Act on Special Measures Concerning Taxation

Where land, etc. held by a qualified farmland-owning corporation prescribed in Article 2, paragraph (3) of the Cropland Act has come to fall under any of the cases listed in the following items, if the amount of the consideration or the value of the assets (hereinafter referred to as "assets acquired by exchange" in this paragraph) that the qualified farmland-owning corporation has acquired through the transfer of the land, etc. that has come to fall under any of those items (where the value of the assets acquired by exchange acquired through the transfer exceeds the value of the transferred land, etc., and an amount equivalent to the difference has been paid upon the transfer, the amount after deducting the amount equivalent to that difference) exceeds the total of the book value of the transferred land, etc. immediately before the transfer and the amount calculated pursuant to the provisions of Cabinet Order as the expenses required for the transfer of the transferred land, etc. that pertain to the consideration or the assets acquired by exchange, and the qualified farmland-owning corporation does not receive the application of the provisions of Articles 65-7 through 65-9 or Article 66 with regard to any of the land, etc. that has so come to fall under those items during the portion of that business year falling within the same calendar year, the lower of the amount of that excess and 8 million yen (where there is an amount that has been included or is to be included in deductible expenses pursuant to the provisions of this paragraph with regard to the amount of consideration or the value of the assets acquired by exchange acquired through transfers in the year that includes the date of the transfer, the amount after deducting that amount) is included in deductible expenses in calculating the amount of income for the business year that includes the date of the transfer.

where land, etc. is transferred through consultation, conciliation or mediation pertaining to a recommendation prescribed in Article 23 of the Act on Establishment of Agricultural Promotion Regions, or any other case specified by Cabinet Order as a case where land, etc. is transferred for rationalization of farmland holding (excluding the case where the provisions of Article 65-3, paragraph (1), item (vii) or paragraph (1), item (xxv) of the preceding Article apply);

where land, etc. located within an agricultural land area prescribed in Article 8, paragraph (2), item (i) of the Act on Establishment of Agricultural Promotion Regions is transferred as provided by a promotion plan for agricultural land use consolidation, etc. referred to in Article 18, paragraph (1) of the Act on the Promotion of Farmland Intermediary Management Services for which public notice under the provisions of paragraph (7) of that Article has been given (excluding the case where the provisions of Article 65-3, paragraph (1), item (vii) or paragraph (1), item (xxv) of the preceding Article apply).

The provisions of the preceding paragraph apply only where the final return, etc. contains a statement concerning the inclusion in deductible expenses of the amount to be included in deductible expenses pursuant to the provisions of that paragraph, and a written statement concerning the calculation of the amount to be included in deductible expenses and other documents specified by Order of the Ministry of Finance are attached to that final return, etc.

Even where a final return, etc. 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 were unavoidable circumstances for the failure to include the statement or attachment, apply the provisions of paragraph (1), but only where a document containing the statement, and the written statement and the documents specified by Order of the Ministry of Finance referred to in that paragraph, are submitted.

The provisions of Article 65-3, paragraph (7) apply mutatis mutandis where the provisions of paragraph (1) are applied.

Beyond what is provided for in the preceding three paragraphs, matters necessary for the application of the provisions of paragraph (1) are specified by Cabinet Order.

Where a corporation (excluding a corporation in liquidation) has transferred land located in Japan or a right existing on land (excluding that which falls under inventory assets; hereinafter referred to as "land, etc." in this Article) that it acquired within the period from January 1, 2009 to December 31, 2010 (referred to as the "designated period" in paragraph (4)), that it has continued to hold since the date of acquisition and for which the holding period (meaning the period during which it held the land, etc. from the day following the date of acquisition until January 1 of the year that includes the date of the transfer of the land, etc.) exceeds five years, if the amount of the consideration or the value of the assets (hereinafter referred to as "assets acquired by exchange" in this paragraph) that the corporation has acquired through the transfer of the land, etc. (where the value of the assets acquired by exchange acquired through the transfer exceeds the value of the transferred land, etc., and an amount equivalent to the difference has been paid upon the transfer, the amount after deducting the amount equivalent to that difference) exceeds the total of the book value of the transferred land, etc. immediately before the transfer and the amount calculated pursuant to the provisions of Cabinet Order as the expenses required for the transfer of the transferred land, etc. that pertain to the consideration or the assets acquired by exchange, and the corporation does not receive the application of the provisions of Articles 65-7 through 65-9 or Article 66 with regard to any of the land, etc. it has transferred during the portion of that business year falling within the same calendar year, the lower of the amount of that excess and 10 million yen (where there is an amount that has been included or is to be included in deductible expenses pursuant to the provisions of this paragraph with regard to the amount of consideration or the value of the assets acquired by exchange acquired through transfers in the year that includes the date of the transfer, the amount after deducting that amount) is included in deductible expenses in calculating the amount of income for the business year that includes the date of the transfer.

The provisions of the preceding paragraph apply only where the final return, etc. contains a statement concerning the inclusion in deductible expenses of the amount to be included in deductible expenses pursuant to the provisions of that paragraph, and a written statement concerning the calculation of the amount to be included in deductible expenses is attached to that final return, etc.

Even where a final return, etc. 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 were unavoidable circumstances for the failure to include the statement or attachment, apply the provisions of paragraph (1), but only where a document containing the statement and the written statement referred to in that paragraph are submitted.

Where a merging corporation, a succeeding corporation in a company split, a corporation receiving a capital contribution in kind or a corporation receiving a distribution in kind (hereinafter referred to as a "merging corporation, etc." in this paragraph) has received, through a qualified merger, a qualified company split, a qualified capital contribution in kind or a qualified in-kind distribution (referred to as a "qualified merger, etc." in paragraph (7), item (ii), (d)), a transfer of land, etc. that the merged corporation, splitting corporation, corporation making a capital contribution in kind or corporation making a distribution in kind (hereinafter referred to as a "merged corporation, etc." in this paragraph) acquired within the designated period, the provisions of paragraph (1) apply by deeming that the merging corporation, etc. acquired the land, etc. on the date on which the merged corporation, etc. acquired the land, etc.

With regard to the application of the provisions of Article 67, paragraphs (3) and (5) of the Corporation Tax Act, the amount that a corporation that has received the application of the provisions of paragraph (1) has included in deductible expenses pursuant to the provisions of that paragraph is to be included in the amount of income, etc. prescribed in those provisions of that Act.

Beyond what is provided for in paragraph (2) through the preceding paragraph, the calculation of the amount of revenue reserves of a corporation that has received the application of the provisions of paragraph (1), and other matters necessary for the application of the provisions of that paragraph, are specified by Cabinet Order.

With regard to the terms used in this Article, the following provisions apply:

acquisition does not include acquisition from an individual or corporation having a special relationship with the corporation that is specified by Cabinet Order, acquisition through a merger, company split, gift, exchange, capital contribution or qualified in-kind distribution, acquisition through a lease transaction without transfer of ownership, or any other acquisition specified by Cabinet Order;

transfer is to include, in the case that falls under the case specified by Cabinet Order as a case where the value of land, etc. is significantly reduced by having another person use the land, etc., the act of having it so used, and is not to include the following:

a transfer through expropriation, purchase, replotting disposition, rights conversion, or acquisition prescribed in Article 64, paragraph (1), items (i) through (iv) and item (viii) and Article 65, paragraph (1), item (i) and items (iii) through (vii) (including a transfer in the case where a transfer through expropriation, etc. or replotting disposition, etc. prescribed in those provisions is deemed to have been made pursuant to the provisions of Article 64, paragraph (2) or Article 65, paragraphs (7) through (9));

a transfer to which the provisions of the preceding three Articles apply (including a transfer by exchange);

a transfer by exchange to which the provisions of Article 50, paragraph (1) or (5) of the Corporation Tax Act apply;

a transfer of land, etc. through a qualified merger, etc.

Where a corporation has transferred assets it holds, if, with regard to the transfers of assets in the year that includes the day of that transfer (including transfers of assets held by a corporation that has, in that year, a full controlling interest relationship prescribed in Article 2, item (xii)-7-6 of the Corporation Tax Act with that corporation (limited to a full controlling interest relationship by a corporation as prescribed in that item) (hereinafter referred to in this Article as a "corporation with a full controlling interest relationship")), that corporation and the corporation with a full controlling interest relationship receive the application of two or more of the provisions of Article 65-2, paragraph (1), (2) or (7), Article 65-3, paragraph (1), Article 65-4, paragraph (1), Article 65-5, paragraph (1) or paragraph (1) of the preceding Article, or that corporation or the corporation with a full controlling interest relationship each receive the application of those provisions, and the total of the amounts that that corporation and the corporation with a full controlling interest relationship have included or will include in deductible expenses pursuant to those provisions (hereinafter referred to in this Article as the "deductible amount before adjustment") exceeds 50 million yen, then, notwithstanding those provisions, the amount calculated by multiplying the amount of the excess by the ratio of the total of the amounts that that corporation has included or will include in deductible expenses pursuant to those provisions to the deductible amount before adjustment is not included in deductible expenses in calculating the amount of income of that corporation for each business year.