Act on Special Measures Concerning Taxation

Where a resident receives delivery of dividends of surplus pertaining to distributions of proceeds from the beneficial rights listed in the items of paragraph (1) of the preceding Article issued outside Japan which the resident is to receive on or after January 1, 2016 (limited to those paid outside Japan; hereinafter referred to in this Article as "dividends and similar income on foreign privately placed bond-based investment trusts, etc.") through a person in charge of handling payment in Japan that is specified by Cabinet Order (hereinafter referred to in this Article as the "person in charge of handling payment"), notwithstanding the provisions of Article 22 and Article 89 of the Income Tax Act, income tax is imposed on the dividends and similar income on foreign privately placed bond-based investment trusts, etc. to be received by applying a tax rate of 15 percent to the amount to be received, separately from other income.

Where a domestic corporation (excluding a domestic corporation listed in Appended Table 1 of the Income Tax Act; hereinafter the same applies in this Article) receives delivery, through a person in charge of handling payment in Japan, of dividends and similar income prescribed in Article 24, paragraph (1) of that Act pertaining to distributions of proceeds from, or dividends of surplus on, beneficial interests in an investment trust (excluding a bond investment trust and a bond-based investment trust under public offering) or a specified trust that issues beneficiary certificates, or bond-type beneficial interests, issued outside Japan which it is to receive on or after January 1, 2016 (limited to those paid outside Japan; hereinafter referred to in this Article as "dividends and similar income on foreign investment trusts, etc."), the domestic corporation is to be liable to pay income tax on the dividends and similar income on foreign investment trusts, etc. to be received, and income tax is imposed on the amount to be received by applying the tax rate specified in each of the following items according to the category of dividends and similar income on foreign investment trusts, etc. listed in those items:

dividends and similar income on foreign privately placed bond-based investment trusts, etc.: 15 percent;

dividends and similar income on foreign investment trusts, etc. other than dividends and similar income on foreign privately placed bond-based investment trusts, etc.: 20 percent.

A person in charge of handling payment in Japan of dividends and similar income on foreign investment trusts, etc. to be paid to a resident or a domestic corporation on or after January 1, 2016 must, when delivering the dividends and similar income on foreign investment trusts, etc. to the resident or domestic corporation, collect income tax in the amount calculated by multiplying the amount to be delivered (where the dividends and similar income on foreign investment trusts, etc. are dividends and similar income on foreign privately placed bond-based investment trusts, etc. and there is an amount of foreign income tax prescribed in the following paragraph, the amount obtained by adding that amount) by the tax rate specified in each item of the preceding paragraph according to the category of dividends and similar income on foreign investment trusts, etc. listed in those items, and pay it to the State by the 10th day of the month following the month that includes the day of collection.

In the cases referred to in the preceding two paragraphs, where there is an amount of foreign income tax prescribed in Article 95, paragraph (1) of the Income Tax Act (including the tax specified by Cabinet Order) imposed at the time of payment on dividends and similar income on foreign investment trusts, etc. which a resident or a domestic corporation is to receive, the following provisions apply:

where the dividends and similar income on foreign investment trusts, etc. are dividends and similar income on foreign privately placed bond-based investment trusts, etc., the amount of the foreign income tax is to be deducted from the amount of income tax to be collected and paid pursuant to the provisions of the preceding paragraph with respect to the dividends and similar income on foreign privately placed bond-based investment trusts, etc., up to the amount of that income tax, and is deemed not to exist with regard to the application of the provisions of Article 95 of the Income Tax Act to the resident;

where the dividends and similar income on foreign investment trusts, etc. are the dividends and similar income on foreign investment trusts, etc. listed in paragraph (2), item (ii), the amount to be received prescribed in that paragraph is to be the amount remaining after deducting an amount equivalent to the amount of the foreign income tax from the amount of the dividends and similar income on foreign investment trusts, etc..

Income tax to be collected and paid pursuant to the provisions of paragraph (3) is deemed to be income tax pertaining to withholding at the source as prescribed in Article 2, paragraph (1), item (xlv) of the Income Tax Act, and the provisions of that Act, the Act on General Rules for National Taxes, and the National Tax Collection Act apply thereto. In this case, where the person who is to receive the dividends and similar income on foreign investment trusts, etc. is a domestic corporation, with regard to the application of the provisions of the Corporation Tax Act to the domestic corporation, the phrase "or prize money" in Article 68, paragraph (1) of that Act is deemed to be replaced with "or prize money, or dividends and similar income on foreign investment trusts, etc. prescribed in Article 8-3, paragraph (2) of the Act on Special Measures Concerning Taxation (Separate Taxation, etc. on Dividend Income from Distributions of Proceeds of Investment Trusts, etc. Issued Outside Japan)", and the phrase "that Act" is deemed to be replaced with "the Income Tax Act or the Act on Special Measures Concerning Taxation".

Where income tax is to be collected pursuant to the provisions of paragraph (3) on the dividends and similar income on foreign investment trusts, etc. listed in paragraph (2), item (ii), the provisions of Article 8-5 apply to a resident who has the dividends and similar income on foreign investment trusts, etc., as provided in item (i) where the dividends and similar income on foreign investment trusts, etc. are received from a domestic corporation, and as provided in that item and item (ii) where the dividends and similar income on foreign investment trusts, etc. are received from a person other than a domestic corporation:

the amount to be delivered by the person in charge of handling payment in Japan of the dividends and similar income on foreign investment trusts, etc. is deemed to be the amount to be received prescribed in Article 8-5, paragraph (1), item (i) or the amount of dividends and similar income to be received prescribed in paragraph (4) of that Article;

the dividends and similar income on foreign investment trusts, etc. are deemed to be received from a domestic corporation.

Beyond what is provided for in the preceding two paragraphs, special provisions of Article 224 and Article 225 of the Income Tax Act pertaining to dividends and similar income on foreign investment trusts, etc. and other necessary matters concerning the application of the provisions of paragraphs (1) through (4) are specified by Cabinet Order.