Article through Article 60-4 (Special Provisions on Capital Gains upon Application of Foreign Exit Tax Provisions)), for the calculation of that person's business income, capital gains, or miscellaneous income, the Securities and similar interests are deemed to have been transferred at the time of the departure from Japan, for the amount prescribed in each of the following items for the category of case set forth in that item:

if, by the time of filing the Tax Return for the year that includes the date of the departure from Japan, the Resident has given notification of a tax agent pursuant to Article 117, paragraph (2) (Tax Agent) of the Act on General Rules for National Taxes, if the Resident files the Tax Return for that year on or after the date of the departure from Japan without having given notification of a tax agent pursuant to that paragraph, or if a determination is made with regard to income tax for that year: the amount equivalent to the value of the Securities and similar interests at the time of the departure from Japan;

in a case other than as set forth in the preceding item: the amount equivalent to the value of the Securities and similar interests as of the day three months before the scheduled date of the departure from Japan (or, for Securities and similar interests acquired after that day, as of the time of acquisition).

If a Resident who makes a departure from Japan is, at the time of that departure from Japan, a party to a contract for margin transactions prescribed in Article 156-24, paragraph (1) (License and Application for License) of the Financial Instruments and Exchange Act or when-issued transactions (meaning transactions for the purchase and sale of Securities before those Securities are issued which are specified by Ministry of Finance Order) that have not been settled (hereinafter referred to as "unsettled margin transactions or similar transactions" in this Article through Article 60-4), for the calculation of that person's business income or miscellaneous income, the amount of profit or loss prescribed in each of the following items for the category of case set forth in that item is deemed to have arisen at the time of the departure from Japan:

in the case set forth in item (i) of the preceding paragraph: the amount equivalent to the amount of profit or loss calculated pursuant to Ministry of Finance Order on the assumption that the unsettled margin transactions or similar transactions were settled at the time of the departure from Japan;

in the case set forth in item (ii) of the preceding paragraph: the amount equivalent to the amount of profit or loss calculated pursuant to Ministry of Finance Order on the assumption that the unsettled margin transactions or similar transactions were settled on the day three months before the scheduled date of the departure from Japan (or, for unsettled margin transactions or similar transactions for which the contract was concluded after that day, at the time of conclusion).

If a Resident who makes a departure from Japan is, at the time of that departure from Japan, a party to a contract for derivatives transactions prescribed in Article 2, paragraph (20) (Definitions) of the Financial Instruments and Exchange Act that have not been settled (hereinafter referred to as "unsettled derivatives transactions" in this Article through Article 60-4), for the calculation of that person's business income or miscellaneous income, the amount of profit or loss prescribed in each of the following items for the category of case set forth in that item is deemed to have arisen at the time of the departure from Japan:

in the case set forth in paragraph (1), item (i): the amount equivalent to the amount of profit or loss calculated pursuant to Ministry of Finance Order on the assumption that the unsettled derivatives transactions were settled at the time of the departure from Japan;

in the case set forth in paragraph (1), item (ii): the amount equivalent to the amount of profit or loss calculated pursuant to Ministry of Finance Order on the assumption that the unsettled derivatives transactions were settled on the day three months before the scheduled date of the departure from Japan (or, for unsettled derivatives transactions for which the contract was concluded after that day, at the time of conclusion).

If an individual (including the individual's heir) to whom the provisions of the preceding three paragraphs (including as applied pursuant to paragraph (8) (including as applied mutatis mutandis pursuant to paragraph (9); the same applies in item (i)) or paragraph (10)) have applied with regard to income tax for the year that includes the date of the departure from Japan transfers (including anything similar to a transfer that Cabinet Order prescribes; the same applies in paragraph (8)) or settles Securities and similar interests held at the time of the departure from Japan, or unsettled margin transactions or similar transactions or unsettled derivatives transactions to whose contracts the individual was a party at that time, the calculation of business income, capital gains, or miscellaneous income is governed by the following; provided, however, that this does not apply to the Securities and similar interests, unsettled margin transactions or similar transactions, and unsettled derivatives transactions in the case where neither a Tax Return has been filed nor a determination has been made with regard to income tax for the year that includes that date, to Securities and similar interests, unsettled margin transactions or similar transactions, and unsettled derivatives transactions for which the amount prescribed in the items of paragraph (1), the items of paragraph (2), or the items of the preceding paragraph for the category of case set forth in those items has not been included in the gross revenue used to calculate business income, capital gains, or miscellaneous income for the year that includes that date, or to Securities and similar interests, unsettled margin transactions or similar transactions, and unsettled derivatives transactions to which the main clause of paragraph (6) (including as applied pursuant to paragraph (7)) has applied.

the Securities and similar interests are deemed to have been acquired for the amount prescribed in the items of paragraph (1) (or, if the provisions of paragraph (1) have applied pursuant to paragraph (8), for the transfer price for the transfer of those Securities and similar interests prescribed in paragraph (8) or the amount equivalent to the value of those Securities and similar interests at the time of the gift or inheritance with limited liability);

if the unsettled margin transactions or similar transactions or unsettled derivatives transactions are settled, the amount equivalent to the amount of profit prescribed in the items of paragraph (2) or the items of the preceding paragraph with regard to those unsettled margin transactions or similar transactions or unsettled derivatives transactions is to be subtracted from the amount of profit or loss arising from the settlement (hereinafter referred to as the "gain or loss on settlement" in this item), or the amount equivalent to the amount of loss prescribed in the items of paragraph (2) or the items of the preceding paragraph with regard to those unsettled margin transactions or similar transactions or unsettled derivatives transactions is to be added to the gain or loss on settlement.

The provisions of the preceding paragraphs do not apply to a Resident for whom the amount prescribed in each of the following items for the category of case set forth in that item, as of the time of the departure from Japan, for the Securities and similar interests held, and the unsettled margin transactions or similar transactions and unsettled derivatives transactions to whose contracts the Resident is a party, at the time of that departure from Japan is less than 100,000,000 yen, or to a Resident for whom the total of the periods prescribed by Cabinet Order as periods during which the Resident had a domicile or residence in Japan within the 10 years before the date of the departure from Japan is five years or less.

in the case set forth in paragraph (1), item (i): the total of the amount prescribed in that item, the amount prescribed in paragraph (2), item (i), and the amount prescribed in paragraph (3), item (i);

in the case set forth in paragraph (1), item (ii): the total of the amount prescribed in that item, the amount prescribed in paragraph (2), item (ii), and the amount prescribed in paragraph (3), item (ii).

An individual to whom the provisions of paragraphs (1) through (3) are to apply with regard to income tax for the year that includes the date of the departure from Japan may, for those of the Securities and similar interests held at the time of the departure from Japan, or the unsettled margin transactions or similar transactions or unsettled derivatives transactions to whose contracts the individual was a party at that time, that are prescribed in each of the following items for the category of case set forth in that item, treat all of the transfers of Securities and similar interests, the settlements of unsettled margin transactions or similar transactions, and the settlements of unsettled derivatives transactions that were deemed to have been made pursuant to the provisions of paragraphs (1) through (3) in the calculation of the business income, capital gains, or miscellaneous income for that year of the Resident referred to in those paragraphs as not having occurred; provided, however, that this does not apply to the amount equivalent to the income from transfers of Securities and similar based on the facts concealed or disguised, in the case where all or part of the facts that should form the basis for calculating the business income, capital gains, or miscellaneous income from the transfer of the Securities and similar interests, the business income or miscellaneous income from the settlement of the unsettled margin transactions or similar transactions, or the business income or miscellaneous income from the settlement of the unsettled derivatives transactions (hereinafter referred to as "income from transfers of Securities and similar" in this paragraph) were concealed or disguised and, because a Tax Return was filed based on that concealment or disguise or a Tax Return was not filed, a determination or Reassessment is made, or a return filed after the deadline or an Amended Return is filed, by the day on which five years have elapsed from the date of the individual's departure from Japan (excluding the case where a return filed after the deadline or an Amended Return was filed by that day and the filing was not made in anticipation of a determination or Reassessment with regard to income tax as a result of an examination concerning that income tax).

if the individual makes a return to Japan (meaning coming to have a domicile in Japan or to have had a residence in Japan continuously for one year or more up to the present; hereinafter the same applies in this paragraph and in paragraph (6) of the following Article) by the day on which five years have elapsed from the date of the departure from Japan: the Securities and similar interests that the individual has continued to hold until the time of that return to Japan, or the unsettled margin transactions or similar transactions or unsettled derivatives transactions that the individual has not settled;

if, by the day on which five years have elapsed from the date of the departure from Japan, the individual has transferred to a Resident, by gift (other than a gift to the trustee of a public interest trust; hereinafter the same applies in this item), Securities and similar interests held at the time of the departure from Japan, or contracts for unsettled margin transactions or similar transactions or unsettled derivatives transactions to which the individual was a party at that time: the Securities and similar interests, unsettled margin transactions or similar transactions, or unsettled derivatives transactions that were transferred by that gift;

if, due to the death of the individual by the day on which five years have elapsed from the date of the departure from Japan, the Securities and similar interests held at the time of the departure from Japan, or contracts for unsettled margin transactions or similar transactions or unsettled derivatives transactions to which the individual was a party at that time, have been transferred by hereditary succession (other than hereditary succession subject to qualified acceptance; hereinafter the same applies in this item) or a legacy (other than a legacy left to the trustee of a public interest trust and a universal legacy which is associated with a qualified acceptance; hereinafter the same applies in this item), and the case comes to fall under either of the following: the Securities and similar interests, unsettled margin transactions or similar transactions, or unsettled derivatives transactions that were transferred by that hereditary succession or legacy.

if, by the day on which five years have elapsed from the date of the departure from Japan, all of the individuals who are heirs and legatees that received a transfer of Securities and similar interests or contracts for unsettled margin transactions or similar transactions or unsettled derivatives transactions through that hereditary succession or legacy (including an individual that received a transfer of those Securities and similar interests or contracts for unsettled margin transactions or similar transactions or unsettled derivatives transactions from such an individual through hereditary succession or a legacy; the same applies in (b)) have become Residents;

if, due to a division of the estate or similar event prescribed in Article 151-6, paragraph (1) (Special Provisions on Amended Returns in the Event of Division of an Estate or Similar Event) that has arisen with regard to the individual, the individuals who are heirs and legatees that received a transfer of Securities and similar interests or contracts for unsettled margin transactions or similar transactions or unsettled derivatives transactions through that hereditary succession or legacy have come to include no Nonresident (excluding a person who has made a return to Japan by the day on which five years have elapsed from the date of the departure from Japan).

For the purpose of applying the provisions of the preceding paragraph to an individual to whom the provisions of paragraphs (1) through (3) have applied with regard to income tax for the year that includes the date of the departure from Japan and who, pursuant to Article 137-2, paragraph (2) (Tax Payment Grace Period Where the Special Provisions on Capital Gains upon Departure from Japan Apply), has been granted a tax payment grace period under paragraph (1) of that Article, the term "five years" in that paragraph is deemed to be replaced with "10 years".

If an individual (including the individual's heir) to whom the provisions of paragraphs (1) through (3) have applied with regard to income tax for the year that includes the date of the departure from Japan and who has been granted a tax payment grace period under Article 137-2, paragraph (1) (including as applied pursuant to paragraph (2) of that Article; the same applies in paragraph (10)) has, by the expiry base date prescribed in paragraph (1) of that Article for that tax payment grace period, transferred (excluding a transfer made at a price lower than the value at the time of the transfer and any other transfer prescribed by Cabinet Order; hereinafter the same applies in this paragraph and the following paragraph) or settled Securities and similar interests that the individual has continued to hold since the time of the departure from Japan, or contracts for unsettled margin transactions or similar transactions or unsettled derivatives transactions that the individual has not settled, or has transferred them by a gift or inheritance with limited liability (meaning a gift, hereditary succession (but only hereditary succession subject to qualified acceptance), or a legacy (but only a universal legacy which is associated with a qualified acceptance); hereinafter the same applies in this paragraph and the following paragraph), and the transfer price for the transfer or the amount equivalent to the value of the Securities and similar interests at the time of the gift or inheritance with limited liability, or the amount of profit or loss arising from the settlement, the amount equivalent to the amount of profit or loss calculated pursuant to Ministry of Finance Order on the assumption that the unsettled margin transactions or similar transactions were settled at the time of the gift or inheritance with limited liability (referred to as the "deemed margin transaction profit or loss at a gift or inheritance with limited liability" in paragraph (8) of the following Article), or the amount equivalent to the amount of profit or loss calculated pursuant to Ministry of Finance Order on the assumption that the unsettled derivatives transactions were settled at the time of the gift or inheritance with limited liability (referred to as the "deemed derivatives profit or loss at a gift or inheritance with limited liability" in paragraph (8) of the following Article) falls under any of the following cases, then, for the purpose of applying the provisions of paragraphs (1) through (3) with regard to that individual's income tax for the year that includes the date of the departure from Japan, the phrase "the amount prescribed in each of the following items for the category of case set forth in that item" in paragraph (1) may be deemed to be replaced with "the transfer price for the transfer of those Securities and similar interests prescribed in paragraph (8) or the amount equivalent to the value of those Securities and similar interests at the time of the gift or inheritance with limited liability", the phrase "the amount of profit or loss prescribed in each of the following items for the category of case set forth in that item" in paragraph (2) may be deemed to be replaced with "the amount of profit or loss arising from the settlement prescribed in paragraph (8) or the deemed margin transaction profit or loss at a gift or inheritance with limited liability", and the phrase "the amount of profit or loss prescribed in each of the following items for the category of case set forth in that item" in paragraph (3) may be deemed to be replaced with "the amount of profit or loss arising from the settlement prescribed in paragraph (8) or the deemed derivatives profit or loss at a gift or inheritance with limited liability":

the transfer price for the transfer of the Securities and similar interests or the amount equivalent to the value of the Securities and similar interests at the time of the gift or inheritance with limited liability is lower than the amount equivalent to the value prescribed in the items of paragraph (1) for the category of case set forth in those items as of the time of the departure from Japan (or, if a merger or split of the corporation that issued the Securities and similar interests or any other event prescribed by Cabinet Order occurs after the time of the departure from Japan, the amount calculated pursuant to Cabinet Order based on that amount; the same applies in paragraph (10), item (i));

the amount equivalent to the amount of profit arising from the settlement of the unsettled margin transactions or similar transactions, or the deemed margin-transaction gain at the time of a gift or inheritance with limited liability (meaning the amount equivalent to the amount of profit calculated pursuant to Ministry of Finance Order on the assumption that the unsettled margin transactions or similar transactions were settled at the time of the gift or inheritance with limited liability; the same applies in paragraph (8), item (ii) of the following Article), is lower than the deemed margin-transaction gain at the time of departure from Japan (meaning the amount equivalent to the amount of profit prescribed in the items of paragraph (2) for the category of case set forth in those items as of the time of the departure from Japan; the same applies in item (iv) and paragraph (10), items (ii) and (iv));

the margin-transaction loss (meaning the amount equivalent to the amount of loss arising from the settlement of the unsettled margin transactions or similar transactions, or the deemed margin-transaction loss at the time of a gift or inheritance with limited liability (meaning the amount equivalent to the amount of loss calculated pursuant to Ministry of Finance Order on the assumption that the unsettled margin transactions or similar transactions were settled at the time of the gift or inheritance with limited liability; the same applies in paragraph (8), item (iii) of the following Article); the same applies in the following item) exceeds the deemed margin-transaction loss at the time of departure from Japan (meaning the amount equivalent to the amount of loss prescribed in the items of paragraph (2) for the category of case set forth in those items as of the time of the departure from Japan; the same applies in paragraph (10), item (iii));

a deemed margin-transaction gain at the time of departure from Japan had arisen with regard to unsettled margin transactions or similar transactions on which a margin-transaction loss has arisen;

the amount equivalent to the amount of profit arising from the settlement of the unsettled derivatives transactions, or the deemed derivatives gain at the time of a gift or inheritance with limited liability (meaning the amount equivalent to the amount of profit calculated pursuant to Ministry of Finance Order on the assumption that the unsettled derivatives transactions were settled at the time of the gift or inheritance with limited liability; the same applies in paragraph (8), item (v) of the following Article), is lower than the deemed derivatives gain at the time of departure from Japan (meaning the amount equivalent to the amount of profit prescribed in the items of paragraph (3) for the category of case set forth in those items as of the time of the departure from Japan; the same applies in item (vii) and paragraph (10), items (v) and (vii));

the derivatives loss (meaning the amount equivalent to the amount of loss arising from the settlement of the unsettled derivatives transactions, or the deemed derivatives loss at the time of a gift or inheritance with limited liability (meaning the amount equivalent to the amount of loss calculated pursuant to Ministry of Finance Order on the assumption that the unsettled derivatives transactions were settled at the time of the gift or inheritance with limited liability; the same applies in paragraph (8), item (vi) of the following Article); the same applies in the following item) exceeds the deemed derivatives loss at the time of departure from Japan (meaning the amount equivalent to the amount of loss prescribed in the items of paragraph (3) for the category of case set forth in those items as of the time of the departure from Japan; the same applies in paragraph (10), item (vi));

a deemed derivatives gain at the time of departure from Japan had arisen with regard to unsettled derivatives transactions on which a derivatives loss has arisen.

The provisions of the preceding paragraph apply mutatis mutandis if an individual to whom the provisions of paragraphs (1) through (3) are to apply with regard to income tax for the year that includes the date of the departure from Japan and who has given notification of a tax agent pursuant to Article 117, paragraph (2) of the Act on General Rules for National Taxes by the time of the departure from Japan has, by the Filing Deadline for income tax for the year that includes that date, transferred or settled Securities and similar interests that the individual has continued to hold since that date, or contracts for unsettled margin transactions or similar transactions or unsettled derivatives transactions that the individual has not settled, or has transferred them by a gift or inheritance with limited liability.

If an individual (including the individual's heir) to whom the provisions of paragraphs (1) through (3) have applied with regard to income tax for the year that includes the date of the departure from Japan and who has been granted a tax payment grace period under Article 137-2, paragraph (1) holds, on the day on which five years have elapsed from that date (or, if the individual has been granted a tax payment grace period under paragraph (1) of that Article pursuant to paragraph (2) of that Article, the day on which 10 years have elapsed; hereinafter the same applies in this paragraph), Securities and similar interests that the individual has continued to hold since the time of the departure from Japan, or unsettled margin transactions or similar transactions or unsettled derivatives transactions that the individual has not settled, and these fall under any of the following cases, then, for the purpose of applying the provisions of paragraphs (1) through (3) with regard to that individual's income tax for the year that includes the date of the departure from Japan, the phrases "the time of the departure from Japan", "the day three months before the scheduled date of the departure from Japan (or, for Securities and similar interests acquired after that day, as of the time of acquisition)", "the day three months before the scheduled date of the departure from Japan (or, for unsettled margin transactions or similar transactions for which the contract was concluded after that day, at the time of conclusion)", and "the day three months before the scheduled date of the departure from Japan (or, for unsettled derivatives transactions for which the contract was concluded after that day, at the time of conclusion)" in those provisions may be deemed to be replaced with "the day on which five years have elapsed from the date of the departure from Japan (or, if the individual has been granted a tax payment grace period under paragraph (1) of Article 137-2 pursuant to paragraph (2) of that Article (Tax Payment Grace Period Where the Special Provisions on Capital Gains upon Departure from Japan Apply), the day on which 10 years have elapsed)":

the amount equivalent to the value of the Securities and similar interests on the day on which those five years have elapsed is lower than the amount equivalent to the value prescribed in the items of paragraph (1) for the category of case set forth in those items as of the time of the departure from Japan;

the amount equivalent to the amount of profit calculated pursuant to Ministry of Finance Order on the assumption that the unsettled margin transactions or similar transactions were settled on the day on which those five years have elapsed is lower than the deemed margin-transaction gain at the time of departure from Japan;

the amount equivalent to the amount of loss calculated pursuant to Ministry of Finance Order on the assumption that the unsettled margin transactions or similar transactions were settled on the day on which those five years have elapsed (referred to as the "deemed margin transaction loss at the five-year mark" in the following item) exceeds the deemed margin-transaction loss at the time of departure from Japan;