Local Tax Act

Where a person liable for the income levy has paid, in the previous year, the donations listed below and the total amount of those donations (or, where that total exceeds the amount equivalent to 30 percent of the total of the gross income, the amount of retirement income and the amount of timber income for the previous year, the amount equivalent to that 30 percent) exceeds 2,000 yen, a municipality is to deduct the amount equivalent to six percent (or eight percent, where that person liable for tax has a domicile within the area of a designated city) of the excess amount (or, where that person liable for tax has paid donations eligible for the special deduction in the previous year and the total amount of those donations eligible for the special deduction exceeds 2,000 yen, the amount obtained by adding the amount of special deduction to the amount equivalent to that six percent (or eight percent, where that person liable for tax has a domicile within the area of a designated city); 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 the preceding Article are applied. In this case, where the amount of deduction exceeds the amount of the income levy, the amount of deduction is to be the amount equivalent to the amount of the income levy.

a donation to a prefecture, municipality or special ward (referred to as "prefecture, etc." in this Article) (excluding one found to confer a special benefit on that person liable for tax, such as the exclusive use by that person of facilities established by the donation);

a donation to a community chest prescribed in Article 113, paragraph (2) of the Social Welfare Act (limited to one whose principal office is located in the prefecture of the domicile of that person liable for tax as of the assessment date relating to that person liable for tax) or a donation to the Japanese Red Cross Society (limited to one received by a branch of the Japanese Red Cross Society that has an office in the prefecture of the domicile of that person liable for tax as of the assessment date relating to that person liable for tax), that is specified by Cabinet Order;

Of the donations listed in Article 78, paragraph (2), items (ii) through (iv) of the Income Tax Act and the donations related to specified non-profit activities prescribed in Article 41-18-2, paragraph (2) of the Act on Special Measures Concerning Taxation (excluding the donations listed in the following item), those specified by Municipal Ordinance of the municipality as donations contributing to the promotion of the welfare of residents;

of the donations to a specified non-profit corporation prescribed in Article 2, paragraph (2) of the Act on Promotion of Specified Non-profit Activities (referred to as a "specified non-profit corporation" in this item and paragraph (12)) that relate to the business concerning specified non-profit activities prescribed in paragraph (1) of that Article conducted by that specified non-profit corporation, those specified by a Municipal Ordinance of the municipality concerned as donations that contribute to the improvement of the welfare of residents (excluding those found to confer a special benefit on that person liable for tax).

The "donation eligible for the special deduction" in the preceding paragraph means a donation listed in item (i) of that paragraph (referred to as an "item 1 donation" in this Article) that is made to a prefecture, etc. designated by the Minister for Internal Affairs and Communications as found to conform to the standards listed in items (i), (ii), (v) and (vi) (or the standards listed below, where the prefecture, etc. provides return gifts, etc. (meaning goods, services and the like that the prefecture, etc. provides, upon receipt of an item 1 donation, to the person who paid that item 1 donation, as specified by the Minister for Internal Affairs and Communications; the same applies in items (iii) and (iv))) throughout the period specified by Order of the Ministry of Internal Affairs and Communications as the period subject to designation under this paragraph (referred to as "designation" in this Article) (referred to as the "designation period" in item (ii), (a) and item (v)).

it conforms to the standards specified by the Minister for Internal Affairs and Communications as the standards for the appropriate conduct of solicitation of item 1 donations by prefectures, etc.;

it conforms to the following standards and other standards specified by the Minister for Internal Affairs and Communications as the standards for the use of item 1 donations by prefectures, etc.:

the amount obtained by deducting, from the total amount of item 1 donations received by the prefecture, etc. in the designation period, the amount calculated as provided by the Minister for Internal Affairs and Communications as the amount of the expenses required for soliciting item 1 donations in that designation period (referred to as the "usable donation amount" in (b)) is equal to or more than the amount equivalent to 60 percent of the total amount of item 1 donations received in that designation period;

it makes public the matters concerning the use of the usable donation amount, as provided by the Minister for Internal Affairs and Communications.

the amount calculated as provided by the Minister for Internal Affairs and Communications as the amount of expenses required to procure the return gifts, etc. that the prefecture, etc. provides upon receipt of each individual item 1 donation is, in every case, equal to or less than the amount equivalent to 30 percent of the amount of that item 1 donation received by that prefecture, etc.;

the return gifts, etc. provided by the prefecture, etc. are goods produced within, or services provided within, the area of that prefecture, etc., or the like, and conform to the standards specified by the Minister for Internal Affairs and Communications;

there is no fact that the prefecture, etc. failed to conform to those of the standards listed in the preceding items to which it was required to conform within four years before the first day of the designation period (limited to the period during which that prefecture, etc. had been designated; referred to as the "specified period" in the following item) (excluding the case where it has already received revocation of designation under paragraph (5) (referred to as "revocation of designation" in this Article) on the basis of that fact);

there is no fact that the prefecture, etc. failed to report, or made a false report, in response to a request for a report made under paragraph (4) during the specified period (excluding the case where it has already received revocation of designation on the basis of those facts).

A prefecture, etc. seeking designation must, as provided by Order of the Ministry of Internal Affairs and Communications, submit to the Minister for Internal Affairs and Communications a written request stating the matters specified by Order of the Ministry of Internal Affairs and Communications concerning conformity to the standards prescribed in the preceding paragraph, together with other documents specified by Order of the Ministry of Internal Affairs and Communications.

The Minister for Internal Affairs and Communications may request a prefecture, etc. that has been designated to report on the status of implementation of solicitation of item 1 donations and other necessary matters.

The Minister for Internal Affairs and Communications may revoke the designation where the Minister finds that a prefecture, etc. that has been designated has ceased to conform, or had not conformed, to any of the standards prescribed in paragraph (2), or where it has failed to make the report under the preceding paragraph or has made a false report.

When revoking a designation under the preceding paragraph, the Minister for Internal Affairs and Communications must make a decision, in respect of the prefecture, etc. subject to the revocation of designation, not to grant designation for a period fixed within three years. In this case, the prefecture, etc. subject to revocation of designation may not receive designation until that period has elapsed, counting from the date of revocation of designation.

When the Minister for Internal Affairs and Communications has granted a designation or revoked a designation, the Minister must give public notice to that effect without delay.

The Minister for Internal Affairs and Communications must hear the opinion of the Local Finance Council regarding the establishment, change or abolition of the standards prescribed in paragraph (2) or of the stipulations under that paragraph, designation or revocation of designation, and the decision prescribed in paragraph (6).

In the case of paragraph (1), whether a donation is a donation eligible for the special deduction prescribed in paragraph (2) (referred to as a "donation eligible for the special deduction" in paragraph (11)) is determined by whether the prefecture, etc. that received the item 1 donation was designated at the time when the person liable for the income levy paid the item 1 donation.

In addition to what is prescribed in paragraphs (2) through (8), matters necessary for designation and revocation of designation are specified by Cabinet Order.

The amount of special deduction in paragraph (1) is the amount equivalent to three-fifths (or four-fifths, where that person liable for tax has a domicile 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 paid in the previous year by the person liable for the income levy under that paragraph by the ratio provided in the following items according to the classification of cases listed in those items; 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 the preceding Article are applied and 1,158,000 yen (or 1,544,000 yen, where that person liable for tax has a domicile within the area of a designated city), the amount is that lower amount.

where that person liable for tax has taxable gross income and the amount obtained by deducting the adjustment for differences in personal deductions relating to that person liable for tax from that taxable gross income is less than zero, and that person liable for tax has neither the taxable timber income prescribed in Article 314-3, paragraph (2) (referred to as "taxable timber income" in the following item) nor the taxable retirement income prescribed in that paragraph (referred to as "taxable retirement income" in that item): 90 percent;

where, in the case where that person liable for tax has taxable gross income, the amount obtained by deducting the adjustment for differences in personal deductions relating to that person liable for tax from that taxable gross income is less than zero, or in the case where that person liable for tax does not have taxable gross income, that person liable for tax has taxable timber income or taxable retirement income: the ratio specified respectively in (a) or (b) according to the classification of cases listed in (a) or (b) (the lower of the ratios specified in (a) and (b), where the person falls under both of the cases listed in (a) and (b)).

where the person has taxable timber income: for the amount equivalent to one-fifth of that taxable timber income, the ratio listed in the right-hand column of the table in item (i) according to the classification of amounts listed in the left-hand column of that table;

where the person has taxable retirement income: for that taxable retirement income, the ratio listed in the right-hand column of the table in item (i) according to the classification of amounts listed in the left-hand column of that table.

The stipulation of a Municipal Ordinance under paragraph (1), item (iv) is to be made where there has been a request from the specified non-profit corporation that receives the donation (referred to as a "deduction-eligible specified non-profit corporation" in this Article) and it is found appropriate, and that Municipal Ordinance must make clear the name and the location of the principal office of that deduction-eligible specified non-profit corporation.

A deduction-eligible specified non-profit corporation must, as provided by Order of the Ministry of Internal Affairs and Communications, keep and preserve a donor register (meaning a document stating, for each payer of the donations received by that corporation in each business year, the name or appellation of the payer, the payer's address or the location of the payer's office, the amount of the donation and the date of receipt; the same applies in the following paragraph).

When the mayor of the municipality finds it necessary for calculating the amount to be deducted under paragraph (1) (limited to the portion relating to the donations listed in item (iv)), the mayor may have a deduction-eligible specified non-profit corporation make a report on its receipt of the donations listed in that item, or submit a donor register or other materials.