Act on Special Measures Concerning Taxation

Where a resident or a nonresident who has a permanent establishment has interest and similar income prescribed in Article 23, paragraph (1) of the Income Tax Act (excluding general interest and similar income prescribed in Article 3, paragraph (1), interest and similar income on general foreign public and corporate bonds, etc. prescribed in Article 3-3, paragraph (1), and others specified by Cabinet Order; hereinafter referred to in this paragraph and paragraph (5) as "interest and similar income") or dividends and similar income prescribed in Article 24, paragraph (1) of that Act (excluding dividends, etc. from distributions of proceeds of privately placed bond-based investment trusts, etc. prescribed in Article 8-2, paragraph (1), dividends and similar income on foreign privately placed bond-based investment trusts, etc. prescribed in paragraph (1) of the preceding Article, and others specified by Cabinet Order; hereinafter referred to in this paragraph, paragraph (4), and paragraph (5) as "dividends and similar income") which the person is to receive on or after January 1, 2016 and which are listed in the following items (hereinafter referred to in this paragraph, the following paragraph, and paragraph (4) as "dividends and similar income on listed shares, etc."), notwithstanding the provisions of Article 22, Article 89, and Article 165 of that Act, income tax is imposed on the interest income and dividend income pertaining to the dividends and similar income on listed shares, etc., separately from other income, on the amount calculated, as specified by Cabinet Order, as the amount of interest income and the amount of dividend income pertaining to the dividends and similar income on listed shares, etc. for that year (hereinafter referred to in this paragraph as the "amount of dividend income, etc. on listed shares, etc."), in an amount equivalent to 15 percent of the taxable amount of dividend income, etc. on listed shares, etc. (meaning the amount of dividend income, etc. on listed shares, etc. (where the provisions of Articles 72 through 87 of that Act as replaced pursuant to the provisions of paragraph (3), item (iii) apply, the amount after that application)). In this case, the provisions of Article 92, paragraph (1) of that Act do not apply to the dividend income pertaining to the dividends and similar income on listed shares, etc..

interest and similar income or dividends and similar income on shares, etc. listed in Article 37-11, paragraph (2), item (i), other than dividends and similar income received from a domestic corporation by a person who holds, as of the record date for the payment of the dividends and similar income paid by the domestic corporation (where the dividends and similar income pertain to those deemed to be a dividend of surplus, a dividend of profits, a distribution of surplus, or a distribution of monies pursuant to the provisions of Article 25, paragraph (1) of the Income Tax Act, the date specified by Cabinet Order; hereinafter the same applies in this item and paragraph (9)), shares (including investment units; hereinafter the same applies in this Chapter) or capital contributions that account for 3 percent or more of the total number or the total amount of the issued shares (for an investment corporation (meaning an investment corporation as prescribed in Article 2, paragraph (12) of the Act on Investment Trusts and Investment Corporations; the same applies in item (iii), Article 9-3, item (iii), and Article 9-3-2, paragraph (3), item (iii)), the issued investment units (meaning investment units as prescribed in Article 2, paragraph (14) of the Act on Investment Trusts and Investment Corporations; hereinafter the same applies in this paragraph, paragraph (1), item (iv) of the following Article, Article 9-3, item (iii), and Article 9-3-2, paragraph (1), item (iii) and paragraph (3), item (iii)); hereinafter the same applies in this item, paragraph (9), and Article 9-3, item (i)) of or capital contributions to the domestic corporation (including a person who receives the dividends and similar income and who, together with a corporation that would fall under a family company as prescribed in Article 2, item (x) of the Corporation Tax Act if that person were selected as a shareholder serving as the basis for the determination as of the record date for the payment of the dividends and similar income, holds shares or capital contributions that account for 3 percent or more of the total number or the total amount of issued shares of or capital contributions to the domestic corporation);

distributions of proceeds from an investment trust for which the public offering of beneficial rights at its establishment was conducted through a public offering (meaning a solicitation of offers to acquire as prescribed in Article 2, paragraph (3) of the Financial Instruments and Exchange Act which is specified by Cabinet Order as falling under the case listed in item (i) of that paragraph) (excluding a specified stock investment trust);

dividends and similar income on investment units of a specified investment corporation (meaning an investment corporation whose articles of incorporation provide that it will refund investment units at the request of its unitholders as prescribed in Article 2, paragraph (16) of the Act on Investment Trusts and Investment Corporations, and for which the public offering of securities as prescribed in Article 2, paragraph (3) of the Financial Instruments and Exchange Act with respect to its investment units at its incorporation was conducted through a solicitation of offers to acquire as prescribed in that paragraph which is specified by Cabinet Order as falling under the case listed in item (i) of that paragraph);

distributions of proceeds from a specified trust that issues beneficiary certificates (limited to one for which the public offering of beneficial rights acquired by the settlor at the time of conclusion of its trust contract as prescribed in Article 3, item (i) of the Trust Act (Act No. 108 of 2006) (referred to in paragraph (1), item (v) of the following Article, Article 9-3, item (iv), Article 9-3-2, paragraph (1), item (iv), and Article 37-11, paragraph (2), item (iii)-2 as a "trust contract") was conducted through a public offering (meaning a solicitation of offers to acquire as prescribed in Article 2, paragraph (3) of the Financial Instruments and Exchange Act which is specified by Cabinet Order as falling under the case listed in item (i) of that paragraph));

dividends of surplus on bond-type beneficial interests in a special purpose trust (limited to one for which the public offering of bond-type beneficial interests held by the original entrustor at the time of conclusion of its trust contract was conducted through a public offering as prescribed in Article 8-2, paragraph (1), item (ii));

interest on specified public and corporate bonds prescribed in Article 3, paragraph (1), item (i).

Of the provisions of the preceding paragraph, the part pertaining to dividend income from dividends and similar income on listed shares, etc. listed in items (i) through (iii) of that paragraph (for distributions of proceeds listed in item (ii) of that paragraph, limited to those pertaining to a securities investment trust other than a bond investment trust; hereinafter referred to in this paragraph as "dividends and similar income on specified listed shares, etc.") applies only where a resident or a nonresident who has a permanent establishment has filed a tax return stating that the person seeks the application of the provisions of the preceding paragraph to dividend income from dividends and similar income on specified listed shares, etc. which the person is to receive during that year; and where the provisions of Article 22 and Article 89 or Article 165 of the Income Tax Act have been applied to dividend income from dividends and similar income on specified listed shares, etc. which a resident or a nonresident who has a permanent establishment is to receive during that year, the provisions of that paragraph do not apply to dividend income from other dividends and similar income on specified listed shares, etc. which the person is to receive during the same year.

Where the provisions of paragraph (1) apply, the provisions of the Income Tax Act and other laws and regulations concerning income tax apply as follows:

with regard to the application of the provisions of Article 2, paragraph (1), items (xxx) through (xxxiv)-5 of the Income Tax Act, the phrase "amount of timber income" in item (xxx) of that paragraph is deemed to be replaced with "amount of timber income, and the amount of dividend income, etc. on listed shares, etc. prescribed in Article 8-4, paragraph (1) of the Act on Special Measures Concerning Taxation (Special Provisions on Taxation on Dividend Income, etc. on Listed Shares, etc.) (hereinafter referred to as the "amount of dividend income, etc. on listed shares, etc.")";

with regard to the application of the provisions of Article 69 of the Income Tax Act, the phrase "amount of each type of income" in paragraph (1) of that Article is deemed to be replaced with "amount of each type of income (excluding the amount of dividend income, etc. on listed shares, etc.)";

with regard to the application of the provisions of Article 71 and Articles 72 through 87 of the Income Tax Act, the phrase "amount of gross income" in those provisions is deemed to be replaced with "amount of gross income, the amount of dividend income, etc. on listed shares, etc.";

with regard to the application of the provisions of Article 92, Article 93, Article 95, Article 165-5-3, and Article 165-6 of the Income Tax Act: in Article 92, paragraph (1) of that Act, the phrase "excluding those)" is deemed to be replaced with "excluding those) and dividend income pertaining to dividends and similar income on listed shares, etc. prescribed in Article 8-4, paragraph (1) of the Act on Special Measures Concerning Taxation (Special Provisions on Taxation on Dividend Income, etc. on Listed Shares, etc.) (limited to that for which the application of the provisions of that paragraph is sought)", the phrase "the preceding Section (Tax Rates)" is deemed to be replaced with "the preceding Section (Tax Rates) and that paragraph", and the phrase "taxable gross income" is deemed to be replaced with "the sum of taxable gross income and the taxable amount of dividend income, etc. on listed shares, etc. prescribed in Article 8-4, paragraph (1) of the Act on Special Measures Concerning Taxation"; in paragraph (2) of that Article, the phrase "amount of income tax on taxable gross income" is deemed to be replaced with "amount of income tax on taxable gross income, the amount of income tax under the provisions of Article 8-4, paragraph (1) of the Act on Special Measures Concerning Taxation"; in Article 93, paragraph (1) of that Act, the phrase "receives payment of distribution of proceeds" is deemed to be replaced with "receives payment of distribution of proceeds or dividends and similar income of a specified corporation (meaning a dividend of profits prescribed in Article 9-6, paragraph (1) of the Act on Special Measures Concerning Taxation (Special Provisions on Withholding at the Source, etc. for Dividends of Profits of Specific Purpose Companies) of a specific purpose company prescribed in that paragraph, dividends and similar income prescribed in Article 9-6-2, paragraph (1) of that Act (Special Provisions on Withholding at the Source, etc. for Dividends and Similar Income of Investment Corporations) on investment units prescribed in paragraph (3) of that Article of an investment corporation prescribed in paragraph (1) of that Article, a dividend of surplus on beneficial interests in a special purpose trust, or a dividend of surplus on beneficial interests in a specified investment trust prescribed in Article 9-6-4, paragraph (1) of that Act (Special Provisions on Withholding at the Source, etc. for Dividends of Surplus of Specified Investment Trusts); the same applies hereinafter), or receives delivery of dividends and similar income on listed shares, etc. prescribed in Article 9-3-2, paragraph (1) of that Act (Special Provisions on Withholding Obligation, etc. for Dividends and Similar Income on Listed Shares, etc.) (hereinafter referred to as "dividends and similar income on specified listed shares, etc.") (limited to cases where the provisions of Article 8-4, paragraph (1) of that Act (Special Provisions on Taxation on Dividend Income, etc. on Listed Shares, etc.) apply to the distribution of proceeds, the dividends and similar income of a specified corporation, or the dividends and similar income on specified listed shares, etc.)", the phrase "that paragraph" is deemed to be replaced with "Article 176, paragraph (3)", the phrase "amount (" is deemed to be replaced with "amount, the amount equivalent to the foreign tax for adjustment of a specified corporation pertaining to the dividends and similar income of a specified corporation (meaning the amount equivalent to the foreign tax adjusted at distribution by a specific purpose company prescribed in Article 9-6, paragraph (3) of that Act, the amount equivalent to the foreign tax adjusted at distribution by an investment corporation prescribed in Article 9-6-2, paragraph (3) of that Act, the amount equivalent to the foreign tax adjusted at distribution by a special purpose trust prescribed in Article 9-6-3, paragraph (3) of that Act (Special Provisions on Withholding at the Source, etc. for Dividends of Surplus of Special Purpose Trusts), and the amount equivalent to the foreign tax adjusted at distribution by a specified investment trust prescribed in Article 9-6-4, paragraph (3) of that Act; the same applies hereinafter), and the amount specified by Cabinet Order as the amount of the portion other than the portion corresponding to the amount of income tax (hereinafter referred to as the "specified amount equivalent to foreign tax for adjustment") out of the amount equivalent to the amount specified in each item of Article 9-3-2, paragraph (3) of that Act which has been deducted pursuant to the provisions of that paragraph with respect to the dividends and similar income on specified listed shares, etc. (", and the phrase "amount of income tax for that year" is deemed to be replaced with "amount of income tax for that year and the amount of income tax under the provisions of Article 8-4, paragraph (1) of that Act"; in Article 95, paragraph (1) of that Act, the phrase "of the amount of income tax for that year" is deemed to be replaced with "of the amount of income tax for that year and the amount of income tax under the provisions of Article 8-4, paragraph (1) of the Act on Special Measures Concerning Taxation (Special Provisions on Taxation on Dividend Income, etc. on Listed Shares, etc.)", and the phrase "from the amount of income tax for that year" is deemed to be replaced with "from the amount of income tax for that year and the amount of income tax under the provisions of that paragraph"; in Article 95, paragraphs (2) and (3) of the Income Tax Act, the phrase "amount of income tax for that year" is deemed to be replaced with "amount of income tax for that year and the amount of income tax under the provisions of Article 8-4, paragraph (1) of the Act on Special Measures Concerning Taxation"; in Article 165-5-3, paragraph (1) of that Act, the phrase "receives payment (limited to cases where it receives payment of that which falls under income attributable to a permanent establishment" is deemed to be replaced with "receives payment, or receives payment of dividends and similar income of a specified corporation or delivery of dividends and similar income on specified listed shares, etc. (limited to cases where it receives payment or delivery of that which falls under income attributable to a permanent establishment and where the provisions of Article 8-4, paragraph (1) of the Act on Special Measures Concerning Taxation (Special Provisions on Taxation on Dividend Income, etc. on Listed Shares, etc.) apply to the distribution of proceeds, the dividends and similar income of a specified corporation, or the dividends and similar income on specified listed shares, etc.", the phrase "in that paragraph" is deemed to be replaced with "in Article 176, paragraph (3)", the phrase "amount (" is deemed to be replaced with "amount, the amount equivalent to the foreign tax for adjustment of a specified corporation pertaining to the dividends and similar income of a specified corporation, and the specified amount equivalent to foreign tax for adjustment pertaining to the dividends and similar income on specified listed shares, etc. (", and the phrase "amount of income tax for that year" is deemed to be replaced with "amount of income tax for that year and the amount of income tax under the provisions of Article 8-4, paragraph (1) of that Act", and in Article 165-5-3, paragraph (3) of the Income Tax Act, the phrase "amount of income tax," is deemed to be replaced with "amount of income tax, the amount of income tax under the provisions of Article 8-4, paragraph (1) of the Act on Special Measures Concerning Taxation, calculated in accordance with the provisions of Article 165, paragraph (1)," and the phrase "or" is deemed to be replaced with "or calculated in accordance with the provisions of that paragraph"; and in Article 165-6, paragraph (1) of that Act, the phrase "of the amount of income tax for that year" is deemed to be replaced with "of the amount of income tax for that year and the amount of income tax under the provisions of Article 8-4, paragraph (1) of the Act on Special Measures Concerning Taxation (Special Provisions on Taxation on Dividend Income, etc. on Listed Shares, etc.)", and the phrase "from the amount of income tax for that year" is deemed to be replaced with "from the amount of income tax for that year and the amount of income tax under the provisions of Article 8-4, paragraph (1) of that Act", in Article 165-6, paragraphs (2) and (3) of the Income Tax Act, the phrase "amount of income tax for that year" is deemed to be replaced with "amount of income tax for that year and the amount of income tax under the provisions of Article 8-4, paragraph (1) of the Act on Special Measures Concerning Taxation", and in paragraph (8) of that Article, the phrase "amount of income tax," is deemed to be replaced with "amount of income tax, the amount of income tax under the provisions of Article 8-4, paragraph (1) of the Act on Special Measures Concerning Taxation, calculated in accordance with the provisions of Article 165, paragraph (1)," and the phrase "or" is deemed to be replaced with "or calculated in accordance with the provisions of that paragraph";

beyond what is provided for in the preceding items, special provisions concerning applications or returns under the provisions of Part II, Chapter V of the Income Tax Act and other necessary matters concerning the application of the provisions of laws and regulations concerning income tax where the provisions of paragraph (1) apply are specified by Cabinet Order.

A person who pays in Japan, to a resident or a nonresident who has a permanent establishment, dividends and similar income on listed shares, etc. (excluding distributions of proceeds from an open-end securities investment trust as prescribed in Article 2, paragraph (1), item (xiv) of the Income Tax Act and dividends and similar income pertaining to those deemed to be a dividend of surplus, a dividend of profits, a distribution of surplus, or a distribution of monies pursuant to the provisions of Article 25, paragraph (1) of that Act; hereinafter referred to in this paragraph as "listed share dividends, etc.") (including a person specified by Cabinet Order as being equivalent thereto (hereinafter referred to in this paragraph and the following paragraph as a "quasi-payer")) must, as specified by Order of the Ministry of Finance, deliver a written notice concerning the payment of the listed share dividends, etc. to the person receiving the payment within one month (or within 45 days, where a quasi-payer delivers it) from the date on which the payment was finalized (for a written notice concerning interest on bearer public and corporate bonds, a dividend of surplus on bearer shares, etc. prescribed in Article 225, paragraph (1) of that Act, or distributions of proceeds pertaining to bearer beneficiary certificates of an investment trust or a specified trust that issues beneficiary certificates, the date on which the payment was made).

Where a person who pays listed share dividends, etc. prescribed in the preceding paragraph or a person listed in Article 225, paragraph (2), item (i) of the Income Tax Act (referred to in the following paragraph and paragraph (7) as a "payer of dividends and similar income") prepares, as specified by Order of the Ministry of Finance, the written notice prescribed in those provisions based on the total amount of interest and similar income and dividends and similar income paid to the same person during the year, the payer must, notwithstanding those provisions, deliver the written notice to the person receiving the payment by January 31 (or by February 15 of that year, where a quasi-payer delivers it) of the year following the year that includes the date on which the payment was finalized as prescribed in those provisions.

A payer of dividends and similar income may, in lieu of delivering the written notice pursuant to the provisions of the preceding two paragraphs, provide the matters to be stated in the written notice by electronic or magnetic means (meaning a means using an electronic data processing system or any other means using information and communications technology, which is specified by Order of the Ministry of Finance), with the consent of the person receiving the payment, as specified by Cabinet Order; provided, however, that where requested by the person receiving the payment, the payer must deliver the written notice to that person.

In the case referred to in the main clause of the preceding paragraph, the payer of dividends and similar income referred to in that paragraph is deemed to have delivered the written notice referred to in paragraph (4) or paragraph (5).

Beyond what is provided for in paragraph (2), paragraph (3), and the preceding two paragraphs, necessary matters concerning the application of the provisions of paragraph (1), paragraph (4), and paragraph (5) are specified by Cabinet Order.

A domestic corporation that is to pay the dividends and similar income referred to in paragraph (1), item (i) must, within one month from the date on which the payment of the dividends and similar income was finalized, prepare a report stating the name, individual number, and other matters specified by Order of the Ministry of Finance of each resident or nonresident who has a permanent establishment who holds, as of the record date for the payment of the dividends and similar income, shares or capital contributions that account for 1 percent or more of the total number or the total amount of issued shares of or capital contributions to the domestic corporation, and submit it to the competent district director with jurisdiction over the location of the head office or principal office of the domestic corporation.

When it is necessary for an investigation concerning the submission of the report referred to in the preceding paragraph, the relevant official of the National Tax Agency, the Regional Taxation Bureau, or the tax office may ask questions of a person who is obligated to submit the report, inspect that person's books and documents concerning the payment of the dividends and similar income referred to in that paragraph (including, where electromagnetic records (meaning records created in electronic form, magnetic form, or any other form that cannot be perceived by the human senses, which are used in information processing by computers) have been created or retained in lieu of the creation or retention of those books and documents, those electromagnetic records; the same applies hereinafter in this Chapter) and other articles, or request the presentation or submission of those articles (including copies thereof).

When it is necessary for an investigation concerning the submission of the report referred to in paragraph (9), the relevant official of the National Tax Agency, the Regional Taxation Bureau, or the tax office may retain articles submitted in the course of the investigation.

The relevant official of the National Tax Agency, the Regional Taxation Bureau, or the tax office, when asking questions, conducting an inspection, or requesting presentation or submission pursuant to the provisions of paragraph (10), must carry an identification card and present it to the person concerned when requested.

The authority of the official under the provisions of paragraph (10) and paragraph (11) must not be construed as being granted for the purpose of a criminal investigation.

Beyond what is provided for in the preceding paragraph, necessary matters concerning the application of the provisions of paragraph (11) are specified by Cabinet Order.