Local Tax Act

A trustee of a trust subject to corporate taxation is deemed to be a separate person for each of the trust assets and liabilities of each trust subject to corporate taxation (meaning the assets and liabilities belonging to the trust property and the income and expenses attributable to that trust property; the same applies hereinafter in this paragraph through paragraph (3)) and the personal assets and other holdings (meaning the assets and liabilities and the income and expenses other than the trust assets and liabilities of trusts subject to corporate taxation; the same applies in the following paragraph and paragraph (7)), and the provisions of this Section (excluding the preceding Article, the following Article, Article 72-3, Article 72-4, paragraph (1), Article 72-8 through Article 72-11, Article 72-37, Article 72-38, Article 72-49, Article 72-49-3, Article 72-49-10, Article 72-56, Article 72-57, Article 72-60, Article 72-64 and Subsection 4; the same applies in paragraphs (3) through (5), (7) and (8)) apply.

In a case as referred to in the preceding paragraph, the trust assets and liabilities of each trust subject to corporate taxation and the personal assets and other holdings of the trustee are separately attributed to each of the persons deemed to be different from one another pursuant to the provisions of that paragraph.

The provisions of Article 4-3 of the Corporation Tax Act apply mutatis mutandis where the provisions of the preceding two paragraphs are applied in this Section with respect to a trustee corporation (meaning, with respect to a corporation that is the trustee of a trust subject to corporate taxation (or, where that trustee is an individual, that individual), the corporation that is that trustee in the case where the provisions of this Section are applied, pursuant to the preceding two paragraphs, to it as the person to whom the trust assets and liabilities relating to that trust subject to corporate taxation belong; the same applies hereinafter in this Section) or a beneficiary of a trust subject to corporate taxation.

The provisions of Article 4-4 and Article 152, paragraph (3) of the Corporation Tax Act apply mutatis mutandis where the provisions of paragraphs (1) and (2) are applied in the provisions of this Section concerning enterprise tax on business conducted by corporations.

The provisions of Article 6-3 of the Income Tax Act apply mutatis mutandis where the provisions of paragraphs (1) and (2) are applied in the provisions of this Section concerning enterprise tax on business conducted by individuals.

A prefecture may not impose the value-added levy or the capital levy on a corporation that is listed in paragraph (1), item (i), (a) or item (iii), (a) of the preceding Article and is a trustee corporation.

A prefecture may not impose enterprise tax on business conducted by individuals on a deemed taxable corporation that is a trustee corporation, or enterprise tax on business conducted by corporations on a deemed taxable corporation that is a trustee corporation in its own capacity (meaning, with respect to a corporation that is the trustee of a trust subject to corporate taxation (or, where that trustee is an individual, that individual), the corporation that is that trustee in the case where the provisions of this Section are applied, pursuant to paragraphs (1) and (2), to it as the person to whom the personal assets and other holdings relating to that trust subject to corporate taxation belong; the same applies hereinafter in this Section).

In addition to what is provided for in the preceding paragraphs, matters necessary for the application of the provisions of this Section to the trustee or beneficiary of a trust subject to corporate taxation are specified by Cabinet Order.

Where the person to whom profits arising from assets or business are deemed legally to belong is a mere nominal holder and does not enjoy those profits, and a person other than that person enjoys those profits, enterprise tax on those profits is to be imposed on the person who enjoys them.

The provisions of this Section apply by deeming a beneficiary of a trust (limited to one who actually holds rights as a beneficiary) to hold the assets and liabilities belonging to the trust property of that trust, and by deeming the profits and expenses attributable to that trust property to be the profits and expenses of that beneficiary; provided, however, that this does not apply to the assets and liabilities belonging to the trust property of a group investment trust (meaning a group investment trust prescribed in Article 2, item (xxix) of the Corporation Tax Act; the same applies in paragraph (3)), a retirement pension trust, etc. (meaning a retirement pension trust, etc. prescribed in Article 12, paragraph (4), item (i) of that Act; the same applies in paragraph (3)), a public interest trust, etc. (meaning a public interest trust, etc. prescribed in Article 12, paragraph (4), item (ii) of that Act; the same applies in paragraph (3)) or a trust subject to corporate taxation, or to the profits and expenses attributable to that trust property.

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.

The assets and liabilities belonging to the trust property of a group investment trust, retirement pension trust, etc. or public interest trust, etc. for which a corporation is the trustee, and the profits and expenses attributable to that trust property, are deemed not to be the assets and liabilities and the profits and expenses of that corporation in calculating the amount of income of each business year of that corporation, and the provisions of this Section apply accordingly.

Matters necessary for the application of the provisions of paragraph (1) where there are two or more beneficiaries, for determining whether a person falls under a person who is to receive the benefit of the trust property prescribed in paragraph (2), and otherwise for the application of the provisions of the preceding three paragraphs, are specified by Cabinet Order.

A prefecture may not impose enterprise tax on the business conducted by the State or by any of the following corporations:

prefectures, municipalities, special wards, associations thereof, special merger districts, and other public bodies specified by Cabinet Order;

local incorporated administrative agencies;

incorporated administrative agencies prescribed in Appended Table I of the Corporation Tax Act;

national university corporations, etc. and the Japan Legal Support Center;

Okinawa Development Finance Corporation, Japan Bank for International Cooperation, Japan Finance Corporation, Japan Pension Service, Local Housing Corporations, Local Road Public Corporations, public land development corporations, Japan Finance Organization for Municipalities, Japan Agency for Local Authority Information Systems, Local Tax Joint Organization, Fukushima Institute for Research, Education and Innovation, and Japan Institute for Health Security;

Medical Information Infrastructure and Medical Fee Review and Payment Organization, Japan Broadcasting Corporation, Japan Racing Association, and Japan Sewage Works Agency.

A prefecture may not impose enterprise tax on any of the following businesses:

forestry;

mineral extraction business.

A prefecture may not impose enterprise tax on agriculture conducted by an agricultural producers' cooperative corporation (in the case of one whose members include persons other than those listed in Article 72-13, paragraph (1), item (i) of the Agricultural Co-operatives Act, limited to those specified by Cabinet Order) that satisfies all of the requirements listed in the items of Article 2, paragraph (3) of the Cropland Act (Act No. 229 of 1952).