Local Tax Act

In the case of a municipality for which the amount (referred to as the "estimated standard fiscal revenue amount"; the same applies hereinafter in this paragraph and the following Article) obtained by adding, to the amount obtained by deducting from the standard fiscal revenue amount that formed the basis of calculation of local allocation tax for the previous fiscal year the estimated fixed assets tax revenue on large-scale depreciable assets that was included in it (meaning the estimated tax revenue calculated at the standard rate under Article 14, paragraph (2) of the Local Allocation Tax Act (Act No. 211 of 1950); the same applies hereinafter in this paragraph), the estimated fixed assets tax revenue from fixed assets tax that could be imposed for the relevant fiscal year if the preceding paragraph were applied to those large-scale depreciable assets, would be less than 160 percent of the standard fiscal need amount that formed the basis of calculation of local allocation tax for the previous fiscal year (referred to as the "previous fiscal year's standard fiscal need amount"; the same applies hereinafter in this paragraph and the following Article), the preceding paragraph is applied after increasing the amount that is to be the tax base of fixed assets tax imposed by that municipality on those large-scale depreciable assets under the preceding paragraph (hereinafter in this paragraph and in paragraphs (2) through (4) of the following Article referred to as the "fixed tax base for large-scale depreciable assets") so that the estimated standard fiscal revenue amount reaches 160 percent of the previous fiscal year's standard fiscal need amount. In this case, if the municipality has two or more large-scale depreciable assets, the fixed tax base for large-scale depreciable assets of the municipality is to be increased sequentially, starting from the large-scale depreciable asset with the lowest value and up to that value, so that the estimated standard fiscal revenue amount of the municipality reaches 160 percent of the previous fiscal year's standard fiscal need amount.

In the case referred to in the preceding paragraph, if there has been an abolition, establishment, division or merger of municipalities, or a boundary change, between the first day of the previous fiscal year and the assessment date of the relevant fiscal year, the method of calculating the standard fiscal revenue amount and standard fiscal need amount that formed the basis of calculation of local allocation tax for the previous fiscal year of the municipality that continues to exist after the abolition, establishment, division or merger, or boundary change, and of a municipality that continues to exist after the abolition, establishment, division or merger, or boundary change and for which the amount of local allocation tax for the previous fiscal year has been calculated, under the provisions of other Acts, so as not to fall below the aggregate of the amounts that would be calculated if the municipalities before the abolition, establishment, division or merger, or boundary change had still continued to exist with their former areas on April 1 of the previous fiscal year, is specified by Order of the Ministry of Internal Affairs and Communications.

With respect to the standard fiscal revenue amount or standard fiscal need amount referred to in the preceding two paragraphs, necessary corrections are to be made as provided by Order of the Ministry of Internal Affairs and Communications where, due to the enactment, amendment or repeal of an Act, it would differ significantly from the standard fiscal revenue amount or standard fiscal need amount that is to form the basis of calculation of local allocation tax for the relevant fiscal year, or where it is discovered that there was an error in a number used as the basis for calculating the amount of ordinary allocation tax (limited to where it is discovered within five fiscal years after the fiscal year in which the number with the error was used as the basis for calculating the amount of ordinary allocation tax, and excluding cases specified by Order of the Ministry of Internal Affairs and Communications).

The population of a municipality when applying the table in paragraph (1) is the most recent population publicly notified in the Official Gazette; provided, however, that the population of the relevant municipalities in the case of an abolition, establishment, division or merger of municipalities, or a boundary change, is that calculated as provided by Order of the Ministry of Internal Affairs and Communications.

If the mayor of the municipality has determined a value under Article 410, paragraph (1), has determined or corrected a value under Article 417, paragraph (1), or has received notice of allocation under Article 389, paragraph (1) or Article 417, paragraph (2), and the aggregate value of the depreciable assets owned by a single person liable for tax comes to exceed the amount set out in the right-hand column of the table in paragraph (1), the mayor must, without delay and as provided by Order of the Ministry of Internal Affairs and Communications, notify the prefectural governor and that person liable for tax of the aggregate value and other necessary matters.

If the prefectural governor allocates the value of fixed assets to municipalities under Article 389, paragraph (1) or Article 417, paragraph (2), and the aggregate value of the depreciable assets owned by a single person liable for tax in a municipality comes to exceed the amount set out in the right-hand column of the table in paragraph (1), the governor must state that fact together in the notice to the mayor of the municipality and the owner under Article 389, paragraph (1), Article 393, paragraph (1) or Article 417, paragraph (2).

If the aggregate value of the depreciable assets owned by a single person liable for tax that the Minister for Internal Affairs and Communications has allocated to municipalities under Article 389, paragraph (1) or Article 417, paragraph (2) comes to exceed the amount set out in the right-hand column of the table in paragraph (1), the Minister must, as provided by Order of the Ministry of Internal Affairs and Communications, notify the prefectural governor of the aggregate value and other necessary matters, together with the notice to the mayor of the municipality and the owner under Article 389, paragraph (1), Article 393, paragraph (1) or Article 417, paragraph (2).

If there are depreciable assets owned by a single person liable for tax that are used for a newly constructed single factory, power station or substation (hereinafter in this paragraph referred to as "single factory") (including equipment added to a single factory that is found to be similar to a single factory), and the aggregate value of which comes to exceed, in any one fiscal year of the five fiscal years starting from the fiscal year in which fixed assets tax is newly imposed on those depreciable assets, the amount set out in the right-hand column of the table in paragraph (1) of the preceding Article for the municipality set out in the left-hand column of that table (hereinafter in this Article and Article 740 referred to as "newly built large-scale depreciable assets"), a municipality is to, limited to fixed assets tax for six fiscal years starting from the first fiscal year in which that amount is exceeded (hereinafter in this paragraph and the following paragraph referred to as the "first application year"), and even if in the meantime the aggregate value of the newly built large-scale depreciable assets comes to fall below the amount set out in that column, divide those newly built large-scale depreciable assets from other newly built large-scale depreciable assets owned by that person liable for tax with a different first application year and from depreciable assets other than those newly built large-scale depreciable assets, treat each of them as owned separately by a single person liable for tax, calculate, in accordance with Article 349-2, Article 349-3, Article 349-3-4, the preceding Article and paragraph (2) through paragraph (5), the amount that is to be the tax base of fixed assets tax imposed on those newly built large-scale depreciable assets or on the other newly built large-scale depreciable assets owned by that person liable for tax with a different first application year or on depreciable assets other than those newly built large-scale depreciable assets, and impose fixed assets tax with that amount as the tax base. In this case, if a single person liable for tax owns, within the area of a single municipality, two or more newly built large-scale depreciable assets with the same first application year, those newly built large-scale depreciable assets are regarded together as a single newly built large-scale depreciable asset.

In the case of a municipality for which, limited to fixed assets tax for six fiscal years starting from the first application year imposed on newly built large-scale depreciable assets, the estimated standard fiscal revenue amount calculated in accordance with the rules of Article 349-4, paragraphs (2) through (4) would be less than the amount obtained by multiplying the previous fiscal year's standard fiscal need amount by the ratio set out in each of the following items, Article 349-4, paragraph (1) is to apply, notwithstanding paragraph (2) of that Article, after increasing the fixed tax base for large-scale depreciable assets of the municipality so that the estimated standard fiscal revenue amount reaches the ratio of the previous fiscal year's standard fiscal need amount set out in the relevant item.

For newly built large-scale depreciable assets for which the relevant fiscal year falls under the first application year or the fiscal year following the first application year (referred to in the following item as the "second application year") (referred to in the following paragraph and paragraph (4) as "first-stage newly built large-scale depreciable assets"): 220 percent

For newly built large-scale depreciable assets for which the relevant fiscal year falls under the fiscal year following the second application year (referred to in this item as the "third application year") or the fiscal year following the third application year (referred to in the following item as the "fourth application year") (referred to in the following paragraph and paragraph (4) as "second-stage newly built large-scale depreciable assets"): 200 percent

For newly built large-scale depreciable assets for which the relevant fiscal year falls under the fiscal year following the fourth application year (referred to in this item as the "fifth application year") or the fiscal year following the fifth application year (referred to in the following paragraph and paragraph (4) as "third-stage newly built large-scale depreciable assets"): 180 percent

In the case referred to in the preceding paragraph, if there are two or more first-stage newly built large-scale depreciable assets, second-stage newly built large-scale depreciable assets or third-stage newly built large-scale depreciable assets, respectively, within the area of a single municipality, the fixed tax base for large-scale depreciable assets of the municipality is to be increased, for each category of newly built large-scale depreciable assets, sequentially starting from the newly built large-scale depreciable asset with the lowest value and up to that value, so that the estimated standard fiscal revenue amount of the municipality calculated in accordance with the rules of Article 349-4, paragraphs (2) through (4) reaches 220 percent of the previous fiscal year's standard fiscal need amount for first-stage newly built large-scale depreciable assets, 200 percent for second-stage newly built large-scale depreciable assets, and 180 percent for third-stage newly built large-scale depreciable assets.

The method of calculation for increasing the fixed tax base for large-scale depreciable assets of a municipality with respect to newly built large-scale depreciable assets or large-scale depreciable assets, in the case where there are two or more of the first-stage newly built large-scale depreciable assets, second-stage newly built large-scale depreciable assets or third-stage newly built large-scale depreciable assets within the area of a single municipality, and in the case where there are newly built large-scale depreciable assets and large-scale depreciable assets other than newly built large-scale depreciable assets, is specified by Order of the Ministry of Internal Affairs and Communications.

Beyond what is provided for in the preceding paragraphs, matters necessary for the calculation of the tax base of fixed assets tax imposed on newly built large-scale depreciable assets are specified by Cabinet Order.

The standard tax rate of fixed assets tax is 1.4 percent.

In the case where there is, among the persons liable for fixed assets tax of a municipality, a single person liable for tax for whom the total tax base of the municipality's fixed assets tax to be imposed on the fixed assets the person owns exceeds two-thirds of the total tax base of the municipality's fixed assets tax to be imposed on the fixed assets located within the area of the municipality, if the municipality intends to enact a Municipal Ordinance that sets or changes the rate of fixed assets tax and imposes fixed assets tax at a rate exceeding 1.7 percent, it is to hear the opinion of that person liable for tax in the municipal assembly.