Act on Special Measures Concerning Taxation

Where a resident or a nonresident who has a permanent establishment transfers listed shares, etc. that, based on a contract for custody of listed shares, etc., are entered or recorded in the transfer account book pertaining to a specified account (where the person has two or more specified accounts, each of them; hereinafter the same applies in this paragraph and the following paragraph) or custody of which has been entrusted to a specified account (hereinafter referred to as "listed shares, etc. held in a specified account" up to Article 37-11-6), the amount of business income, the amount of capital gains or the amount of miscellaneous income from the transfer of the listed shares, etc. held in a specified account and the amount of business income, the amount of capital gains or the amount of miscellaneous income from the transfer of shares, etc. (meaning shares, etc. prescribed in Article 37-10, paragraph (2); the same applies in the following paragraph) other than the listed shares, etc. held in a specified account are to be calculated separately pursuant to the provisions of Cabinet Order.

Where a resident or a nonresident who has a permanent establishment conducting margin transactions prescribed in Article 156-24, paragraph (1) of the Financial Instruments and Exchange Act or when-issued transactions (meaning transactions specified by Order of the Ministry of Finance that are transactions for the purchase and sale of securities before they are issued) (hereinafter referred to as "margin transactions, etc." in this Article and the following Article) processes margin transactions, etc. in listed shares, etc. in a specified account based on a contract for margin trading, etc. in listed shares, etc., the amount of business income or the amount of miscellaneous income from transfers of listed shares, etc. through margin transactions, etc. processed in the specified account or from transfers of listed shares, etc. made to settle the margin transactions, etc. (limited to the case where the transaction is settled by purchasing shares, etc. of the same class as the shares, etc. pertaining to the transfer of the listed shares, etc., or where the transfer is made to settle a transaction in which shares, etc. of the same class as the shares, etc. pertaining to the transfer of the listed shares, etc. were purchased; hereinafter referred to as a "transfer of listed shares, etc. through margin transactions, etc." in this paragraph, the following paragraph and paragraph (8)) and the amount of business income or the amount of miscellaneous income from transfers of shares, etc. other than transfers of listed shares, etc. through margin transactions, etc. are to be calculated separately pursuant to the provisions of Cabinet Order.

In this Article, the meanings of the terms listed in the following items are as prescribed respectively in those items:

specified account: an account that a resident or a nonresident who has a permanent establishment, in order to receive the application of the provisions of the preceding two paragraphs, has opened, by submitting, pursuant to the provisions of Cabinet Order, to the head of a business office (meaning a business office or office located in Japan; hereinafter the same applies in this Article, the following Article and Article 37-11-6) of a financial instruments business operator prescribed in Article 2, paragraph (9) of the Financial Instruments and Exchange Act (limited to a person engaged in type I financial instruments business prescribed in Article 28, paragraph (1) of that Act), a registered financial institution prescribed in Article 2, paragraph (11) of that Act or an investment trust management company prescribed in Article 2, paragraph (11) of the Act on Investment Trusts and Investment Corporations (hereinafter referred to as a "financial instruments business operator, etc." in this Article, the following Article and Article 37-11-6) a written notification stating the name of the account, the name and location of the business office of the financial instruments business operator, etc., the types of account to be set up in the account, a statement to the effect that the person is to receive the application of the provisions of paragraph (1) or the preceding paragraph to the calculation of the amount of business income, the amount of capital gains or the amount of miscellaneous income from transfers of listed shares, etc. that are entered or recorded in the transfer account book pertaining to the account or custody of which has been entrusted to the account and from transfers of listed shares, etc. through margin transactions, etc. processed in the account, and other matters specified by Order of the Ministry of Finance (hereinafter referred to as a "written notification for opening a specified account" up to paragraph (6)) (the submission includes the provision, by electronic or magnetic means (meaning the method of using an electronic data processing system or any other method using information and communications technology; the same applies in paragraph (1) of the following Article and Article 37-11-6, paragraph (2)), of the matters to be stated in the written notification for opening a specified account in lieu of submitting the written notification for opening a specified account; hereinafter the same applies up to paragraph (6)), based on a contract for custody of listed shares, etc. or a contract for margin trading, etc. in listed shares, etc. concluded with the financial instruments business operator, etc., for the entry or recording in the transfer account book or custody of listed shares, etc. or for margin transactions, etc. in listed shares, etc. (limited to an account in which no matters concerning transactions other than those based on these contracts and on a contract entrusting receipt of listed share dividends, etc. prescribed in Article 37-11-6, paragraph (4), item (i) are handled);

contract for custody of listed shares, etc.: a contract concerning the entry or recording in the transfer account book or custody of listed shares, etc. (excluding one pertaining to margin transactions, etc.) concluded with a financial instruments business operator, etc. by the resident or nonresident who has a permanent establishment referred to in paragraph (1) in order to receive the application of the provisions of that paragraph, whose written contract provides that the entry or recording in the transfer account book or custody of listed shares, etc. is to be made in a specified custody account (meaning an account for keeping records concerning the entry or recording in the transfer account book or custody of listed shares, etc. that are, based on the contract, entered or recorded in the transfer account book pertaining to the account or deposited for custody in the account separately from records concerning other transactions) set up in the account pertaining to that entry or recording or custody, that only the following listed shares, etc. of the resident or nonresident who has a permanent establishment (excluding those specified by Cabinet Order) are to be accepted into the specified custody account, that the transfer of listed shares, etc. entered or recorded in the transfer account book or held in custody in the specified custody account is to be made by the method of entrusting the sale to the financial instruments business operator, etc., by the method of a transfer to the financial instruments business operator, etc. or by any other method specified by Cabinet Order, and other matters specified by Cabinet Order:

listed shares, etc. acquired, after the submission of the written notification for opening a specified account, through entrusting the purchase to the financial instruments business operator, etc. (including intermediation, brokerage or agency for the entrustment of the purchase) or acquired from the financial instruments business operator, etc., which are accepted into the account immediately after their acquisition;

listed shares, etc. moved, pursuant to the provisions of Cabinet Order, from a specified account of the resident or nonresident who has a permanent establishment that is opened with a financial instruments business operator, etc. other than the financial instruments business operator, etc. (referred to as an "other specified account" in (b)), in the case where all or part of the listed shares, etc. held in a specified account pertaining to the other specified account are moved (in the case where part of the listed shares, etc. held in a specified account are moved, limited to the case where all of the listed shares, etc. held in a specified account of the same class as the listed shares, etc. held in a specified account being moved are included in those being moved);

listed shares, etc. specified by Cabinet Order beyond those listed in (a) and (b);

contract for margin trading, etc. in listed shares, etc.: a contract concerning margin transactions, etc. in listed shares, etc. concluded with a financial instruments business operator, etc. by the resident or nonresident who has a permanent establishment referred to in the preceding paragraph in order to receive the application of the provisions of that paragraph, whose written contract provides that margin transactions, etc. in listed shares, etc. are to be processed in a specified margin transaction, etc. account (meaning an account for keeping records concerning the processing of margin transactions, etc. in listed shares, etc. processed in the account based on the contract separately from records concerning other transactions) set up in the account pertaining to the margin transactions, etc., that only matters concerning margin transactions, etc. in listed shares, etc. commenced after the submission of the written notification for opening a specified account are to be processed in the specified margin transaction, etc. account, and other matters specified by Cabinet Order.

A resident or a nonresident who has a permanent establishment who intends to submit a written notification for opening a specified account must, pursuant to the provisions of Cabinet Order, at the time of the submission, notify the head of the business office of the financial instruments business operator, etc. referred to in item (i) of the preceding paragraph of the person's name, date of birth, domicile (for a person who does not have a domicile in Japan, the place specified by Order of the Ministry of Finance; hereinafter the same applies in this paragraph, the following paragraph and paragraph (7)) and individual number (for a person who does not have an individual number and other persons specified by Cabinet Order, name, date of birth and domicile; the same applies in the following paragraph), by presenting a copy of the person's certificate of residence or other documents specified by Cabinet Order, or by transmitting an electronic certificate for signature, etc. (meaning an electronic certificate for signature prescribed in Article 3, paragraph (1) of the Act on Certification Business of the Japan Agency for Local Authority Information Systems in Relation to Electronic Signatures, etc. (Act No. 153 of 2002) or other electromagnetic records (meaning records made in an electronic form, a magnetic form or any other form not recognizable to human perception, which are used in information processing by computers) that is specified by Order of the Ministry of Finance), and have the notified matters confirmed.

The head of a business office of a financial instruments business operator, etc. may not accept a written notification for opening a specified account that states a name, date of birth, domicile and individual number different from those notified under the preceding paragraph, or a written notification for opening a specified account submitted again by a resident or a nonresident who has a permanent establishment who has already opened a specified account with the financial instruments business operator, etc. (excluding a written notification for opening a specified account submitted in the case where the specified account is an account constituting a taxable minor's account prescribed in Article 37-14-2, paragraph (5), item (v), and a written notification for opening a specified account submitted in order to open a specified account as an account constituting a taxable minor's account prescribed in that item).

Beyond what is specified in the preceding paragraph, matters concerning the books that a financial instruments business operator, etc. is to keep for a specified account, matters concerning the notification in the case where an individual who has submitted a written notification for opening a specified account has changed or is to change, after the submission, the matters stated in the written notification for opening a specified account, or intends to cease receiving the application of the provisions of paragraph (1) or paragraph (2), and other necessary matters concerning the application of the provisions of paragraphs (1) through (4) are specified by Cabinet Order.

Where there is a specified account that was opened with a financial instruments business operator, etc. during a year, the financial instruments business operator, etc. must, pursuant to the provisions of Order of the Ministry of Finance, prepare two copies of a report stating the name and domicile of the resident or nonresident who has a permanent establishment who opened the specified account, the amount of consideration for transfers of listed shares, etc. processed in the specified account during that year, the amount of acquisition costs of those listed shares, etc., the amount of expenses incurred for the transfers, the amount of income or the amount of gain pertaining to the transfers, the amount of dividends and similar income on listed shares, etc. prescribed in Article 37-11-6, paragraph (1) accepted into the specified account (referred to as "dividends and similar income on listed shares, etc." in the following paragraph and paragraph (11)), and other matters specified by Order of the Ministry of Finance, and must, by January 31 of the following year (or, where the specified account is closed due to the cancellation of the contract for custody of listed shares, etc. or the contract for margin trading, etc. in listed shares, etc., or any other cause specified by Cabinet Order arises, partway through the year, by the last day of the month following the month that includes the date on which that cause arose), submit one copy to the district director with jurisdiction over the location of the business office of the financial instruments business operator, etc. at which the specified account is opened, and deliver the other copy to the resident or nonresident who has a permanent establishment.

Where, among the specified accounts that were opened with a financial instruments business operator, etc., there is one in which no transfer of listed shares, etc. held in a specified account pertaining to the specified account, no transfer of listed shares, etc. through margin transactions, etc. processed in the specified account and no acceptance of dividends and similar income on listed shares, etc. into the specified account took place during the year, the financial instruments business operator, etc. is not required, notwithstanding the provisions of the preceding paragraph, to deliver the report under that paragraph pertaining to the specified account to the resident or nonresident who has a permanent establishment who opened the specified account. However, if the resident or nonresident who has a permanent establishment so requests, the financial instruments business operator, etc. must deliver the report to that person.

In lieu of delivering the report under paragraph (7) and the proviso to the preceding paragraph, a financial instruments business operator, etc. may, pursuant to the provisions of Cabinet Order, with the consent of the resident or nonresident who has a permanent establishment prescribed in those provisions, provide the matters to be stated in the report by electronic or magnetic means (meaning the method of using an electronic data processing system or any other method using information and communications technology that is specified by Order of the Ministry of Finance; the same applies in Article 42-3, paragraph (6), item (iii)). However, if the resident or nonresident who has a permanent establishment so requests, the financial instruments business operator, etc. must deliver the report to that person.

In the case referred to in the main clause of the preceding paragraph, the financial instruments business operator, etc. referred to in that paragraph is deemed to have delivered the report referred to in paragraph (7) or the proviso to paragraph (8).

Special provisions to the provisions of Articles 224, 224-3 and 225 of the Income Tax Act concerning transfers of listed shares, etc. processed in a specified account or dividends and similar income on listed shares, etc. accepted into a specified account, and other necessary matters concerning the application of the provisions of paragraph (7) are specified by Cabinet Order.

If it is necessary for an investigation concerning the submission of the report referred to in paragraph (7), a relevant official of the National Tax Agency, a Regional Taxation Bureau or a tax office may ask questions of a person who is obligated to submit the report, inspect the books and documents and other articles concerning that person's specified accounts and the handling of listed shares, etc. in those specified accounts, or request the presentation or submission of those articles (including copies thereof).

If it is necessary for an investigation concerning the submission of the report referred to in paragraph (7), a relevant official of the National Tax Agency, a Regional Taxation Bureau or a tax office may retain articles submitted in the investigation.

When asking questions, conducting an inspection, or requesting presentation or submission under the provisions of paragraph (12), a relevant official of the National Tax Agency, a Regional Taxation Bureau or a tax office must carry a certificate of identification and present it if so requested by a person concerned.

The authority of the relevant officials under the provisions of paragraphs (12) and (13) must not be construed as being granted for the purpose of criminal investigation.

Beyond what is specified in the preceding paragraph, necessary matters concerning the application of the provisions of paragraph (13) are specified by Cabinet Order.