Act on Special Measures Concerning Taxation

Where an individual has transferred an asset held by the individual (excluding land) that has been designated as an Important Cultural Property pursuant to the provisions of Article 27, paragraph (1) of the Act on Protection of Cultural Properties to the State, the Independent Administrative Institution National Institutes for Cultural Heritage, the Independent Administrative Institution National Museum of Art, the Independent Administrative Institution National Museum of Nature and Science, a local government, a local independent administrative agency (limited to one specified by Cabinet Order among those whose principal purpose is the operations listed in Article 21, item (vi) of the Local Independent Administrative Agency Act), or a cultural property preservation and utilization support organization prescribed in Article 192-2, paragraph (1) of the Act on Protection of Cultural Properties (limited to one specified by Cabinet Order; the same applies hereinafter in this Article) (in the case of a transfer to that cultural property preservation and utilization support organization, limited to the case specified by Cabinet Order), income tax is not imposed on the capital gains pertaining to that transfer.

Where an individual has made a payment in kind of the individual's property with permission under the provisions of Article 42, paragraph (2) (including as applied mutatis mutandis pursuant to Article 45, paragraph (2) of that Act) or Article 48-2, paragraph (3) of the Inheritance Tax Act, with regard to the application of the provisions of Article 32 or Article 33 of the Income Tax Act, the transfer of that property (where the provisions of the second sentence of Article 41, paragraph (1) of the Inheritance Tax Act (including as applied mutatis mutandis pursuant to Article 45, paragraph (2) or Article 48-2, paragraph (6) of that Act) apply, the part of that property specified by Cabinet Order as corresponding to the amount specified by Cabinet Order as the amount that makes payment difficult prescribed in Article 41, paragraph (1) (including as applied mutatis mutandis pursuant to Article 45, paragraph (2) of that Act) or Article 48-2, paragraph (1) of that Act) is deemed not to have been made.

Where an individual who is a director or a member executing the business of a domestic corporation that falls under the category of small and medium sized enterprise prescribed in Article 42-4, paragraph (19), item (vii) and who has a guarantee obligation pertaining to the guarantee of the debts of that domestic corporation has, during the period from April 1, 2013 to March 31, 2028, given to that domestic corporation an asset held by that individual (excluding securities) on which a right of lease, a right of loan for use, or any other right for the purpose of using or deriving profit from an asset has been established and that right is actually being used for the business of that domestic corporation (where there is a part of that asset or right that is used for purposes other than the business of that domestic corporation, limited to the part specified by Cabinet Order as the part used for the business of that domestic corporation; the same applies hereinafter in this Article), based on a plan concerning debt workout formulated for that domestic corporation that satisfies the requirements specified by Cabinet Order, such as having been formulated based on generally published rules concerning the procedures for carrying out debt workouts (referred to as a "debt workout plan" in this paragraph), then, only if the following requirements are satisfied, with regard to the application of the provisions of Article 59, paragraph (1), item (i) of the Income Tax Act, the gift of that asset is deemed not to have been made:

that individual has, based on that debt workout plan, performed part of the guarantee obligation pertaining to the guarantee of the debts of that domestic corporation;

it is expected in that debt workout plan that, even after the gift of assets to that domestic corporation made based on that debt workout plan and the performance of part of the guarantee obligation referred to in the preceding item, that individual will have a guarantee obligation pertaining to the guarantee of the debts of that domestic corporation;

it is provided in that debt workout plan that that domestic corporation will use those assets for its business after receiving the gift of those assets;

any of the following requirements is satisfied:

with regard to a loan of business funds that that domestic corporation received from a financial institution prescribed in Article 2, paragraph (1) of the Act on Temporary Measures to Facilitate Financing for Small and Medium Sized Enterprises, etc. (Act No. 96 of 2009), the terms and conditions have been changed during the period from the date of enforcement of that Act to March 31, 2016 in order to reduce the burden of repaying the debts pertaining to that loan;

where that debt workout plan was formulated on or after April 1, 2016, that domestic corporation did not fall under any of the following before that date:

a corporation that was subject to a decision to support revitalization prescribed in Article 25, paragraph (4) of the Act on Regional Economy Vitalization Corporation of Japan (Act No. 63 of 2009);

a corporation that was subject to a decision to provide support prescribed in Article 19, paragraph (4) of the Act on the Great East Japan Earthquake Business Revitalization Support Corporation (Act No. 113 of 2011);

a corporation that is the obligor of a claim that is partnership property of an industrial revitalization organization prescribed in Article 59, paragraph (1) of the Act on the Great East Japan Earthquake Business Revitalization Support Corporation;

beyond the corporations listed in 1. through 3., a corporation specified by Order of the Ministry of Finance.

The provisions of the preceding paragraph apply only if the tax return contains a statement to the effect that the individual is to receive the application of the provisions of that paragraph, and a document stating the type of the assets given as referred to in that paragraph and other matters specified by Order of the Ministry of Finance and a document specified by Order of the Ministry of Finance as a document certifying that the requirements listed in the items of that paragraph are satisfied are attached thereto.

Even where no tax return has been filed or a tax return without the statement or attachment referred to in the preceding paragraph has been filed, the district director may, if the district director finds that there are unavoidable circumstances for the failure to file or to provide the statement or attachment, apply the provisions of paragraph (1) only if a document containing that statement and the document referred to in that paragraph are submitted.