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Article 42第四十二条
Special Provisions on Taxation of Interest on Margin for Over-the-Counter Derivatives Transactions of Foreign Financial Institutions, etc.（外国金融機関等の店頭デリバティブ取引の証拠金に係る利子の課税の特例）
Article 42, paragraph (1)
No income tax is imposed on interest (meaning interest listed in Article 161, paragraph (1), item (x) of the Income Tax Act, excluding interest to which the provisions of Article 7 apply; hereinafter the same applies in this Article) that a foreign financial institution, etc. receives from a domestic financial institution, etc. on margin (meaning money deposited with the counterparty under a contract incidental to an over-the-counter derivatives transaction in order to secure the performance of obligations under the contract pertaining to that over-the-counter derivatives transaction; the same applies in the following paragraph and paragraph (10)) that satisfies the requirements specified by Order of the Ministry of Finance and pertains to over-the-counter derivatives transactions (including transactions specified by Order of the Ministry of Finance as transactions that may be included in those over-the-counter derivatives transactions in calculating margin; hereinafter the same applies in this paragraph) conducted with that domestic financial institution, etc. by March 31, 2027.
No income tax is imposed on interest received by a foreign financial institution, etc. or a foreign financial instruments clearing organization on margin (excluding that specified by Cabinet Order) deposited with a financial instruments clearing organization in the case where that financial instruments clearing organization has assumed the obligations of the counterparty under an over-the-counter derivatives transaction conducted by the foreign financial institution, etc. by March 31, 2027, or on margin deposited with a domestic financial institution, etc. in the case where a foreign financial instruments clearing organization has assumed the obligations of the counterparty under an over-the-counter derivatives transaction conducted by that domestic financial institution, etc. by that date.
The provisions of the preceding two paragraphs do not apply to interest received by a foreign corporation that has a permanent establishment that falls under the domestic source income listed in Article 141, item (i), (a) of the Corporation Tax Act.
In this Article, the meanings of the terms set forth in the following items are as prescribed in those items:
この条において、次の各号に掲げる用語の意義は、当該各号に定めるところによる。
Article 42, paragraph (4), item (i)
foreign financial institution, etc.: This means a foreign corporation engaged in the banking business, financial instruments business or insurance business in a foreign state in accordance with the laws and regulations of the state;
domestic financial institution, etc.: This means a financial institution prescribed in Article 8, paragraph (1) or 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) that has a business office or an office in Japan;
over-the-counter derivatives transaction: This means an over-the-counter derivatives transaction prescribed in Article 2, paragraph (22) of the Financial Instruments and Exchange Act (excluding one pertaining to crypto assets, etc. listed in paragraph (24), item (iii)-2 of that Article or to a financial indicator prescribed in Article 29-2, paragraph (1), item (ix) of that Act);
financial instruments clearing organization: This means a financial instruments clearing organization prescribed in Article 2, paragraph (29) of the Financial Instruments and Exchange Act;
金融商品取引清算機関 金融商品取引法第二条第二十九項に規定する金融商品取引清算機関をいう。
Article 42, paragraph (4), item (v)
foreign financial instruments clearing organization: This means a foreign financial instruments clearing organization prescribed in Article 2, paragraph (29) of the Financial Instruments and Exchange Act.
外国金融商品取引清算機関 金融商品取引法第二条第二十九項に規定する外国金融商品取引清算機関をいう。
Article 42, paragraph (5)
The provisions of paragraph (1) or (2) apply only if the foreign financial institution, etc. or foreign financial instruments clearing organization seeking the application of those provisions has, as provided by Cabinet Order, submitted a return stating that it seeks the application of those provisions to the interest it is to receive, its name, the location of its head office or principal office (or, for a foreign corporation that has a permanent establishment, the place specified by Order of the Ministry of Finance; the same applies in paragraphs (7) and (8)) and other matters specified by Order of the Ministry of Finance (hereinafter referred to as a "written application for a tax exemption" in this Article), by the day before the date on which it is first to receive that payment, via the person who pays the interest, to the district director having jurisdiction over the place for tax payment under the provisions of Article 17 of the Income Tax Act (or, if a designation has been made under the provisions of Article 18, paragraph (2) of that Act, the designated place for tax payment) of the person who pays the interest with respect to that interest.
In the case referred to in the preceding paragraph, when a written application for a tax exemption has been submitted to the district director prescribed in that paragraph, it is deemed to have been submitted at the time when it was received by the person who pays the interest referred to in that paragraph.
A foreign financial institution, etc. or foreign financial instruments clearing organization that submits a written application for a tax exemption must, at the time of its submission, present the certificate of registered matters of the corporation submitting it and other documents specified by Cabinet Order to the head of the business office or office of the domestic financial institution, etc. or financial instruments clearing organization through which it is submitted, and the head of the business office or office of that domestic financial institution, etc. or financial instruments clearing organization must confirm the name and the location of the head office or principal office stated in that written application for a tax exemption by means of those documents.
If a foreign financial institution, etc. or foreign financial instruments clearing organization that has submitted a written application for a tax exemption comes to fall under any of the cases listed in the following items, it must submit the return specified in each of those items to the district director prescribed in paragraph (5) via the domestic financial institution, etc. or financial instruments clearing organization through which it submitted that written application for a tax exemption, by the day before the date on which it is first to receive, on or after the date on which it came to fall under that case, payment of the interest on the margin prescribed in paragraph (1) or (2) from that domestic financial institution, etc. or financial instruments clearing organization. In this case, if it fails to submit the return specified in each of those items, the provisions of paragraphs (1) and (2) do not apply to the interest on that margin that it receives from that domestic financial institution, etc. or financial instruments clearing organization on or after the date on which it came to fall under that case.
if it has changed its name, the location of its head office or principal office or any other matter specified by Order of the Ministry of Finance stated in that written application for a tax exemption or in the return specified in the following item: a return stating the name and the location of the head office or principal office and other matters specified by Order of the Ministry of Finance, after that change, of the person who submitted that written application for a tax exemption or that return;
if five years have elapsed from the day following the date on which that written application for a tax exemption was submitted, the date on which the return specified in the preceding item was submitted or the date on which the return specified in this item was submitted, whichever is the latest: a return stating the name and the location of the head office or principal office and other matters specified by Order of the Ministry of Finance of the person who submitted that written application for a tax exemption.
The provisions of paragraphs (6) and (7) apply mutatis mutandis to the submission of the return specified in each item of the preceding paragraph. In this case, the phrase "the preceding paragraph" in paragraph (6) is deemed to be replaced with "paragraph (8)", the phrase "a written application for a tax exemption has been submitted to the district director prescribed in that paragraph" is deemed to be replaced with "the return specified in each item of that paragraph has been submitted to the district director prescribed in the preceding paragraph", the phrase "submits a written application for a tax exemption" in paragraph (7) is deemed to be replaced with "submits the return specified in each item of the following paragraph", the phrase "that written application for a tax exemption" is deemed to be replaced with "the return specified in each of those items", the phrase "本店又は" (head office or) is deemed to be replaced with "本店若しくは" (head office or, joining a smaller group of alternatives), and the phrase "location" is deemed to be replaced with "location, or the name and the location of the head office or principal office after the change".
A domestic financial institution, etc. or financial instruments clearing organization must keep books on the margin pertaining to over-the-counter derivatives transactions (including, where the provisions of paragraph (1) are applied, the transactions specified by Order of the Ministry of Finance prescribed in that paragraph; hereinafter the same applies in this paragraph) with a foreign financial institution, etc. or foreign financial instruments clearing organization that has submitted a written application for a tax exemption, and must enter or record therein, for each person who submitted that written application for a tax exemption, as provided by Cabinet Order, the date on which the contract on the margin pertaining to those over-the-counter derivatives transactions was concluded and other matters specified by Order of the Ministry of Finance.
A foreign financial institution, etc. or foreign financial instruments clearing organization referred to in paragraph (5) or (8) may, in lieu of submitting a written application for a tax exemption under the provisions of paragraph (5) or submitting the return specified in each item of paragraph (8) under the provisions of that paragraph, provide the person who pays the interest referred to in paragraph (5) or the domestic financial institution, etc. or financial instruments clearing organization referred to in paragraph (8) with the matters to be stated in that written application for a tax exemption or in the return specified in each of those items 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). In this case, that foreign financial institution, etc. or foreign financial instruments clearing organization is deemed to have submitted that written application for a tax exemption or the return specified in each of those items to that person who pays the interest or that domestic financial institution, etc. or financial instruments clearing organization.
With regard to the application of the provisions of paragraphs (6) and (9) in the case where the provisions of the preceding paragraph apply, the phrase "a written application for a tax exemption" in paragraph (6) is deemed to be replaced with "the matters to be stated in a written application for a tax exemption", the phrase "at the time when it was received" is deemed to be replaced with "at the time when they were provided", the phrase "a written application for a tax exemption has" in paragraph (9) is deemed to be replaced with "the matters to be stated in a written application for a tax exemption have", and the phrase "the return specified in each item of that paragraph" is deemed to be replaced with "the matters to be stated in the return specified in each item of that paragraph".
The due date of filing a written application for a tax exemption, and other necessary matters concerning the application of the provisions of paragraphs (1) through (3) and paragraph (5) through the preceding paragraph are specified by Cabinet Order.