Act on Special Measures Concerning Taxation

Where a corporation that, at the end of each business year, falls under any of the corporations listed in Article 52, paragraph (1), item (i), (a) through (c) of the Corporation Tax Act (excluding mutual companies prescribed in the Insurance Business Act and those specified by Cabinet Order as being equivalent thereto; referred to in the following paragraph as a "small and medium sized enterprise, etc.") (for one that falls under a corporation listed in (a) of that item (referred to in the following paragraph as a "small or medium-sized corporation"), excluding one that falls under an excluded business operator prescribed in Article 42-4, paragraph (19), item (viii) (hereinafter referred to in this Article as an "excluded business operator") (including, where any of the other group tax sharing corporations that have a group tax sharing full controlling interest with a group tax sharing corporation at the end of each business year of that group tax sharing corporation falls under an excluded business operator, that group tax sharing corporation)) is subject to the provisions of Article 52, paragraph (2) of the Corporation Tax Act, notwithstanding the provisions of that paragraph, the corporation may treat the amount calculated by multiplying the total book value (for monetary claims specified by Cabinet Order, the balance after deducting the amount specified by Cabinet Order; the same applies in the following paragraph) of the collectively assessed monetary claims prescribed in that paragraph (excluding monetary claims held by that corporation against another corporation with which that corporation has a full controlling interest prescribed in Article 2, item (xii)-7-6 of that Act; the same applies in the following paragraph) as of the end of that business year by the rate specified by Cabinet Order as the amount calculated as specified by Cabinet Order prescribed in Article 52, paragraph (2) of that Act.

Where a corporation that would fall under a small and medium sized enterprise, etc. if the time immediately before a qualified company split, etc. prescribed in Article 52, paragraph (6) of the Corporation Tax Act were the end of a business year (for a small or medium-sized corporation, excluding one that falls under an excluded business operator (including, where any of the other group tax sharing corporations that have a group tax sharing full controlling interest with a small or medium-sized corporation that is a group tax sharing corporation at the time immediately before that qualified company split, etc. falls under an excluded business operator, that small or medium-sized corporation that is a group tax sharing corporation)) is subject to the provisions of that paragraph, notwithstanding the provisions of that paragraph, the corporation may treat the amount calculated by multiplying the total book value of the collectively assessed monetary claims to be transferred through that qualified company split, etc. as of the time immediately before that qualified company split, etc. by the rate specified by Cabinet Order as the amount equivalent to the maximum amount of transfer to the collective allowance for bad debts prescribed in that paragraph.