Local Tax Act

For the time being, a prefecture may not, notwithstanding the provisions of Article 24, paragraph (1), impose the income levy of prefectural inhabitant tax (excluding the income levy imposed under the provisions of Article 50-2) on a person, among those on whom the income levy of prefectural inhabitant tax is to be imposed, for whom the total of the gross income, amount of retirement income and amount of timber income calculated pursuant to the provisions of Article 32 with respect to income of the year preceding the year that includes the first day of the fiscal year concerned (hereinafter in this Article, paragraphs (2) through (11) of the following Article, Article 4-2, paragraphs (2) through (11) of the Supplementary Provisions, Articles 4-5 through 35-3-2 33-2 of the Supplementary Provisions, Articles 33-3 through 35-3 of the Supplementary Provisions, Article 35-3-2, paragraphs (1) and (6) of the Supplementary Provisions, Article 35-3-335-3-4, paragraphs (1) and (6) of the Supplementary Provisions, Articles 35-4 through 44 of the Supplementary Provisions, Article 45 of the Supplementary Provisions and Article 61 of the Supplementary Provisions referred to as the "previous year") is the amount obtained by adding 100,000 yen to the amount obtained by multiplying 350,000 yen by the number obtained by adding one to the number of the person's spouse in the same household and dependents (limited to persons under 16 years of age and claimable dependents prescribed in Article 34, paragraph (1), item (xi); the same applies hereinafter in this paragraph and the following paragraph) (where the person has a spouse in the same household or dependents, the amount obtained by adding 320,000 yen to that amount) or less.

A prefecture, limited to individual prefectural inhabitant tax for each fiscal year from fiscal year 2018 toon or after fiscal year 20272018, from the viewpoint of promoting the use of over-the-counter drugs, etc. (meaning the pharmaceuticals requiring guidance prescribed in Article 4, paragraph (5), item (iii) of the Act on Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices (Act No. 145 of 1960) and, the over-the-counter pharmaceuticals prescribed in item (iv) of that paragraph and the pharmaceuticals set out in Article 2, paragraph (17), item (iii) of that Act; the same applies hereinafter in this paragraph and paragraph (3)) that are particularly highly substitutable for drugs provided as benefits for medical treatment under the provisions of the medical insurance Acts, etc. (meaning the medical insurance Acts prescribed in Article 7, paragraph (1) of the Act on Assurance of Medical Care for Elderly People and that Act; the same applies hereinafter in this paragraph and paragraph (3)), and over-the-counter drugs, etc. that are recognized as having a markedly high effect, through their use, of optimizing the cost of medical care benefits under medical insurance (meaning the expenses required for benefits for medical treatment under the provisions of the medical insurance Acts, etc.; the same applies in that paragraph), may, in the case where a person liable for the income levy has paid, in the previous year, the cost of purchasing specified over-the-counter medicines, etc. (meaning the cost of purchasing specified over-the-counter medicines, etc. prescribed in Article 41-17, paragraph (1) of the Act on Special Measures Concerning Taxation; the same applies in paragraph (3)) for the person or for a spouse or other relative who shares the same livelihood with the person, (limited to the case where payment is made within the period specified in the item of Article 41-17, paragraph (1) of the Act on Special Measures Concerning Taxation that sets out the category of cost of purchasing specified over-the-counter medicines, etc. concerned; the same applies in paragraph (3)), and that person liable for the income levy has, in the previous year, undertaken initiatives specified by Cabinet Order as efforts to maintain and promote health and prevent disease, at the election of that person, with regard to the deduction under Article 34, paragraph (1) (limited to the part relating to item (ii)) for the previous year's gross income, amount of retirement income and amount of timber income, apply that paragraph (limited to the part relating to that item) by deeming "in the previous year" in that item to be replaced with "in the previous year (limited to each year from 2017 to 2026)", "the medical expenses (meaning the amount specified by Cabinet Order as recognized to be normally necessary, among the consideration for medical examination or treatment by a physician or dentist, the purchase of pharmaceuticals necessary for treatment or recuperation, and other medical care or provision of personal services related thereto)" to be replaced with "the cost of purchasing specified over-the-counter medicines, etc. (meaning the cost of purchasing specified over-the-counter medicines, etc. prescribed in Article 41-17, paragraph (1) of the Act on Special Measures Concerning Taxation; the same applies in this item)", "the medical expenses paid" to be replaced with "the cost of purchasing specified over-the-counter medicines, etc. (limited to that paid within the period specified in the item of Article 41-17, paragraph (1) of the Act on Special Measures Concerning Taxation that sets out the category of cost of purchasing specified over-the-counter medicines, etc. concerned) paid", "the amount equivalent to five percent of the total of the gross income, the amount of retirement income and the amount of timber income for the previous year (or 100,000 yen, where that amount exceeds 100,000 yen)" to be replaced with "12,000 yen", and "2,000,000 yen" to be replaced with "88,000 yen". In this case, with regard to the application of Article 34, paragraph (6), "item (ii) of that paragraph" in that paragraph is deemed to be replaced with "item (ii) of that paragraph (including where applied with replaced terms pursuant to Article 4-5, paragraph (1) of the Supplementary Provisions)", and "item (iii) of that paragraph" is deemed to be replaced with "paragraph (1), item (iii)".

A municipality, limited to individual municipal inhabitant tax for each fiscal year from fiscal year 2018 toon or after fiscal year 20272018, from the viewpoint of promoting the use of over-the-counter drugs, etc. that are particularly highly substitutable for drugs provided as benefits for medical treatment under the provisions of the medical insurance Acts, etc., and over-the-counter drugs, etc. that are recognized as having a markedly high effect, through their use, of optimizing the cost of medical care benefits under medical insurance, may, in the case where a person liable for the income levy has paid, in the previous year, the cost of purchasing specified over-the-counter medicines, etc. for the person or for a spouse or other relative who shares the same livelihood with the person, and that person liable for the income levy has, in the previous year, undertaken initiatives specified by Cabinet Order as efforts to maintain and promote health and prevent disease, at the election of that person, with regard to the deduction under Article 314-2, paragraph (1) (limited to the part relating to item (ii)) for the previous year's gross income, amount of retirement income and amount of timber income, apply that paragraph (limited to the part relating to that item) by deeming "in the previous year" in that item to be replaced with "in the previous year (limited to each year from 2017 to 2026)", "the medical expenses (meaning the amount specified by Cabinet Order as recognized to be normally necessary, among the consideration for medical examination or treatment by a physician or dentist, the purchase of pharmaceuticals necessary for treatment or recuperation, and other medical care or provision of personal services related thereto)" to be replaced with "the cost of purchasing specified over-the-counter medicines, etc. (meaning the cost of purchasing specified over-the-counter medicines, etc. prescribed in Article 41-17, paragraph (1) of the Act on Special Measures Concerning Taxation; the same applies in this item)", "the medical expenses paid" to be replaced with "the cost of purchasing specified over-the-counter medicines, etc. (limited to that paid within the period specified in the item of Article 41-17, paragraph (1) of the Act on Special Measures Concerning Taxation that sets out the category of cost of purchasing specified over-the-counter medicines, etc. concerned) paid", "the amount equivalent to five percent of the total of the gross income, the amount of retirement income and the amount of timber income for the previous year (or 100,000 yen, where that amount exceeds 100,000 yen)" to be replaced with "12,000 yen", and "2,000,000 yen" to be replaced with "88,000 yen". In this case, with regard to the application of Article 314-2, paragraph (6), "item (ii) of that paragraph" in that paragraph is deemed to be replaced with "item (ii) of that paragraph (including where applied with replaced terms pursuant to Article 4-5, paragraph (3) of the Supplementary Provisions)", and "item (iii) of that paragraph" is deemed to be replaced with "paragraph (1), item (iii)".

A prefecture is, limited to individual prefectural inhabitant tax for each fiscal year from fiscal year 2010 to fiscal year 20382043, in the case where a person liable for the income levy has received the application of Article 41 or Article 41-2-2 of the Act on Special Measures Concerning Taxation with respect to income tax for the previous year (limited to the case where the year of moving in prescribed in Article 41, paragraph (1) of that Act (referred to as the "year of moving in" in this Article and Article 45 of the Supplementary Provisions) is each year from 2009 to 20252030), to deduct the amount equivalent to two-fifths (one-fifth where the person liable for tax has an address within the area of a designated city) of the amount obtained by deducting the amount listed in item (ii) from the amount listed in item (i) (zero where that amount is less than zero) (referred to as the "amount of deduction" in this paragraph) from the amount of the income levy of that person liable for tax when Article 35 and Article 37 are applied. In this case, where that amount of deduction exceeds the amount equivalent to 2 percent (1 percent where the person has an address within the area of a designated city) of the total of the taxable gross income, taxable retirement income and taxable timber income prescribed in Article 89, paragraph (2) of the Income Tax Act relating to the income tax for the previous year of that person liable for tax (where the year of moving in is each year from 2016 to 2025, the amount obtained by adding the amount obtained by deducting 480,000 yen from the amount of the basic personal exemption prescribed in Article 86, paragraph (2) of that Act relating to the income tax for the previous year of that person liable for tax (the amount after application, where Article 41-16-2, paragraph (1) of the Act on Special Measures Concerning Taxation applies) (zero, where the amount so obtained is less than zero)) (where that amount exceeds 39,000 yen (19,500 yen where the person has an address within the area of a designated city), 39,000 yen (19,500 yen where the person has an address within the area of a designated city); referred to as the "maximum credit" in this paragraph), that amount of deduction is the amount equivalent to that maximum credit.

the amount of special tax credit for housing loans, etc. prescribed in Article 41, paragraph (1) of the Act on Special Measures Concerning Taxation, relating to the income tax for the previous year of that person liable for tax, calculated by applying Article 41, paragraphs (2) through (5) or (10) through (21)(18) or Article 41-2 of the Act on Special Measures Concerning Taxation, or Article 16, paragraphs (1) through (3) of the Act on Temporary Special Provisions of Acts Related to National Tax, in Relation to Victims, etc. of Hanshin-Awaji Earthquake (Act No. 11 of 1995) (where the person has an amount of housing loans, etc. prescribed in Article 41, paragraph (1) of the Act on Special Measures Concerning Taxation relating to the year of moving in of 2007 or 2008, the amount of special tax credit for housing loans, etc. prescribed in that paragraph calculated by applying those provisions on the assumption that that amount did not exist);

With regard to the application of paragraph (1) where a person liable for the income levy of prefectural inhabitant tax has an amount of housing loans, etc. prescribed in Article 41, paragraph (1) of the Act on Special Measures Concerning Taxation relating to the acquisition, etc. of a dwelling prescribed in that paragraph that falls under the specified acquisition prescribed in paragraph (5) of that Article or the special specified acquisition prescribed in paragraph (16)(12) of that Article, and the year of moving in is from 2014 to 2021, "2 percent" in paragraph (1) is deemed to be replaced with "2.8 percent", "1 percent" with "1.4 percent", "39,000 yen" with "54,600 yen", and "19,500 yen" with "27,300 yen".

A municipality is, limited to individual municipal inhabitant tax for each fiscal year from fiscal year 2010 to fiscal year 20382043, in the case where a person liable for the income levy has received the application of Article 41 or Article 41-2-2 of the Act on Special Measures Concerning Taxation with respect to income tax for the previous year (limited to the case where the year of moving in is each year from 2009 to 20252030), to deduct the amount equivalent to three-fifths (four-fifths where the person liable for tax has an address within the area of a designated city) of the amount obtained by deducting the amount listed in item (ii) from the amount listed in item (i) (zero where that amount is less than zero) (referred to as the "amount of deduction" in this paragraph) from the amount of the income levy of that person liable for tax when Article 314-3 and Article 314-6 are applied. In this case, where that amount of deduction exceeds the amount equivalent to 3 percent (4 percent where the person has an address within the area of a designated city) of the total of the taxable gross income, taxable retirement income and taxable timber income prescribed in Article 89, paragraph (2) of the Income Tax Act relating to the income tax for the previous year of that person liable for tax (where the year of moving in is each year from 2016 to 2025, the amount obtained by adding the amount obtained by deducting 480,000 yen from the amount of the basic personal exemption prescribed in Article 86, paragraph (2) of that Act relating to the income tax for the previous year of that person liable for tax (the amount after application, where Article 41-16-2, paragraph (1) of the Act on Special Measures Concerning Taxation applies) (zero, where the amount so obtained is less than zero)) (where that amount exceeds 58,500 yen (78,000 yen where the person has an address within the area of a designated city), 58,500 yen (78,000 yen where the person has an address within the area of a designated city); referred to as the "maximum credit" in this paragraph), that amount of deduction is the amount equivalent to that maximum credit.

the amount of special tax credit for housing loans, etc. prescribed in Article 41, paragraph (1) of the Act on Special Measures Concerning Taxation, relating to the income tax for the previous year of that person liable for tax, calculated by applying Article 41, paragraphs (2) through (5) or (10) through (21)(18) or Article 41-2 of the Act on Special Measures Concerning Taxation, or Article 16, paragraphs (1) through (3) of the Act on Temporary Special Provisions of Acts Related to National Tax, in Relation to Victims, etc. of Hanshin-Awaji Earthquake (where the person has an amount of housing loans, etc. prescribed in Article 41, paragraph (1) of the Act on Special Measures Concerning Taxation relating to the year of moving in of 2007 or 2008, the amount of special tax credit for housing loans, etc. prescribed in that paragraph calculated by applying those provisions on the assumption that that amount did not exist);

With regard to the application of paragraph (5) where a person liable for the income levy of municipal inhabitant tax has an amount of housing loans, etc. prescribed in Article 41, paragraph (1) of the Act on Special Measures Concerning Taxation relating to the acquisition, etc. of a dwelling prescribed in that paragraph that falls under the specified acquisition prescribed in paragraph (5) of that Article or the special specified acquisition prescribed in paragraph (16)(12) of that Article, and the year of moving in is from 2014 to 2021, "3 percent" in paragraph (5) is deemed to be replaced with "4.2 percent", "4 percent" with "5.6 percent", "58,500 yen" with "81,900 yen", and "78,000 yen" with "109,200 yen".

Where a person liable for the income levy of prefectural inhabitant tax who receives the application of Article 37-2 falls under the cases listed in Article 37-2, paragraph (11), item (ii) or (iii), or does not have the taxable gross income, taxable retirement income and taxable timber income prescribed in Article 35, paragraph (2), and receives the application of Article 33-2, paragraph (1) of the Supplementary Provisions, Article 33-3, paragraph (1) of the Supplementary Provisions, Article 34, paragraph (1) of the Supplementary Provisions, Article 35, paragraph (1) of the Supplementary Provisions, Article 35-2, paragraph (1) of the Supplementary Provisions, Article 35-2-2, paragraph (1) of the Supplementary Provisions or Article 35-4, paragraph (1) of the Supplementary Provisions with respect to the income of that person liable for tax for the previous year, the amount of special deduction prescribed in Article 37-2, paragraph (11) is, notwithstanding items (ii) and (iii) of that paragraph, the amount equivalent to two-fifths (one-fifth where that person liable for tax has an address within the area of a designated city) of the amount obtained by multiplying the portion exceeding 2,000 yen of the total amount of donations eligible for the special deduction prescribed in paragraph (2) of that Article that were paid by that person liable for tax in the previous year by the ratio provided in each of the following items according to the classification of cases listed in those items (the lowest of the ratios provided in those items, where two or more of the cases listed in those items apply) (where that ; provided, however, that where that equivalent amount exceeds the lower of the amount equivalent to 20 percent of the amount of the income levy of that person liable for tax when Article 35 and Article 37 are applied, the amount equivalent to that 20 percent) and 772,000 yen (386,000 yen where that person liable for tax has an address within the area of a designated city), it is that lower amount.

Where a person liable for the income levy of municipal inhabitant tax who receives the application of Article 314-7 falls under the cases listed in Article 314-7, paragraph (11), item (ii) or (iii), or does not have the taxable gross income, taxable retirement income and taxable timber income prescribed in Article 314-3, paragraph (2), and receives the application of Article 33-2, paragraph (5) of the Supplementary Provisions, Article 33-3, paragraph (5) of the Supplementary Provisions, Article 34, paragraph (4) of the Supplementary Provisions, Article 35, paragraph (5) of the Supplementary Provisions, Article 35-2, paragraph (5) of the Supplementary Provisions, Article 35-2-2, paragraph (5) of the Supplementary Provisions or Article 35-4, paragraph (4) of the Supplementary Provisions with respect to the income of that person liable for tax for the previous year, the amount of special deduction prescribed in Article 314-7, paragraph (11) is, notwithstanding items (ii) and (iii) of that paragraph, the amount equivalent to three-fifths (four-fifths where that person liable for tax has an address within the area of a designated city) of the amount obtained by multiplying the portion exceeding 2,000 yen of the total amount of donations eligible for the special deduction prescribed in paragraph (2) of that Article that were paid by that person liable for tax in the previous year by the ratio provided in each of the following items according to the classification of cases listed in those items (the lowest of the ratios provided in those items, where two or more of the cases listed in those items apply) (where that ; provided, however, that where that equivalent amount exceeds the lower of the amount equivalent to 20 percent of the amount of the income levy of that person liable for tax when Article 314-3 and Article 314-6 are applied, the amount equivalent to that 20 percent) and 1,158,000 yen (1,544,000 yen where that person liable for tax has an address within the area of a designated city), it is that lower amount.

Where, with respect to an individual who opens a tax-exempt account prescribed in Article 37-14, paragraph (5), item (i) of the Act on Special Measures Concerning Taxation (hereinafter in this paragraph, Article 35-3-2 of the Supplementary Provisions and Article 35-3-3, paragraph (1) of the Supplementary Provisions referred to as a "tax-exempt account") and a specified taxable minor's account prescribed in Article 37-14, paragraph (5), item (ix) of that Act (hereinafter in this paragraph, Article 35-3-2 of the Supplementary Provisions and Article 35-3-3, paragraph (1) of the Supplementary Provisions referred to as a "specified taxable minor's account"), an event of non-performance of contract, etc. prescribed in Article 37-14, paragraph (6) of that Act (hereinafter in this paragraph, Article 35-3-2 of the Supplementary Provisions and Article 35-3-3, paragraph (1) of the Supplementary Provisions referred to as an "event of non-performance of contract, etc.") has occurred with respect to that tax-exempt account or specified taxable minor's account by December 31 of the year preceding the reference year of that individual prescribed in Article 37-14, paragraph (4), item (i) of that Act (referred to as the "reference year" in Article 35-3-2, paragraphs (3) and (8) of the Supplementary Provisions and Article 35-3-3, paragraph (1) of the Supplementary Provisions), and dividends and similar income on listed shares, etc. in a tax-exempt account (meaning dividends and similar income on listed shares, etc. in a tax-exempt account set out in Article 9-8, paragraph (1), item (iii) of that Act and prescribed in that paragraph) that were due to be received between the time of the opening of that tax-exempt account and the time of the occurrence of that event of non-performance of contract, etc. have been deemed to have been paid pursuant to Article 9-8, paragraph (2) of that Act, a prefecture is to impose the dividend levy of prefectural inhabitant tax on the amount of dividend income relating to those dividends and similar income on listed shares, etc. in a tax-exempt account.

With regard to the application of Article 23, paragraph (5), Article 24, paragraph (1), item (vi) and Article 71-31, paragraphs (1) and (2) in the case where the preceding paragraph applies, the phrase "Subsections 4 through 6, and Article 35-2-5" in Article 23, paragraph (5) is deemed to be replaced with "Subsections 4 through 6, Article 33-2-2, paragraph (1) of the Supplementary Provisions, and Article 35-2-5", and the phrase "the date on which" in Article 24, paragraph (1), item (vi) and Article 71-31, paragraphs (1) and (2) is deemed to be replaced with "January 1 of the year that includes the date on which".

Necessary matters concerning the application of the provisions of the preceding two paragraphs are specified by Cabinet Order.

Where, for an individual who has opened a minor's account prescribed in Article 37-14-2, paragraph (5), item (i) of the Act on Special Measures Concerning Taxation (hereinafter in this paragraph, Article 35-3-335-3-4 of the Supplementary Provisions and Article 35-3-435-3-5, paragraph (1) of the Supplementary Provisions referred to as a "minor's account"), an event of non-performance of contract, etc. prescribed in Article 37-14-2, paragraph (6) of the Act on Special Measures Concerning Taxation (hereinafter in this paragraph, Article 35-3-335-3-4, paragraphs (3) and (8) of the Supplementary Provisions and Article 35-3-435-3-5, paragraph (1) of the Supplementary Provisions referred to as an "event of non-performance of contract, etc.") has occurred, and dividends and similar income on listed shares, etc. in a minor's account (meaning dividends and similar income on listed shares, etc. in a minor's account prescribed in Article 9-9, paragraph (1) of the Act on Special Measures Concerning Taxation) that were due to be received between the time of the establishment of that minor's account and the time of the occurrence of that event of non-performance of contract, etc. have been deemed to have been paid pursuant to Article 9-9, paragraph (2) of the Act on Special Measures Concerning Taxation, a prefecture is to impose the dividend levy of prefectural inhabitant tax on the amount of dividend income relating to those dividends and similar income on listed shares, etc. in a minor's account.

With regard to the application of Article 23, paragraph (5), Article 24, paragraph (1), item (vi) and Article 71-31, paragraphs (1) and (2) in the case where the preceding paragraph applies, the phrase "Subsections 4 through 6, and Article 35-2-5" in Article 23, paragraph (5) is deemed to be replaced with "Subsections 4 through 6, Article 33-2-233-2-3, paragraph (1) of the Supplementary Provisions, and Article 35-2-5", and the phrase "the date on which" in Article 24, paragraph (1), item (vi) and Article 71-31, paragraphs (1) and (2) is deemed to be replaced with "January 1 of the year that includes the date on which".

Where a person liable for the income levy of prefectural inhabitant tax who holds listed shares, etc. prescribed in Article 37-11, paragraph (2) of the Act on Special Measures Concerning Taxation (referred to as "listed shares, etc." in paragraph (6), the following Article, Article 35-3-2 of the Supplementary Provisions and Article 35-3-335-3-4 of the Supplementary Provisions) receives delivery of an amount with respect to those listed shares, etc. that is deemed, pursuant to Article 4-4, paragraph (3), Article 37-11, paragraphs (3) and (4) and Article 37-14-4, paragraphs (1) and (2) of the Act on Special Measures Concerning Taxation, to be revenue relating to capital gains, etc. on listed shares, etc. prescribed in Article 4-4, paragraph (3), Article 37-11, paragraphs (3) and (4) and Article 37-14-4, paragraphs (1) and (2) of the Act on Special Measures Concerning Taxation for the purpose of applying the provisions of the Income Tax Act and Chapter II of the Act on Special Measures Concerning Taxation, that amount is deemed to be revenue relating to capital gains, etc. on listed shares, etc. prescribed in the preceding paragraph, and the provisions concerning prefectural inhabitant tax apply.

Where a person liable for the income levy of prefectural inhabitant tax has, in the previous year, made a transfer (meaning a transfer prescribed in Article 37-11-2, paragraph (2) of the Act on Special Measures Concerning Taxation; the same applies hereinafter in this paragraph, paragraph (6) and the following Article through Article 35-3 of the Supplementary Provisions) of specified managed shares, etc. that are recorded or registered in the transfer account book prescribed in Article 37-11-2, paragraph (1) of the Act on Special Measures Concerning Taxation (referred to as the "transfer account book" in paragraph (6) and paragraph (1) of the following Article) relating to a specified management account prescribed in that paragraph (where the person has two or more specified management accounts, each specified management account; hereinafter in this paragraph and paragraph (6) referred to as the "specified management account"), or that have been entrusted for custody to the specified management account, the person is to calculate, as provided for by Cabinet Order, the amount of business income, amount of capital gains or amount of miscellaneous income arising from the transfer of those specified managed shares, etc., separately from the amount of business income, amount of capital gains or amount of miscellaneous income arising from the transfer of shares, etc. prescribed in Article 37-10, paragraph (2) of the Act on Special Measures Concerning Taxation other than those specified managed shares, etc. (referred to as "shares, etc." in paragraph (6), the following Article, Article 35-3-2 of the Supplementary Provisions and Article 35-3-335-3-4 of the Supplementary Provisions).

Where a person liable for the income levy of prefectural inhabitant tax has, in the previous year, made, under a contract for managing tax-exempt listed shares, etc. prescribed in Article 37-14, paragraph (5), item (ii) of the Act on Special Measures Concerning Taxation (hereinafter in this Article referred to as "contract for managing tax-exempt listed shares, etc."), a tax-exempt cumulative investment contract prescribed in item (iv) of that paragraph (hereinafter in this Article referred to as "tax-exempt cumulative investment contract") or a specified tax-exempt cumulative investment contract prescribed in item (vi) of that paragraph (hereinafter in this Article referred to as "specified tax-exempt cumulative investment contract"), a transfer of listed shares, etc. in a tax-exempt account prescribed in paragraph (1) of that Article (hereinafter in this Article referred to as "listed shares, etc. in a tax-exempt account") (where the person has two or more tax-exempt accounts prescribed in paragraph (5), item (i) of that Article (hereinafter in this Article referred to as "tax-exempt account"), , the listed shares, etc. in a tax-exempt account relating to each tax-exempt account; the same applies hereinafter in this paragraph and paragraph (4)(6)), the person is to calculate, as provided for by Cabinet Order, the amount of business income, amount of capital gains or amount of miscellaneous income arising from the transfer of those listed shares, etc. in a tax-exempt account, separately from the amount of business income, amount of capital gains or amount of miscellaneous income arising from the transfer of listed shares, etc. other than those listed shares, etc. in a tax-exempt account.

Where, by reason of a cause set out in the items of Article 37-14, paragraph (4) of the Act on Special Measures Concerning Taxation, part or all of the listed shares, etc. in a tax-exempt account has been withdrawn (including withdrawal by book transfer; the same applies hereinafter in this paragraph and paragraph (5)Article) from a tax-exempt management account prescribed in Article 37-14, paragraph (5), item (iii) of that Act (hereinafter in this paragraph and paragraph (5)(7) referred to as "tax-exempt management account"), a cumulative investment account prescribed in item (v) of that paragraph (hereinafter in this paragraph and paragraph (5)(7) referred to as "cumulative investment account"), a specified cumulative investment account prescribed in item (vii) of that paragraph (hereinafter in this paragraph and paragraph (5)(7) referred to as "specified cumulative investment account") or a specified tax-exempt management account prescribed in item (viii) of that paragraph (hereinafter in this paragraph and paragraph (5)(7) referred to as "specified tax-exempt management account"), the listed shares, etc. in a tax-exempt account that have been withdrawn are deemed to have been transferred under a contract for managing tax-exempt listed shares, etc., a tax-exempt cumulative investment contract or a specified tax-exempt cumulative investment contract, at the time the cause arose, for the amount specified by Cabinet Order as the value at that time (hereinafter in this paragraph and paragraph (5)Article referred to as the "amount at the time of withdrawal"), a person liable for the income levy of prefectural inhabitant tax who has opened, or had opened, a tax-exempt account in which there is established the tax-exempt management account, cumulative investment account, specified cumulative investment account or specified tax-exempt management account from which listed shares, etc. in a tax-exempt account were withdrawn through the transfer of custody, return or closing set out in Article 37-14, paragraph (4), item (i) of that Act is deemed to have acquired, at the time of the withdrawal through that transfer of custody, return or closing, shares, etc. of the same class as those listed shares, etc. in a tax-exempt account, in a number equal to the number of those listed shares, etc. in a tax-exempt account withdrawn through that transfer of custody, return or closing, for the amount at the time of withdrawal, and a person liable for the income levy of prefectural inhabitant tax who has acquired listed shares, etc. in a tax-exempt account withdrawn through the gift, inheritance or bequest set out in item (ii) of that paragraph is deemed to have acquired, at the time of that gift, inheritance or bequest, shares, etc. of the same class as those listed shares, etc. in a tax-exempt account, for the amount at the time of withdrawal, respectively, and the provisions concerning prefectural inhabitant tax, including those of the preceding paragraph and Article 35-2, paragraphs (1) through (4) of the Supplementary Provisions, apply.

Where, by December 31 of the year preceding the reference year of a person liable for the income levy of prefectural inhabitant tax who opens a tax-exempt account and a specified taxable minor's account, an event of non-performance of contract, etc. has occurred with respect to that tax-exempt account or specified taxable minor's account, the provisions concerning prefectural inhabitant tax apply as provided for in the following. In this case, the amount of business income, amount of capital gains and amount of miscellaneous income arising from the transfer of listed shares, etc. in a tax-exempt account under the provisions of items (i) through (iii) are to be calculated, as provided for by Cabinet Order, separately from the amount of business income, amount of capital gains and amount of miscellaneous income arising from the transfer of shares, etc. other than those listed shares, etc. in a tax-exempt account:

with regard to business income, capital gains or miscellaneous income arising from a transfer of listed shares, etc. in a tax-exempt account made between the time the tax-exempt account concerned was opened and the time the event of non-performance of contract, etc. arose, a transfer other than a transfer made in accordance with the method specified in the specified tax-exempt cumulative investment contract for those listed shares, etc. in a tax-exempt account is deemed to have been made at the time the event of non-performance of contract, etc. arose;

with regard to listed shares, etc. in a tax-exempt account that have, between the time the tax-exempt account concerned was opened and the time the event of non-performance of contract, etc. arose, been transferred in custody to another custody account prescribed in Article 37-14, paragraph (4), item (i) of the Act on Special Measures Concerning Taxation (referred to as "other custody account" in paragraph (8)), or in respect of which the securities relating to listed shares, etc. in a tax-exempt account have been returned to that person liable for the income levy of prefectural inhabitant tax (excluding a transfer of custody or return by a cause specified by Cabinet Order prescribed in Article 37-14, paragraph (5), item (vi), (e), (1), (i) of that Act; the same applies hereinafter in this item and item (iv)), the provisions of the preceding paragraph are deemed not to have applied, and a transfer other than a transfer made in accordance with the method specified in the specified tax-exempt cumulative investment contract is deemed to have been made at the time the event of non-performance of contract, etc. arose, for the amount at the time of withdrawal as of the time of that transfer of custody or return;

the listed shares, etc. in a tax-exempt account that gave rise to an event of non-performance of contract, etc. and the listed shares, etc. in a tax-exempt account pertaining to the tax-exempt account at the time the event of non-performance of contract, etc. occurred are deemed to have been transferred, at the time the event of non-performance of contract, etc. occurred, by a transfer other than a transfer made in accordance with the method specified in the specified tax-exempt cumulative investment contract, for the amount at the time of withdrawal as of that time;

a person liable for the income levy of prefectural inhabitant tax who had opened the tax-exempt account concerned and to whom the provisions of item (ii) apply is deemed to have acquired, at the time of the transfer of custody or return under that item, shares, etc. of the same class as the listed shares, etc. in a tax-exempt account, in a number equal to the number of those listed shares, etc. in a tax-exempt account withdrawn through that transfer of custody or return, for the amount at the time of withdrawal as of that time;

a person liable for the income levy of prefectural inhabitant tax who had opened the tax-exempt account concerned and to whom the provisions of item (iii) apply is deemed to have acquired, at the time the event of non-performance of contract, etc. arose, shares, etc. of the same class as the listed shares, etc. in a tax-exempt account referred to in that item (excluding those that have been transferred or gifted as prescribed in Article 37-14, paragraph (5), item (vi), (e), (2) of the Act on Special Measures Concerning Taxation), in a number equal to the number of those listed shares, etc. in a tax-exempt account, for the amount at the time of withdrawal as of that time, and a person who has acquired the listed shares, etc. in a tax-exempt account referred to in item (iii) by gift is deemed to have acquired, at the time the event of non-performance of contract, etc. arose, shares, etc. of the same class as those listed shares, etc. in a tax-exempt account, for the amount at the time of withdrawal as of that time, respectively.

In the case of the preceding paragraph, where the revenue relating to the listed shares, etc. in a tax-exempt account that are deemed to have been transferred pursuant to the provisions of items (i) through (iii) of that paragraph is less than the total of the acquisition cost of those listed shares, etc. in a tax-exempt account calculated in accordance with the rules of Article 33, paragraph (3) of the Income Tax Act and the amount of expenses required for their transfer, or less than the necessary expenses relating to their transfer, the shortfall is deemed not to exist for the purpose of applying the provisions of laws and regulations concerning prefectural inhabitant tax.

Necessary matters concerning the application of the provisions of the preceding two paragraphs are specified by Cabinet Order.

Where, by December 31 of the year preceding the reference year of a person liable for the income levy of municipal inhabitant tax who opens a tax-exempt account and a specified taxable minor's account, an event of non-performance of contract, etc. has occurred with respect to that tax-exempt account or specified taxable minor's account, the provisions concerning municipal inhabitant tax apply as provided for in the following. In this case, the amount of business income, amount of capital gains and amount of miscellaneous income arising from the transfer of listed shares, etc. in a tax-exempt account under the provisions of items (i) through (iii) are to be calculated, as provided for by Cabinet Order, separately from the amount of business income, amount of capital gains and amount of miscellaneous income arising from the transfer of shares, etc. other than those listed shares, etc. in a tax-exempt account:

with regard to business income, capital gains or miscellaneous income arising from a transfer of listed shares, etc. in a tax-exempt account made between the time the tax-exempt account concerned was opened and the time the event of non-performance of contract, etc. arose, a transfer other than a transfer made in accordance with the method specified in the specified tax-exempt cumulative investment contract for those listed shares, etc. in a tax-exempt account is deemed to have been made at the time the event of non-performance of contract, etc. arose;

with regard to listed shares, etc. in a tax-exempt account that have, between the time the tax-exempt account concerned was opened and the time the event of non-performance of contract, etc. arose, been transferred in custody to another custody account prescribed in Article 37-14, paragraph (4), item (i) of the Act on Special Measures Concerning Taxation (referred to as "other custody account" in paragraph (8)), or in respect of which the securities relating to listed shares, etc. in a tax-exempt account have been returned to that person liable for the income levy of municipal inhabitant tax (excluding a transfer of custody or return by a cause specified by Cabinet Order prescribed in Article 37-14, paragraph (5), item (vi), (e), (1), (i) of that Act; the same applies hereinafter in this item and item (iv)), the provisions of the preceding paragraph are deemed not to have applied, and a transfer other than a transfer made in accordance with the method specified in the specified tax-exempt cumulative investment contract is deemed to have been made at the time the event of non-performance of contract, etc. arose, for the amount at the time of withdrawal as of the time of that transfer of custody or return;

the listed shares, etc. in a tax-exempt account that gave rise to an event of non-performance of contract, etc. and the listed shares, etc. in a tax-exempt account pertaining to the tax-exempt account at the time the event of non-performance of contract, etc. occurred are deemed to have been transferred, at the time the event of non-performance of contract, etc. occurred, by a transfer other than a transfer made in accordance with the method specified in the specified tax-exempt cumulative investment contract, for the amount at the time of withdrawal as of that time;

a person liable for the income levy of municipal inhabitant tax who had opened the tax-exempt account concerned and to whom the provisions of item (ii) apply is deemed to have acquired, at the time of the transfer of custody or return under that item, shares, etc. of the same class as the listed shares, etc. in a tax-exempt account, in a number equal to the number of those listed shares, etc. in a tax-exempt account withdrawn through that transfer of custody or return, for the amount at the time of withdrawal as of that time;

a person liable for the income levy of municipal inhabitant tax who had opened the tax-exempt account concerned and to whom the provisions of item (iii) apply is deemed to have acquired, at the time the event of non-performance of contract, etc. arose, shares, etc. of the same class as the listed shares, etc. in a tax-exempt account referred to in that item (excluding those that have been transferred or gifted as prescribed in Article 37-14, paragraph (5), item (vi), (e), (2) of the Act on Special Measures Concerning Taxation), in a number equal to the number of those listed shares, etc. in a tax-exempt account, for the amount at the time of withdrawal as of that time, and a person who has acquired the listed shares, etc. in a tax-exempt account referred to in item (iii) by gift is deemed to have acquired, at the time the event of non-performance of contract, etc. arose, shares, etc. of the same class as those listed shares, etc. in a tax-exempt account, for the amount at the time of withdrawal as of that time, respectively.

In the case of the preceding paragraph, where the revenue relating to the listed shares, etc. in a tax-exempt account that are deemed to have been transferred pursuant to the provisions of items (i) through (iii) of that paragraph is less than the total of the acquisition cost of those listed shares, etc. in a tax-exempt account calculated in accordance with the rules of Article 33, paragraph (3) of the Income Tax Act and the amount of expenses required for their transfer, or less than the necessary expenses relating to their transfer, the shortfall is deemed not to exist for the purpose of applying the provisions of laws and regulations concerning municipal inhabitant tax.

Necessary matters concerning the application of the provisions of the preceding two paragraphsparagraph (6) through the preceding paragraph are specified by Cabinet Order.

Where, with respect to an individual who opens a tax-exempt account and a specified taxable minor's account, an event of non-performance of contract, etc. has occurred with respect to that tax-exempt account or specified taxable minor's account by December 31 of the year preceding the reference year of that individual, and Article 37-14, paragraph (8) of the Act on Special Measures Concerning Taxation has applied, a prefecture is to impose the share transfer income levy of prefectural inhabitant tax on the amount obtained by deducting the amount set out in item (ii) of that paragraph from the amount set out in item (i) of that paragraph, deeming it to be the amount of capital gains from specified shares, etc. prescribed in Article 71-48, paragraph (1).

With regard to the application of the provisions of Article 24, paragraph (1), item (vii) and Article 71-51, paragraphs (1) and (2) where the provisions of the preceding paragraph apply, the phrase "an individual who receives payment of consideration, etc. for the transfer of specified shares, etc. and who has a domicile in the prefecture as of January 1 of the year that includes the date on which the payment of that consideration, etc. for the transfer of specified shares, etc. is to be received" in that item is deemed to be replaced with "an individual who opens a tax-exempt account prescribed in Article 37-14, paragraph (5), item (i) of the Act on Special Measures Concerning Taxation (hereinafter in this item and Article 71-51, paragraph (1) referred to as "tax-exempt account") and a specified taxable minor's account prescribed in Article 37-14, paragraph (5), item (ix) of that Act and who has a domicile in the prefecture as of January 1 of the year that includes the date of the closure of that tax-exempt account due to the occurrence of an event of non-performance of contract, etc. prescribed in Article 37-14, paragraph (6) of that Act (referred to as "closure of a tax-exempt account" in Article 71-51, paragraphs (1) and (2))", the phrase "a financial instruments business operator, etc. prescribed in Article 37-11-3, paragraph (3), item (i) of the Act on Special Measures Concerning Taxation with which a withholding-option account has been opened, and which pays consideration, etc. for the transfer of specified shares, etc. to an individual who has a domicile in the prefecture as of January 1 of the year that includes the day on which the individual is to receive payment of that consideration, etc. for the transfer of specified shares, etc." in Article 71-51, paragraph (1) is deemed to be replaced with "a financial instruments business operator, etc. prescribed in Article 37-14, paragraph (1) of the Act on Special Measures Concerning Taxation with which the tax-exempt account of an individual who has a domicile in the prefecture as of January 1 of the year that includes the date of the closure of a tax-exempt account has been opened", the phrase "when paying consideration, etc. for the transfer of specified shares, etc." in paragraph (2) of that Article is deemed to be replaced with "upon the closure of a tax-exempt account", the phrase "January 10 of the year following the year that includes the date of that collection (or, in a case specified by Cabinet Order, the date specified by Cabinet Order)" in that paragraph is deemed to be replaced with "the 10th day of the month following the month that includes the date of that collection", and the phrase "the individual receiving payment of that consideration, etc. for the transfer of specified shares, etc. had his or her domicile as of January 1 of the year that includes the day on which that individual is to receive payment of that consideration, etc." in that paragraph is deemed to be replaced with "the individual had his or her domicile as of January 1 of the year that includes the date of the closure of a tax-exempt account".

With regard to the application of the provisions of Article 23, paragraph (5) where the provisions of the preceding two paragraphs apply, the phrase "Subsections 4 through 6, and" in Article 23, paragraph (5) is deemed to be replaced with "Subsections 4 through 6,", and the phrase "through (4)" in Article 23, paragraph (5) is deemed to be replaced with "through (4) of the Supplementary Provisions, Article 35-3-3, paragraph (1) of the Supplementary Provisions and Article 24, paragraph (1), item (vii) as applied with terms replaced pursuant to Article 35-3-3, paragraph (2)".

The necessary particulars concerning the application of the provisions of the preceding three paragraphs are specified by Cabinet Order.

With regard to the application of the provisions of Article 23, paragraph (5) where the provisions of the preceding two paragraphs apply, the phrase "Subsections 4 through 6, and" in Article 23, paragraph (5) is deemed to be replaced with "Subsections 4 through 6,", and the phrase "through (4)" in Article 23, paragraph (5) is deemed to be replaced with "through (4) of the Supplementary Provisions, Article 35-3-435-3-5, paragraph (1) of the Supplementary Provisions and Article 24, paragraph (1), item (vii) as applied with terms replaced pursuant to Article 35-3-435-3-5, paragraph (2)".