Act on Special Measures Concerning Taxation

Where a corporation filing a blue return that is specified by Order of the Ministry of Finance as one that conducts, jointly with a new business developer (meaning a new business developer prescribed in Article 2, paragraph (6) of the Act on Strengthening Industrial Competitiveness; hereinafter the same applies in this paragraph), a specified business activity (meaning a specified business activity prescribed in paragraph (28) of that Article; hereinafter the same applies in this paragraph and paragraph (9)) (hereinafter referred to as a "covered corporation" in this paragraph and paragraph (15)) has acquired, within the designated period in each business year that includes a day within the period from April 1, 2020 to March 31, 2028 (hereinafter referred to as the "designated period" in this paragraph) (excluding a business year that includes the date of dissolution, each business year during liquidation, and a business year that includes the day before the date of a merger (excluding a qualified merger) of a merged corporation), specified shares (meaning, of the shares of a special new business development operator (meaning a corporation specified by Order of the Ministry of Finance as a new business developer that conducts a business contributing to a specified business activity; hereinafter the same applies in this paragraph), those specified by Cabinet Order as satisfying requirements including that they fall under any of the shares listed below; hereinafter the same applies in this Article), and continues to hold them until the end of the business year that includes the date of the acquisition (hereinafter referred to as the "covered business year" in this Article), then, if the covered corporation has accounted for an amount not exceeding the amount equivalent to 25 percent (where the specified shares fall under the shares listed in item (iii), 20 percent) of the acquisition price of the specified shares (where the acquisition price exceeds 20 billion yen (where the specified shares fall under the shares listed in item (i), 5 billion yen), 20 billion yen (where the specified shares fall under the shares listed in that item, 5 billion yen)) (where the book value of the specified shares has been reduced in the covered business year, the amount after deducting, from that equivalent amount, the amount calculated pursuant to the provisions of Cabinet Order as the amount of the portion of the amount so reduced that pertains to the amount included in deductible expenses in calculating the amount of income for the covered business year), by the method of setting up a special account for each special new business development operator and for each class of shares listed in the following items in the settlement of accounts finalized for the covered business year (including the method of setting it aside as a reserve through the appropriation of surplus by the day on which the settlement of accounts for the covered business year is finalized), an amount equivalent to the amount so accounted for is included in deductible expenses in calculating the amount of income for the covered business year. In this case, if that equivalent amount exceeds the amount calculated pursuant to the provisions of Cabinet Order as the amount of income for the covered business year (where the amount so calculated exceeds 12.5 billion yen, 12.5 billion yen; hereinafter referred to as the "income-based limit" in this paragraph), the amount to be included in deductible expenses is limited to the income-based limit.

shares delivered through payment made in connection with an increase in the amount of stated capital;

the shares, in the case where, through their acquisition (limited to acquisition by purchase; the same applies in the following item), the covered corporation comes to hold voting rights exceeding 50 percent of the voting rights of all shareholders of that special new business development operator;

the shares, in the case where the covered corporation is expected to come to hold voting rights exceeding 50 percent of the voting rights of all shareholders of that special new business development operator by the day on which three years have elapsed from the date of the acquisition (excluding the shares listed in the preceding item).

Where a corporation has carried out a qualified merger or a qualified company split, etc. (meaning a qualified company split or a qualified capital contribution in kind; hereinafter the same applies in this Article), the amount of the special account specified in each of the following items according to the category of qualified merger or qualified company split, etc. listed in that item is to be succeeded to by the merging corporation, the succeeding corporation in a company split or the corporation receiving a capital contribution in kind pertaining to that qualified merger or qualified company split, etc.:

qualified merger: the amount of the special account held immediately before the qualified merger (meaning the amount of the special account referred to in the preceding paragraph that has been included in deductible expenses (where there is any amount that has already been included in gross profit or that should be included in gross profit, the amount after deducting those amounts); hereinafter the same applies in this Article);

qualified company split, etc.: where all or part of the specified shares pertaining to the special account referred to in the preceding paragraph (where those specified shares are not shares that fall under the shares listed in item (i) of that paragraph (hereinafter referred to as "specified shares from a capital increase" in this Article), all of those specified shares) have been transferred to the succeeding corporation in a company split or the corporation receiving a capital contribution in kind through the qualified company split, etc., the amount calculated pursuant to the provisions of Cabinet Order as the amount pertaining to the specified shares so transferred, out of the amount of the special account pertaining to those specified shares held immediately before the qualified company split, etc. (where all of the specified shares pertaining to the special account referred to in that paragraph have been transferred through the qualified company split, etc., the amount of the special account pertaining to those specified shares immediately before the qualified company split, etc.).

The provisions of the preceding paragraph apply, in the case of a corporation that has set up the special account referred to in paragraph (1) and has carried out a qualified company split, etc., only where the corporation that has set up the special account submits, within two months after the date of the qualified company split, etc., a document stating the amount of the special account to be passed on to the succeeding corporation in a company split or the corporation receiving a capital contribution in kind through the qualified company split, etc. and other matters specified by Order of the Ministry of Finance to the district director having jurisdiction over its place for tax payment.

The amount of the special account succeeded to by the merging corporation, the succeeding corporation in a company split or the corporation receiving a capital contribution in kind pursuant to the provisions of paragraph (2) is deemed to be the amount of the special account set up by that merging corporation, succeeding corporation in a company split or corporation receiving a capital contribution in kind pursuant to the provisions of paragraph (1).

In the case referred to in the preceding paragraph, if the merging corporation, the succeeding corporation in a company split or the corporation receiving a capital contribution in kind referred to in that paragraph is not a person that may file the final return, etc. for the business year that includes the date of the qualified merger or qualified company split, etc. as a blue return, the amount of the special account at the end of that business year is included in gross profit in calculating the amount of income for that business year.

Where a corporation that has set up the special account 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 special account 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 for the business year that includes that day. In this case, the provisions of paragraph (2), the following paragraph, paragraph (8), paragraphs (10) through (13) and paragraph (17) do not apply.

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

where a corporation that was a group tax sharing 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 before the day on which the approval under Article 64-9, paragraph (1) of that Act ceased to be effective (where that day before is the end of the business year of the group tax sharing parent corporation of that corporation, the day on which the approval ceased to be effective), whichever is later.

Where a corporation that has set up the special account referred to in paragraph (1) has carried out a non-qualified share exchange, etc. prescribed in Article 62-9, paragraph (1) of the Corporation Tax Act in which it is the wholly owned subsidiary corporation in a share exchange or similar act or the wholly owned subsidiary corporation in a share transfer (hereinafter referred to as a "non-qualified share exchange, etc." in this paragraph), if the corporation holds an amount of the special account (excluding an amount less than the amount specified by Cabinet Order) at the time immediately before the non-qualified share exchange, etc., the amount of that special account is included in gross profit in calculating the amount of income for the business year that includes the date of the non-qualified share exchange, etc.

Where a corporation that has set up the special account referred to in paragraph (1) has come to fall under the category of a domestic corporation prescribed in Article 64-11, paragraph (1) of the Corporation Tax Act, another domestic corporation prescribed in Article 64-12, paragraph (1) of that Act, or a group tax sharing corporation prescribed in Article 64-13, paragraph (1) of that Act (limited to one that satisfies the requirement listed in item (i) of that paragraph), if the corporation holds an amount of the special account (excluding an amount less than the amount specified by Cabinet Order) at the end of the business year immediately before the start of group tax sharing prescribed in Article 64-11, paragraph (1) of that Act, the business year immediately before joining group tax sharing prescribed in Article 64-12, paragraph (1) of that Act, or the business year immediately before the end of group tax sharing prescribed in Article 64-13, paragraph (1) of that Act, the amount of that special account is included in gross profit in calculating the amount of income for that business year immediately before the start of group tax sharing, business year immediately before joining group tax sharing or business year immediately before the end of group tax sharing.

Where, for any business year of a corporation that has set up the special account referred to in paragraph (1), the case does not fall under the case specified by Order of the Ministry of Finance as a case where it has been made clear, through an investigation based on the provisions of Article 46, item (ii) of the Act on Strengthening Industrial Competitiveness or by other means, that a specified business activity is being conducted jointly with the corporation that issued the specified shares pertaining to that special account (excluding specified shares pertaining to the amount of a special account that is to be succeeded to by the merging corporation, the succeeding corporation in a company split or the corporation receiving a capital contribution in kind pursuant to the provisions of paragraph (2); hereinafter the same applies in this paragraph), the amount of the special account pertaining to those specified shares is included in gross profit in calculating the amount of income for that business year. In this case, the provisions of the preceding three paragraphs, the following paragraph, paragraph (11) and paragraph (17) do not apply.

Where, at the end of any business year of a corporation that has set up the special account referred to in paragraph (1) (hereinafter referred to as a "corporation with the special account" in this paragraph), the amount of the special account pertaining to specified shares (excluding specified shares from a capital increase) carried over from the preceding business year includes an amount with respect to which any of the facts listed in the following items has occurred (hereinafter referred to as the "amount of the special account after five years, etc." in this paragraph) (excluding the case specified by Order of the Ministry of Finance as a case where it has been made clear, through an investigation based on the provisions of Article 46, item (ii) of the Act on Strengthening Industrial Competitiveness or by other means, that growth and development of the business of the corporation that issued those specified shares has been achieved for each business year of the corporation with the special account up to and including the business year that includes the day specified in the respective item according to the category of fact listed in that item), the amount of the special account after five years, etc. is included in gross profit in calculating the amount of income for the business year of the corporation with the special account that includes the day specified in the respective item according to the category of fact listed in that item. In this case, the provisions of paragraphs (7), (8) and (17) do not apply.

the arrival of the last day of the accounting period prescribed in Article 13, paragraph (1) of the Corporation Tax Act, of the corporation that issued the specified shares pertaining to that amount of the special account, that includes the day on which five years have elapsed from the date of acquisition of those specified shares: that last day;

the dissolution, on or before the day on which five years elapse from the date of acquisition of the specified shares pertaining to that amount of the special account, of the corporation that issued those specified shares through a merger in which the corporation with the special account is the merging corporation: the date of that dissolution.

Where, at the end of any business year of a corporation that has set up the special account referred to in paragraph (1) (hereinafter referred to as a "corporation with the special account" in this paragraph), the amount of the special account pertaining to specified shares (limited to those that fall under the shares listed in paragraph (1), item (iii)) carried over from the preceding business year includes an amount pertaining to specified shares for which the day on which three years have elapsed from the date of their acquisition has arrived (hereinafter referred to as the "amount of the special account after three years" in this paragraph) (excluding the case specified by Order of the Ministry of Finance as a case where it has been made clear, through an investigation based on the provisions of Article 46, item (ii) of the Act on Strengthening Industrial Competitiveness or by other means, that voting rights exceeding 50 percent of the voting rights of all shareholders of the corporation that issued those specified shares came to be held by that day), the amount of the special account after three years is included in gross profit in calculating the amount of income for the business year of the corporation with the special account that includes that day. In this case, the provisions of paragraphs (7), (8) and (17) do not apply.

Where, at the end of any business year (hereinafter referred to as the "specified business year" in this paragraph) of a corporation that has set up the special account referred to in paragraph (1) (hereinafter referred to as a "corporation with the special account" in this paragraph), the amount of the special account pertaining to specified shares (excluding specified shares from a capital increase) carried over from the preceding business year includes an amount pertaining to a corporation that issued those specified shares and was dissolved through a merger, carried out before the specified business year, in which the corporation with the special account is the merging corporation (limited to the case specified by Order of the Ministry of Finance as a case where it has been made clear, through an investigation based on the provisions of Article 46, item (ii) of the Act on Strengthening Industrial Competitiveness or by other means, that growth and development of the business of the corporation that issued those specified shares has been achieved for each business year of the corporation with the special account up to and including the business year that includes the date of that merger (hereinafter referred to as the "merger business year" in this paragraph)), then, with regard to that amount of the special account, an amount equivalent to the amount calculated by multiplying the amount of that special account at the end of the merger business year by the number of months in the specified business year and dividing the result by 60 (where the amount so calculated exceeds the amount of that special account at the end of the specified business year, the amount of that special account) is included in gross profit in calculating the amount of income for the specified business year. In this case, the provisions of paragraph (2) and the preceding three paragraphs do not apply.

Where a corporation that has set up the special account referred to in paragraph (1) (hereinafter referred to as a "corporation with the special account" in this paragraph) has come to fall under any of the cases listed in the following items (excluding where that special account is to be succeeded to by the merging corporation (limited to one that receives the transfer of the specified shares pertaining to that special account through a qualified merger), the succeeding corporation in a company split or the corporation receiving a capital contribution in kind pursuant to the provisions of paragraph (2), and where the provisions of paragraph (9) have been applied with regard to that special account), the amount specified in each of those items, out of the amount of the special account, is included in gross profit in calculating the amount of income for the business year that includes the day on which it has come to fall under that case (in the case listed in item (ii), the business year that includes the day before the date of the merger):

where the corporation has ceased to hold all or part of the specified shares pertaining to the special account referred to in paragraph (1) (excluding where it falls under any of the following item through item (iv) or item (viii), and where the corporation that issued those specified shares has dissolved through a merger in which the corporation with the special account is the merging corporation): the amount calculated, pursuant to the provisions of Cabinet Order, as the amount pertaining to the shares it has ceased to hold, out of the amount of the special account pertaining to those specified shares as of the day on which it ceased to hold them (where it has ceased to hold all of the specified shares pertaining to the special account referred to in that paragraph, the amount of the special account pertaining to those specified shares as of the day on which it ceased to hold them);

where a merger in which the corporation with the special account is the merged corporation has been carried out: the amount of the special account immediately before the merger;

where there has been a change in the ratio of the value of the contribution of the corporation with the special account based on an investment limited partnership agreement prescribed in Article 3, paragraph (1) of the Limited Partnership Act for Investment or a Civil Code partnership contract, to the total of the values of the contributions of all partners based on those contracts, pertaining to those of the specified shares prescribed in item (i) that are partnership property of an investment limited partnership prescribed in Article 2, paragraph (2) of the Limited Partnership Act for Investment or of a partnership under a partnership contract prescribed in Article 667, paragraph (1) of the Civil Code (hereinafter referred to as a "Civil Code partnership contract" in this item) (excluding the case specified by Order of the Ministry of Finance prescribed in paragraph (10)): the amount of the special account pertaining to those specified shares as of the day of the change;

where the corporation that issued the specified shares prescribed in item (i) has dissolved (excluding where the corporation that issued those specified shares has dissolved through a merger in which the corporation with the special account is the merging corporation): the amount of the special account pertaining to those specified shares as of the date of dissolution;

where a dividend of surplus (excluding one made through a company split by split-off and a share distribution prescribed in Article 2, item (xii)-15-2 of the Corporation Tax Act (referred to as a "share distribution" in the following item)) has been received with respect to the specified shares prescribed in item (i): of the amount of the special account pertaining to those specified shares as of the day on which it was received, an amount equivalent to the amount calculated by multiplying the amount specified by Cabinet Order as the amount, out of the total of the amount of money and the value of assets other than money delivered as that dividend of surplus, that pertains to the amount of capital surplus reduced by that dividend of surplus, or any other amount (in the case specified by Order of the Ministry of Finance prescribed in paragraph (10), that total) by 25 percent (where those specified shares fall under the shares listed in paragraph (1), item (iii), 20 percent);

where the book value of the specified shares prescribed in item (i) has been reduced: the amount calculated pursuant to the provisions of Cabinet Order as the amount pertaining to the amount, out of the amount so reduced, that has been included in deductible expenses in calculating the amount of income for the business year that includes the day of the reduction (where the reduction has been made through a company split by split-off or a share distribution, the amount that is treated as the amount listed in Article 61-2, paragraph (1), item (ii) of the Corporation Tax Act pursuant to the provisions of paragraph (4) or paragraph (8) of that Article), out of the amount of the special account pertaining to those specified shares as of the day of the reduction;

where the corporation with the special account has dissolved (excluding where it has dissolved through a merger): the amount of the special account as of the date of dissolution;

where the corporation with the special account has ceased to hold voting rights exceeding 50 percent of the voting rights of all shareholders of the corporation that issued the specified shares prescribed in item (i) (limited to those listed below) (excluding where it falls under item (ii), and where the corporation that issued those specified shares has dissolved through a merger in which the corporation with the special account is the merging corporation): the amount of the special account pertaining to those specified shares as of the day on which it ceased to hold them;

specified shares that fall under the shares listed in paragraph (1), item (ii);

specified shares that fall under the shares listed in paragraph (1), item (iii) (limited to those specified shares in the case where the corporation with the special account has come to hold voting rights exceeding 50 percent of the voting rights of all shareholders of the corporation that issued those specified shares by the day on which three years have elapsed from the date of their acquisition);

where the amount of the special account pertaining to the specified shares prescribed in item (i) has been reversed in a case other than the cases referred to in paragraph (9) through the preceding paragraph and the preceding items (excluding where the corporation that issued those specified shares (limited to specified shares from a capital increase) has dissolved through a merger in which the corporation with the special account is the merging corporation): an amount equivalent to the amount so reversed, out of the amount of the special account pertaining to those specified shares as of the day of the reversal.

The provisions specified in each of the following items do not apply to the amount of the special account listed in that item:

the amount of the special account pertaining to those of the specified shares from a capital increase pertaining to the special account referred to in paragraph (1) that are specified by Cabinet Order as specified shares for which three years (for specified shares acquired on or before March 31, 2022, five years) have elapsed from the date of their acquisition: the provisions of paragraphs (2) through (9) and the preceding paragraph;

the amount of the special account pertaining to those of the specified shares (excluding specified shares from a capital increase) pertaining to the special account referred to in paragraph (1) that are specified by Cabinet Order as specified shares for which five years have elapsed from the date of their acquisition: the provisions of paragraph (9).

Where the provisions of paragraph (1) are applied for any covered business year of a group tax sharing corporation that is a covered corporation (limited to a business year ending on the day of the end of the business year of the group tax sharing parent corporation pertaining to that group tax sharing corporation), the income-based limit prescribed in that paragraph for that covered business year of that group tax sharing corporation is the amount equivalent to the pre-adjustment group tax sharing income-based limit (meaning the amount calculated pursuant to the provisions of Cabinet Order as the amount of income of that group tax sharing corporation calculated pursuant to the provisions of Article 64-5 and Article 64-7 of the Corporation Tax Act on the basis of the amounts specified by Cabinet Order as the income before group tax sharing and the deficit before group tax sharing prescribed in Article 64-5, paragraph (1) of that Act (referred to as the "income before group tax sharing" and the "deficit before group tax sharing", respectively, in the following paragraph) for that covered business year, or for the business year ending on the day of the end of that covered business year (referred to as the "other business year" in the following paragraph), of that group tax sharing corporation and the other group tax sharing corporations (limited to those that have a group tax sharing full controlling interest with that group tax sharing corporation at the end of that covered business year; the same applies in the following paragraph)) (where that amount exceeds 12.5 billion yen, 12.5 billion yen).

In the case referred to in the preceding paragraph, where the income before group tax sharing or the deficit before group tax sharing for the other business year of another group tax sharing corporation differs from the initially reported income before group tax sharing or the initially reported pre-aggregation loss amount (meaning, respectively, the amount stated, in the document attached to the final return, etc. (excluding a tax return form filed after the due date) for the other business year of the other group tax sharing corporation, as the income before group tax sharing or the deficit before group tax sharing for that other business year of that other group tax sharing corporation; hereinafter the same applies in this paragraph), the initially reported income before group tax sharing or the initially reported pre-aggregation loss amount is deemed to be the income before group tax sharing or the deficit before group tax sharing for the other business year of the other group tax sharing corporation.

If, at the end of each business year (hereinafter referred to as an "adjustment business year" in this paragraph) following the business year for which the provisions of paragraph (1) have been applied to a domestic corporation (limited to one ending on the day of the end of the business year of the group tax sharing parent corporation pertaining to the domestic corporation; hereinafter referred to as the "business year of application" in this paragraph), the deficit before group tax sharing prescribed in Article 64-5, paragraph (1) of the Corporation Tax Act (excluding that deemed not to exist pursuant to the provisions of Article 64-6 of that Act; hereinafter referred to as the "deficit before group tax sharing" in this paragraph and paragraph (19)) incurred in the business year ending on the base date (hereinafter referred to as the "other applicable business year" in this paragraph) of any of the other group tax sharing corporations (meaning other domestic corporations that have a group tax sharing full controlling interest with the domestic corporation as of the day of the end of the business year of application of the domestic corporation (hereinafter referred to as the "base date" in this paragraph); hereinafter the same applies in this paragraph) exceeds the amount stated as the deficit before group tax sharing in the document attached to the final return, etc. for that other applicable business year of that other group tax sharing corporation (limited to the case where the amount of that excess (hereinafter referred to as the "group tax sharing deficit shortfall amount" in this paragraph) includes an amount based on accounting that disguised facts; hereinafter referred to as the "case of an excessive return" in this paragraph), or if there is an amount stated as the deficit before group tax sharing in the document attached to the final return, etc. (limited to a tax return form filed after the due date) for the other applicable business year of any of the other group tax sharing corporations (hereinafter referred to as the "amount of loss stated in a late return" in this paragraph) (hereinafter referred to as the "case of a loss stated in a late return" in this paragraph), and there is an amount, out of the amount of the special account at the end of that adjustment business year pertaining to the amount included in deductible expenses pursuant to the provisions of paragraph (1) in that business year of application, up to the amount obtained by deducting the pre-adjustment group tax sharing income-based shortfall (meaning, where the amount so included in deductible expenses is less than the pre-adjustment group tax sharing income-based limit prescribed in paragraph (15) for that business year of application, the amount of the shortfall) from the amount calculated by multiplying the amount listed in item (i) by the ratio listed in item (ii) (where there is an amount included in gross profit pursuant to the provisions of this paragraph in a business year preceding the adjustment business year with regard to the amount so obtained, the amount obtained by deducting the total of the amounts so included) (hereinafter referred to as the "amount to be added as an adjustment" in this paragraph), the amount to be added as an adjustment is included in gross profit in calculating the amount of income for the adjustment business year.

the total of the group tax sharing deficit shortfall amounts or the amounts of loss stated in a late return pertaining to the other group tax sharing corporations (limited to those pertaining to the case of an excessive return or the case of a loss stated in a late return; referred to as a "group tax sharing corporation with a triggering event" in the following item);

the ratio prescribed in Article 64-5, paragraph (2) of the Corporation Tax Act, as calculated with the provisions of paragraph (5) of that Article applied, of the domestic corporation for the business year of application, in the case where the provisions of Article 64-5, paragraph (5) of that Act were not applied to the group tax sharing corporation with a triggering event.

The number of months referred to in paragraph (12) is calculated in accordance with the calendar, and a fraction of less than one month is counted as one month.

In the application of the provisions of paragraph (17) for the adjustment business year prescribed in that paragraph of the domestic corporation referred to in that paragraph, where the deficit before group tax sharing incurred in the other applicable business year prescribed in that paragraph of a group tax sharing corporation with a triggering event prescribed in item (i) of that paragraph differs from the finalized amount of deficit before group tax sharing (meaning the amount stated as the deficit before group tax sharing in the most recent of the documents attached to the final return, etc. or amended return form for that other applicable business year filed on or before the day of the end of that adjustment business year, or of the documents attached to the written notice of reassessment prescribed in Article 28, paragraph (2) of the Act on General Rules for National Taxes pertaining to a reassessment under the provisions of Article 24 or Article 26 of that Act made on or before that day; hereinafter the same applies in this paragraph), the finalized amount of deficit before group tax sharing is deemed to be the deficit before group tax sharing incurred in that other applicable business year.

Where the provisions of Article 64-5, paragraph (8) of the Corporation Tax Act apply in the covered business year of the group tax sharing corporation referred to in paragraph (15), the provisions of paragraph (16) do not apply to that covered business year. In this case, the provisions of paragraph (17) and the preceding paragraph are not to apply to the adjustment business year prescribed in paragraph (17) of the domestic corporation referred to in that paragraph for which that covered business year is the business year of application prescribed in that paragraph.

The provisions of paragraph (1) apply only if 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 has attached to it 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.

The provisions of paragraph (1) do not apply to specified shares to which the provisions of Article 55, paragraph (1) or Article 56, paragraph (1) have been applied.

With regard to the application of the provisions of Article 67, paragraphs (3) and (5) of the Corporation Tax Act, the amount included in deductible expenses pursuant to the provisions of paragraph (1) of a corporation to which the provisions of that paragraph have been applied (limited to the amount of the portion pertaining to specified shares from a capital increase) is to be included in the amount of income, etc. prescribed in those provisions, and, with regard to the application of the provisions of paragraphs (3) and (5) of that Article, the amount included in gross profit pursuant to the provisions of paragraphs (5) through (8), paragraph (13) or paragraph (17) (limited to the amount of the portion pertaining to specified shares from a capital increase) is not to be included in the amount of income, etc. prescribed in those provisions.

Beyond what is provided for in the preceding three paragraphs, the calculation of the amount of revenue reserves of a corporation to which the provisions of paragraph (1), paragraphs (5) through (9), paragraph (13) or paragraph (17) have been applied and other necessary matters concerning the application of the provisions of paragraphs (1) through (20) are specified by Cabinet Order.