This Act comes into effect on March 31, 2001; provided, however, that the following provisions come into effect on April 1 of that year:

The provisions then in force continue to govern the application of penal provisions to conduct engaged in before this Act comes into effect and to conduct engaged in after this Act comes into effect in relation to corporation tax for which prior laws are to continue to govern pursuant to the provisions of these Supplementary Provisions.

Except as otherwise provided for in these Supplementary Provisions, the provisions of the Income Tax Act as amended by the provisions of Article 2 (hereinafter referred to as "the new Income Tax Act") apply to income tax for 2001 and subsequent years, and the provisions then in force continue to govern income tax for 2000 and prior years.

①The provisions of Article 25 of the new Income Tax Act apply to money or other assets delivered by reason of an event set forth in one of the items of paragraph (1) of that Article which occurs on or after April 1, 2001, and the provisions then in force continue to govern the money or other assets set forth in the items of Article 25, paragraph (1) of the Income Tax Act prior to the amendment by the provisions of Article 2 (hereinafter referred to as "the former Income Tax Act") that are delivered by reason of an event prescribed in those items which occurred before that date.

②The provisions then in force continue to govern the amounts specified in the items of Article 25, paragraph (2) of the former Income Tax Act for a Shareholder, Member, or Other Investor referred to in that paragraph in the case where a fact set forth in one of those items occurred on or before March 31, 2001.

③In the case where only shares (meaning shares as prescribed in Article 25, paragraph (1) of the new Income Tax Act) have been delivered, through a non-qualified merger or similar transaction carried out during the period from April 1, 2001 to March 31, 2002, to the shareholders of a merged corporation or similar (meaning any Shareholder, Member, or Other Investor as prescribed in Article 2, item (xiv) of the new Corporation Tax Act; the same applies hereinafter in this paragraph) in connection with that non-qualified merger or similar transaction, if the merging corporation or similar in connection with that non-qualified merger or similar transaction has filed a corporation Tax Return on the income for the business year (meaning a business year as prescribed in Article 13, paragraph (1) of the new Corporation Tax Act) that includes the date of that non-qualified merger or similar transaction, treating that non-qualified merger or similar transaction as a qualified merger or similar transaction, and has not withheld income tax pursuant to the provisions of Article 181, paragraph (1) or Article 212, paragraph (1) or (3) of the new Income Tax Act on the amount, out of the value of those shares, that is deemed to be the amount of a dividend of profits or a distribution of surplus pursuant to the provisions of Article 25, paragraph (1) of the new Income Tax Act, the provisions of Article 25, paragraph (1) of the new Income Tax Act do not apply, except in the case where it is clear that the merging corporation or similar filed that return for the purpose of evading the income tax of the shareholders of the merged corporation or similar.

The provisions of Article 52 of the new Income Tax Act apply to amounts that an individual transfers into a reserve account for bad debts in each year from 2002 onward, and the provisions then in force continue to govern amounts transferred into a reserve account for bad debts in each year up to and including 2001.

With regard to the application of the provisions of Articles 76 and 77 of the new Income Tax Act to income tax for 2001, the phrase "which are paid" in Article 76, paragraph (3), item (iv) of the new Income Tax Act is deemed to be replaced with "which are paid (for those concluded by a non-life insurance company or a foreign non-life insurance company or similar, limited to those for which the commencement of the insurance period of the insurance contract (or, for those without a fixed insurance period, the day on which they take effect; the same applies in the following Article) is on or after July 1, 2001)"; the phrase "mutual aid benefits by reason of" in Article 77, paragraph (1) of the new Income Tax Act is deemed to be replaced with "insurance proceeds or mutual aid benefits by reason of"; the phrase "among non-life insurance contracts" in paragraph (2), item (i) of that Article is deemed to be replaced with "among non-life insurance contracts (excluding those concluded by the foreign non-life insurance company or similar outside Japan),"; the phrase "those (excluding those set forth in item (iii) or paragraph (3), item (iv) of the preceding Article and those concluded by the foreign non-life insurance company or similar outside Japan)" is deemed to be replaced with "those, and non-life insurance contracts concluded by the non-life insurance company or foreign non-life insurance company or similar under which insurance proceeds are paid for bodily injury or illness and which pay insurance proceeds by reason of hospitalization in a hospital or clinic and payment of the medical expenses prescribed in Article 73, paragraph (2), or any other ground specified by Cabinet Order (limited to those for which the commencement of the insurance period of the non-life insurance contract is on or before June 30, 2001, and excluding those set forth in item (iii))"; and the phrase "excluding" in item (iii) of that paragraph is deemed to be replaced with "excluding, and, for those concluded by the life insurance company or foreign life insurance company or similar, limited to those for which the commencement of the insurance period of the insurance contract is on or after July 1, 2001".

The provisions of Article 95, paragraph (1) of the new Income Tax Act apply in the case where a Resident is to pay foreign income taxes on income arising from a transaction prescribed in that paragraph which the Resident carries out on or after April 1, 2001.

The provisions of Article 157, paragraph (3) of the new Income Tax Act apply to actions taken or calculations made on or after March 31, 2001 by a transferring corporation or acquiring corporation prescribed in that paragraph that carries out a merger or similar transaction prescribed in that paragraph on or after April 1 of that year.

①The provisions of Article 224-3, paragraph (3) of the new Income Tax Act apply to the delivery of money or other assets prescribed in Article 224-3, paragraph (3) of the new Income Tax Act by reason of an event set forth in one of the items of Article 25, paragraph (1) of the new Income Tax Act which occurs on or after April 1, 2001, and the provisions then in force continue to govern the delivery of those assets by reason of an event set forth in those items which occurred before that date.

②The provisions of Article 225, paragraph (1) of the new Income Tax Act (limited to the part concerning item (xi) of that paragraph) apply to the delivery of money or other assets prescribed in Article 225, paragraph (1), item (xi) of the new Income Tax Act by reason of an event set forth in one of the items of Article 25, paragraph (1) of the new Income Tax Act which occurs on or after April 1, 2001, and the provisions then in force continue to govern the delivery of those assets by reason of an event set forth in those items which occurred before that date.

③The provisions then in force continue to govern the notices under Article 225, paragraph (2) of the former Income Tax Act concerning the payments prescribed in item (ii) of that paragraph in the case where a fact set forth in one of the items of Article 25, paragraph (2) of the former Income Tax Act occurred on or before March 31, 2001.

Beyond what is provided for in Article 2 of the Supplementary Provisions through the preceding Article, transitional measures necessary in connection with the enforcement of the provisions of this Act are specified by Cabinet Order.