Act on Special Measures Concerning Taxation

Where the designated company prescribed in Article 12, paragraph (1), item (i) of the Act on the Integrated and Efficient Establishment and Management of Kansai International Airport and Osaka International Airport (Act No. 54 of 2011) (hereinafter referred to in this Article as the "designated company"), in an applicable business year, in preparation for the expenditure of airport site development costs (meaning the costs required for the development of the airport site referred to in Article 15 of that Act), sets aside as a reserve for land development for Kansai International Airport, by the method of accounting as an expense or loss, an amount not exceeding the lower of the following amounts (including where it sets aside the amount as a reserve for land development for Kansai International Airport by the method of setting it aside as a reserve fund through the appropriation of surplus by the day on which the settlement of accounts for that applicable business year is finalized), the amount so set aside is included in deductible expenses in calculating the amount of income for that applicable business year.

the lower of the following amounts:

the amount equivalent to one-tenth of the amount specified by Cabinet Order as the acquisition cost of the airport site (meaning the airport site prescribed in Article 12, paragraph (1) of the Act on the Integrated and Efficient Establishment and Management of Kansai International Airport and Osaka International Airport; the same applies hereinafter in this Article);

the amount, out of the amount of income for that applicable business year, calculated pursuant to the provisions of Cabinet Order on the basis of the amounts of income of the designated company and New Kansai International Airport Company, Ltd. so as to contribute to the reliable repayment of airport site development debts and the appropriate management of the airport site;

the amount obtained by deducting, from the amount of the airport site development debts, the amount of the reserve for land development for Kansai International Airport carried over from the preceding business year as of the end of that applicable business year (where there are amounts that have been included, or are to be included, in gross profit by that day pursuant to the provisions of paragraph (5), or amounts that were included in gross profit by the end of the preceding business year pursuant to the provisions of paragraph (4), the amount obtained by deducting those amounts; the same applies hereinafter in this Article).

The applicable business year prescribed in the preceding paragraph means each business year that includes a day within the period from the day on which the designated company leased the airport site to New Kansai International Airport Company, Ltd. pursuant to the provisions of Article 12, paragraph (1), item (ii) of the Act on the Integrated and Efficient Establishment and Management of Kansai International Airport and Osaka International Airport to the day specified by Cabinet Order as the day on which the period of that lease ends (where that day is after the day of completion of the repayment of the airport site development debts, the day of that completion) (referred to in paragraph (4) as the "accumulation period") (excluding the business year that includes the day of dissolution, each business year during liquidation and the business year that includes the day before the date of a merger (excluding a qualified merger) of a merged corporation, and limited to a business year for which a blue return is filed).

The airport site development debts prescribed in the preceding two paragraphs means, out of the borrowings and other debts held by the designated company after the absorption-type company split prescribed in Article 3, paragraph (3), item (i) of the Supplementary Provisions of the Act on the Integrated and Efficient Establishment and Management of Kansai International Airport and Osaka International Airport, the borrowings and other debts incurred to cover the costs of construction work for the creation of the airport site.

Where, as of the end of each business year after the last business year of the applicable business years prescribed in paragraph (2) (hereinafter referred to in this paragraph as the "base business year") of a designated company that has set aside the reserve for land development for Kansai International Airport referred to in paragraph (1), there is an amount of the reserve for land development for Kansai International Airport carried over from the preceding business year, then with regard to that amount of the reserve for land development for Kansai International Airport, the amount equivalent to the amount calculated by multiplying the amount of the reserve for land development for Kansai International Airport as of the end of that base business year by the number of months in each relevant business year and dividing the result by the number of months in the period specified by Cabinet Order taking into account the accumulation period (where the amount so calculated exceeds the amount of the reserve for land development for Kansai International Airport carried over from the preceding business year, that amount of the reserve for land development for Kansai International Airport so carried over) is included in gross profit in calculating the amount of income for that business year.

Where a designated company that has set aside the reserve for land development for Kansai International Airport referred to in paragraph (1) comes to fall under any of the cases listed in the following items (excluding where it has transferred the airport site through a qualified merger or a qualified company split by split-off), the amount equivalent to the amount specified in that item is included in gross profit in calculating the amount of income of the designated company for the business year that includes the day on which it came to fall under that case (in the case listed in item (ii), (a), the business year that includes the day before the date of the merger).

where the designation under Article 12, paragraph (1), item (i) of the Act on the Integrated and Efficient Establishment and Management of Kansai International Airport and Osaka International Airport has been revoked pursuant to the provisions of Article 16 of that Act: the amount of the reserve for land development for Kansai International Airport as of the day on which it was revoked;

where the designated company has transferred the airport site through an assignment, merger or company split: the amount specified below for the category of the following cases:

where it has transferred the airport site to the merging corporation through a merger: the amount of the reserve for land development for Kansai International Airport immediately before the merger;

cases other than the case listed in (a): the amount of the reserve for land development for Kansai International Airport as of the day on which it transferred the airport site;

where the designated company has dissolved (excluding dissolution through a merger): the amount of the reserve for land development for Kansai International Airport as of the day of dissolution;

where the designated company has reversed the amount of the reserve for land development for Kansai International Airport in a case other than the cases referred to in the preceding paragraph, the preceding three items and the following paragraph: the amount equivalent to the amount reversed out of the amount of the reserve for land development for Kansai International Airport as of the day of the reversal.

Where a designated company that has set aside the reserve for land development for Kansai International Airport referred to in paragraph (1) has had the approval for filing blue returns revoked, or has submitted a written notification to the effect that it will discontinue filing returns by blue return, the amount of the reserve for land development for Kansai International Airport as of the day on which the fact that gave rise to the revocation of the approval occurred (where it falls under any of the cases listed in the following items, the day specified in that item) or the day on which the written notification was submitted (where the day on which the written notification was submitted is after the end of the business year in which it discontinued filing returns by blue return, the end of that business year) is included in gross profit in calculating the amount of income of the designated company for the business year that includes that day. In this case, the provisions of the preceding two paragraphs, paragraph (9) and paragraph (10) do not apply.

where a group tax sharing parent corporation has received the notice under Article 127, paragraph (2) of the Corporation Tax Act pertaining to the disposition of that revocation: the day on which it received the notice;

where a corporation that was a group tax sharing parent corporation has received the notice under Article 127, paragraph (2) of the Corporation Tax Act pertaining to the disposition of that revocation: the day on which the fact that gave rise to the revocation of the approval occurred or the day on which the approval under Article 64-9, paragraph (1) of that Act ceased to be effective, whichever is later.

The number of months referred to in paragraph (4) is calculated in accordance with the calendar, and a fraction of less than one month is counted as one month.

The provisions of Article 56, paragraph (6) apply mutatis mutandis to the application of the provisions of paragraph (1).

The provisions of Article 55, paragraphs (10) through (12) apply mutatis mutandis where a designated company that has set aside the reserve for land development for Kansai International Airport referred to in paragraph (1) has transferred the airport site to the merging corporation through a qualified merger. In this case, the phrase "is not a person who may file the final return, etc. for the business year that includes the date of the qualified merger as a blue return" in paragraph (11) of that Article is deemed to be replaced with "is not a person who may file the final return, etc. for the business year that includes the date of the qualified merger as a blue return or a designated company prescribed in Article 12, paragraph (1), item (i) of the Act on the Integrated and Efficient Establishment and Management of Kansai International Airport and Osaka International Airport"; the phrase "of paragraph (3)" in paragraph (12) of that Article with "of Article 57-7, paragraph (1) and paragraph (4)"; and the phrase "in paragraph (3)" with "in paragraph (4) of that Article".

The provisions of Article 55, paragraphs (13) through (16) apply mutatis mutandis where a designated company that has set aside the reserve for land development for Kansai International Airport referred to in paragraph (1) has transferred the airport site to a succeeding corporation in a company split through a qualified company split by split-off. In this case, the term "paragraph (3)" in paragraph (14) of that Article is deemed to be replaced with "Article 57-7, paragraph (4)"; the phrase "is not a person who may file the final return, etc. for the business year that includes the date of the qualified company split as a blue return" in paragraph (15) of that Article with "is not a person who may file the final return, etc. for the business year that includes the date of the qualified company split as a blue return or a designated company prescribed in Article 12, paragraph (1), item (i) of the Act on the Integrated and Efficient Establishment and Management of Kansai International Airport and Osaka International Airport"; the phrase "of paragraph (3)" in paragraph (16) of that Article with "of Article 57-7, paragraph (1) and paragraph (4)"; and the phrase "in paragraph (3)" with "in paragraph (4) of that Article".

Beyond what is provided for in paragraph (8), necessary matters concerning the application of the provisions of paragraphs (1) through (7) and the preceding two paragraphs are specified by Cabinet Order.