Article 65Penalty Tax for Understatement

①Where a return filed by the due date (including a return of refund claim; the same applies in paragraph (3)) has been filed (including where a return filed after the due date has been filed and the proviso to paragraph (1) or paragraph (9) of the following Article applies), if an amended return has been filed or a reassessment has been made, penalty tax for understatement is imposed on the taxpayer in an amount equivalent to the amount calculated by multiplying the tax amount payable under the provisions of Article 35, paragraph (2) (Payment of National Tax using the Self-Assessment System) based on the amended return or reassessment by 10% (or by 5% if the amended return was not filed in anticipation that a reassessment would be made of the national tax pertaining to the return because an examination had been conducted with regard to that national tax).

②In the case falling under the provisions of the preceding paragraph (excluding where the provisions of paragraph (6) apply), if the payable tax amount prescribed in the preceding paragraph (if, before the amended return or reassessment referred to in that paragraph, an amended return had been filed or a reassessment had been made of the national tax to which that amended return or reassessment pertains, the amount obtained by adding the cumulative increased tax amount for that national tax) exceeds the amount equivalent to the tax amount on the return filed by the due date for that national tax or 500,000 yen, whichever is greater, the amount of penalty tax for understatement referred to in that paragraph is, notwithstanding the provisions of that paragraph, to be the amount obtained by adding, to the amount calculated under the provisions of that paragraph, the amount calculated by multiplying the tax amount equivalent to the excess portion (if the payable tax amount prescribed in that paragraph is less than the tax amount equivalent to that excess portion, that payable tax amount) by 5%.

④In the case falling under the provisions of paragraph (1), if, before the amended return was filed or the reassessment was made (hereinafter referred to as an "amended return, etc." in this paragraph) with regard to matters to be entered or recorded in the books (limited to those specified by Ministry of Finance Order, and including, where an electronic or magnetic record has been prepared or retained in lieu of the preparation or retention of the books, that electronic or magnetic record; the same applies hereinafter in this paragraph and in paragraph (5) of the following Article), the taxpayer was requested by the relevant official of the National Tax Agency, a Regional Taxation Bureau or a tax office (hereinafter referred to as the "relevant official" in this paragraph and in paragraph (5) of that Article) to present or submit those books, and the case falls under any of the following cases (excluding where the taxpayer is not responsible), the amount of penalty tax for understatement referred to in paragraph (1) is, notwithstanding the provisions of that paragraph and paragraph (2), to be the amount obtained by adding, to the amount calculated under those provisions, the amount calculated by multiplying the payable tax amount prescribed in paragraph (1) (if there are facts that are to form the basis for the calculation of that tax amount other than those relating to matters to be entered or recorded in the books that are the cause of the amended return, etc. (hereinafter referred to as "facts other than those relating to matters to be recorded in the books" in this paragraph), the tax amount obtained by deducting the amount calculated, as provided for by Cabinet Order, as the tax amount based on the facts other than those relating to matters to be recorded in the books) by 10% (or by 5% if the case falls under the case listed in item (ii)):

⑤In the cases listed in the following items, the provisions of paragraph (1) or (2) apply with the amount calculated, as provided for by Cabinet Order, as the tax amount specified in the relevant item being deducted from the payable tax amount prescribed in those paragraphs:

⑥The provisions of paragraph (1) do not apply where the filing of an amended return was not made in anticipation that a reassessment would be made of the national tax pertaining to the return because an examination had been conducted with regard to that national tax, and was made before notification of the matters listed in Article 74-9, paragraph (1), items (iv) and (v) (Advance Notice of Examination to Persons with Tax Liability, etc.) and other matters specified by Cabinet Order with regard to the examination concerning the national tax pertaining to the return (referred to as "examination notification" in paragraph (6), item (ii) and paragraph (8) of the following Article).