Act on Special Measures Concerning Taxation

In the case where a person specified by Cabinet Order as an individual who had held specified business assets (excluding a person who has already made a gift to which the provisions of this paragraph apply; referred to as the "donor" in this Article and the following Article) has made a gift to a special business donee of all of the specified business assets relating to the donor's business (excluding, in the case where all or part of those specified business assets belong to the co-ownership of two or more persons, the part relating to the shares of co-ownership held by persons other than that donor) (limited to a gift made during the period from January 1, 2019 to December 31, 2028 that is the first gift to which the provisions of this paragraph apply or a gift made by the day on which one year has elapsed from the day of that gift or any other day specified by Cabinet Order), then, with regard to the gift tax equivalent to the gift tax subject to deferral relating to the specified business assets for which a statement is made in the gift tax return that the special business donee seeks the application of the provisions of this paragraph (referred to as "special gifted business assets" in this Article and the following Article), out of the amount of gift tax for the year that includes the day of that gift that the special business donee must pay by filing the gift tax return (meaning the return filed by the due date under the provisions of Article 28, paragraph (1) of the Inheritance Tax Act; the same applies hereinafter in this Article), notwithstanding the provisions of Article 33 of that Act, a grace period is granted for the payment of that tax until the day of the death of that donor (or, with regard to the gift tax equivalent to the gift tax subject to deferral relating to special gifted business assets in the case where those special gifted business assets are ones relating to the application to that donor of the provisions of paragraph (14) (limited to the part relating to item (iii)), the person who made the gift of the specified business assets relating to those special gifted business assets to the person specified by Cabinet Order as one who had received the application of the provisions of this paragraph; the same applies in paragraph (14)), only if the special business donee has provided security equivalent to that gift tax subject to deferral by the due date for filing the gift tax return for that year.

In this Article, the meanings of the terms listed in the following items are as prescribed respectively in those items:

residential land, etc. (meaning land or rights existing on land, limited to those specified by Cabinet Order out of those used as the site of buildings or structures specified by Order of the Ministry of Finance): the part of the total area of that residential land, etc. that is 400 square meters or less;

buildings (limited to those specified by Cabinet Order as buildings used for that business): the part of the total floor area of those buildings that is 800 square meters or less;

depreciable assets (meaning depreciable assets prescribed in Article 2, paragraph (1), item (xix) of the Income Tax Act, excluding those listed in (b)): depreciable property prescribed in Article 341, item (iv) of the Local Tax Act, automobiles to which the standard tax rate for business use applies under the automobile tax or the light motor vehicle tax, and other depreciable assets equivalent to these that are specified by Order of the Ministry of Finance;

special business donee: an individual who has acquired specified business assets from the donor through a gift to which the provisions of the preceding paragraph apply and who satisfies all of the following requirements:

the individual is 18 years of age or older on the day of that gift;

the individual is a small and medium-sized enterprise prescribed in Article 2 of the Act on Facilitation of Succession of Management of Small and Medium Sized Enterprises (Act No. 33 of 2008) and has received the certification by the Minister of Economy, Trade and Industry referred to in Article 12, paragraph (1) of that Act (or, in the case where the affairs falling under the authority of the Minister of Economy, Trade and Industry are to be performed by a prefectural governor pursuant to the provisions of Cabinet Order based on the provisions of Article 17 of that Act, that prefectural governor) (limited to a certification specified by Order of the Ministry of Finance as one relating to item (ii) of that paragraph; referred to as the "special certification for business succession" in paragraph (27) and Article 70-6-10, paragraph (2), item (ii), (a));

the individual was engaged in the business relating to those specified business assets (including a business specified by Order of the Ministry of Finance as equivalent to that business) immediately before that gift;

the individual has continuously held all of those specified business assets from the time of that gift until the due date for filing the gift tax return for the year that includes the day of that gift (or, if the individual dies before that due date, the day of death; the same applies in (e)), and is using them for the individual's own business;

on the due date for filing the gift tax return for the year that includes the day of that gift, the individual has submitted a written notification of commencement of business for the business relating to those specified business assets under the provisions of Article 229 of the Income Tax Act, and has obtained the approval referred to in Article 143 of that Act (including the approval in the case where it is deemed to have been granted under the provisions of Article 147 of that Act);

the individual's business relating to those specified business assets falls under none of an asset-holding business, an asset-management business and a sex-related special business prescribed in Article 2, paragraph (5) of the Act on Control and Improvement of Amusement Business (Act No. 122 of 1948) at the time of that gift;

the individual satisfies the requirements specified by Order of the Ministry of Finance as those under which the individual is found to reliably succeed to the business of the donor;

gift tax subject to deferral: the amount specified in (a) or (b) according to the category of cases listed in (a) or (b):

cases other than the case listed in (b): the amount calculated by applying the provisions of Articles 21-5 and 21-7 of the Inheritance Tax Act (including the case where they are applied pursuant to the provisions of Articles 70-2-4 and 70-2-5), deeming the value of the special gifted business assets to which the provisions of the preceding paragraph apply (or, in the case where the special business donee has assumed debts relating to those special gifted business assets from the donor together with the gift of those special gifted business assets, the value specified by Cabinet Order as the amount obtained by deducting the amount of those debts from the value of those special gifted business assets; the same applies in (b)) to be the taxable value of gift tax for that year relating to the special business donee referred to in that paragraph;

in the case where the special gifted business assets to which the provisions of the preceding paragraph apply are those to which the provisions of Article 21-9, paragraph (3) of the Inheritance Tax Act (including the case where it is applied mutatis mutandis pursuant to Article 70-2-6, paragraph (1), Article 70-2-7, paragraph (1) (including the case where it is applied mutatis mutandis pursuant to Article 70-2-8) or Article 70-3, paragraph (1); the same applies in paragraph (13), items (vi) and (vii)) apply: the amount calculated by applying the provisions of Articles 21-11-2 through 21-13 of that Act (including the provisions of Article 70-3-2), deeming the value of those special gifted business assets to be the taxable value of gift tax for that year relating to the special business donee referred to in the preceding paragraph;

asset-holding business: a business in which, on any day within the period specified by Cabinet Order as the period for confirming the state of assets of the business relating to an individual's specified business assets, the ratio of the total of the amounts listed in (b) and (c) to the total of the amounts listed in (a) and (c) is 70 percent or more:

the total book value of the total assets recorded in the balance sheet relating to that business as of that day;

the total book value of the specified assets (meaning cash, deposits and savings, and other assets specified by Order of the Ministry of Finance; the same applies in the following item) recorded in the balance sheet relating to that business as of that day;

the total of the consideration, etc. not counted as necessary expenses (meaning the amount of consideration or salary paid to a specially related person that is specified by Cabinet Order as not being included in necessary expenses in calculating the amount of business income prescribed in Article 27, paragraph (2) of the Income Tax Act of that individual; the same applies hereinafter in this Article and Article 70-6-10) received from that individual, within five years on or before that day, by a person who has a special relationship specified by Cabinet Order with that individual (referred to as a "specially related person" in this Article and Article 70-6-10);

asset-management business: a business in which, in any year within the period specified by Cabinet Order as the period for confirming the state of management of assets of the business relating to an individual's specified business assets, the ratio of the total income from the management of specified assets to the gross revenue relating to business income is 75 percent or more.

In the case where the special business donee to whom the provisions of paragraph (1) apply, the special gifted business assets referred to in that paragraph or the business relating to those special gifted business assets has come to fall under any of the cases listed in the following items, notwithstanding the provisions of that paragraph, the deadline of the tax payment grace period under the provisions of that paragraph is the day on which two months have elapsed from the day specified in the relevant item:

in the case where that special business donee has discontinued that business, or an order commencing bankruptcy proceedings has been issued against that special business donee: the day on which the business was discontinued or the day on which that order was issued;

in the case where that business has come to fall under any of an asset-holding business, an asset-management business or a sex-related special business prescribed in Article 2, paragraph (5) of the Act on Control and Improvement of Amusement Business: the day on which it came to so fall;

in the case where the gross revenue of business income relating to that business of that special business donee for the year has become zero: December 31 of that year;

in the case where all of those special gifted business assets have ceased to be recorded in the balance sheet of the blue return relating to the business income of that special business donee for the year: December 31 of that year;

in the case where that special business donee has had the approval referred to in Article 143 of the Income Tax Act revoked under the provisions of Article 150, paragraph (1) of that Act, or has submitted a written notification to the effect that the special business donee will cease to file blue returns under the provisions of Article 151, paragraph (1) of that Act: the day on which that approval was revoked or the day on which that written notification was submitted;

in the case where the special business donee has submitted to the district director with jurisdiction over the place for tax payment a written notification stating that the special business donee will cease to receive the application of the provisions of paragraph (1): the day on which that written notification was submitted.

In the case where all or part of the special gifted business assets to which the provisions of paragraph (1) apply have ceased to be used for the business of the special business donee (excluding the cases listed in the items of the preceding paragraph and the case specified by Cabinet Order as a case where it has become difficult to use them for that business), notwithstanding the provisions of paragraph (1), the deadline of the tax payment grace period under the provisions of that paragraph for the gift tax equivalent to the amount calculated pursuant to the provisions of Cabinet Order as the amount of the part corresponding to the part that has ceased to be used for that business, out of the gift tax subject to deferral (excluding, in the case where the provisions of this paragraph have already been applied, the amount calculated pursuant to the provisions of Cabinet Order as the amount corresponding to the value of the special gifted business assets to which the provisions of this paragraph have been applied; referred to as the "amount of gift tax under a grace period" hereinafter in this Article and in paragraph (1) of the following Article), is the day on which two months have elapsed from the day on which they ceased to be used for that business.

In the case referred to in the preceding paragraph, where the reason for which the assets ceased to be used for the business referred to in that paragraph is a transfer of special gifted business assets, if approval has been obtained from the district director with jurisdiction over the place for tax payment, pursuant to the provisions of Cabinet Order, for the expectation that, within one year from the day on which that transfer took place, assets to be used for the business of the special business donee (limited to the assets listed in paragraph (2), item (i), (a) or (b) or the assets specified in (c) of that item) will be acquired with all or part of the amount of consideration for that transfer, the following provisions apply with regard to the application of the provisions of the preceding paragraph:

the special gifted business assets relating to that approval are deemed to have been used for the business of the special business donee until the day of the acquisition referred to in item (iii);

in the case where, on the day on which one year has elapsed from the day on which that transfer took place, all or part of the amount of consideration for the transfer relating to that approval has not been appropriated to the acquisition of assets to be used for that business, the part specified by Cabinet Order as corresponding to the amount not so appropriated, out of the special gifted business assets relating to that transfer, is deemed to have ceased to be used for that business on that day;

in the case where all or part of the amount of consideration for the transfer relating to that approval has been appropriated to the acquisition of assets to be used for that business by the day on which one year has elapsed from the day on which that transfer took place, the assets so acquired are deemed to be special gifted business assets to which the provisions of paragraph (1) apply.

In the case referred to in paragraph (4), where the reason for which the assets ceased to be used for the business referred to in that paragraph is a transfer of all of the special gifted business assets through a capital contribution in kind upon the incorporation of a company after the day on which five years have elapsed from the day following the specified return due date (meaning the due date for filing the gift tax return for the year that includes the day of the first gift to which the provisions of paragraph (1) apply received by the special business donee to whom the provisions of that paragraph apply, or the due date for filing the inheritance tax return prescribed in Article 70-6-10, paragraph (1) relating to the first inheritance to which the provisions of that paragraph apply, whichever is earlier; the same applies in paragraph (9) and paragraph (14), item (iii)), if approval has been obtained from the district director with jurisdiction over the place for tax payment, pursuant to the provisions of Cabinet Order, for that transfer of the special gifted business assets, then, with regard to the application of the provisions of paragraph (4), the transfer relating to that approval is deemed not to have taken place, and the shares or equity interests acquired through that capital contribution in kind are deemed to be special gifted business assets to which the provisions of paragraph (1) apply (including, in the case where that company has been extinguished through a merger or in any other case specified by Order of the Ministry of Finance, those specified by Order of the Ministry of Finance as equivalent to the shares or equity interests of that company). In this case, necessary matters concerning the application of the provisions of paragraphs (3), (4), (14) and (16) through (18) after that approval has been obtained are specified by Cabinet Order.

The provisions of paragraph (1) do not apply to specified business assets acquired by gift from the donor if, with regard to assets used for the same business as the business relating to those specified business assets, there is another special business donee who is receiving the application of the provisions of that paragraph, another special business donee who seeks to receive the application of the provisions of that paragraph, or another special business heir, etc. prescribed in Article 70-6-10, paragraph (2), item (ii) who is receiving the application of the provisions of paragraph (1) of that Article.

The provisions of paragraph (1) do not apply in the case where the gift tax return relating to the assets used for business that the special business donee seeking the application of the provisions of that paragraph acquired by gift from the donor does not state that the special business donee seeks the application of the provisions of that paragraph for all or part of those assets, or where a document stating details of those assets, details concerning the calculation of the gift tax subject to deferral and other matters specified by Order of the Ministry of Finance is not attached to that return.

If, during the period from the day following the due date for filing the gift tax return for the year that includes the day of the gift to which the provisions of paragraph (1) apply until the day on which the deadline of the tax payment grace period under the provisions of that paragraph, paragraph (3), paragraph (4), paragraph (11) or paragraph (12) is fixed for all of the gift tax equivalent to the amount of gift tax under a grace period, there is a special gift report base date (meaning each day on which a period of three years elapses from the day following the specified return due date), the special business donee to whom the provisions of paragraph (1) apply must, by the notification deadline (meaning the day on which three months have elapsed from the day following that special gift report base date; the same applies in the following paragraph, paragraph (11) and paragraph (15)), submit to the district director with jurisdiction over the place for tax payment, pursuant to the provisions of Cabinet Order, a written notification stating that the special business donee wishes to continue to receive the application of the provisions of paragraph (1) and matters concerning the business relating to the special gifted business assets referred to in that paragraph.

With regard to the prescription of the national government's right to collect the gift tax equivalent to the amount of gift tax under a grace period and the interest tax and delinquent tax relating to that gift tax, except in the case where the provisions of Article 73, paragraph (4) of the Act on General Rules for National Taxes as applied by replacing terms pursuant to paragraph (13), item (iii) apply, the prescription is not completed during the period from the time of submission of the written notification referred to in the preceding paragraph until the notification deadline of that written notification, and is to begin to run anew from the day following that notification deadline.

In the case where the written notification referred to in paragraph (9) is not submitted to the district director with jurisdiction over the place for tax payment by the notification deadline, notwithstanding the provisions of paragraph (1), the deadline of the tax payment grace period under the provisions of that paragraph for the gift tax equivalent to the amount of gift tax under a grace period as of that notification deadline is the day on which two months have elapsed from the day following that notification deadline.

In the following cases, the district director may accelerate the deadline of the tax payment grace period under the provisions of paragraph (1) relating to the gift tax equivalent to the amount of gift tax under a grace period. In this case, the provisions of Article 49, paragraphs (2) and (3) of the Act on General Rules for National Taxes apply mutatis mutandis:

in the case where the special business donee to whom the provisions of paragraph (1) apply does not comply, with regard to the security prescribed in that paragraph, with an order under the provisions of Article 51, paragraph (1) of the Act on General Rules for National Taxes;

in the case where a fact has been found that differs from the matters stated in the written notification referred to in paragraph (9) submitted by the special business donee to whom the provisions of paragraph (1) apply.

With regard to the application of the provisions of the Act on General Rules for National Taxes, the National Tax Collection Act and the Inheritance Tax Act in the case where a special business donee seeks the application of the provisions of paragraph (1) or a tax payment grace period has been granted under the provisions of that paragraph, the following provisions apply:

with regard to delinquent tax on gift tax in the case where the provisions of paragraph (1) have been applied, the amount of that gift tax is divided into the gift tax subject to deferral and the remainder, that gift tax subject to deferral is further divided according to each different deadline of the tax payment grace period prescribed in item (iv), and the provisions concerning delinquent tax in the Act on General Rules for National Taxes apply to each of those tax amounts;

with regard to the application of the provisions of Articles 56 through 58 of the Act on General Rules for National Taxes to gift tax equivalent to the amount that has become an overpayment or erroneous payment as a result of the notice under the provisions of paragraph (21) (limited to a notice relating to paragraph (16) or paragraph (17)), the overpayment or erroneous payment is deemed to have been made on the day on which that notice was issued or the day on which six months have elapsed from the deadline for the application under the provisions of paragraph (16) or paragraph (17), whichever is earlier;

with regard to gift tax for which a tax payment grace period has been granted under the provisions of paragraph (1), the phrase "deferred payment" in Article 64, paragraph (1) and Article 73, paragraph (4) of the Act on General Rules for National Taxes is deemed to be replaced with "deferred payment (including a tax payment grace period under the provisions of Article 70-6-8, paragraph (1) (Tax Payment Grace Period and Exemption for Gift Tax on Business Assets of Individuals) of the Act on Special Measures Concerning Taxation)";

the deadline of the tax payment grace period under the provisions of paragraph (1) (including that deadline under the provisions of paragraph (3), paragraph (4) or the preceding two paragraphs) is to be included in the deadline for deferred payment under the provisions of the Inheritance Tax Act when the provisions concerning the statutory due date for payment or the due date for payment in the Act on General Rules for National Taxes and the National Tax Collection Act are applied;

in the case where the written application referred to in paragraph (16) or paragraph (17) has been submitted, the gift tax equivalent to the amount of gift tax applied for exemption prescribed in those provisions relating to that written application does not, with regard to the application of the provisions of Article 82, paragraph (1) of the National Tax Collection Act, fall under delinquent national tax referred to in paragraph (1) of that Article until the day on which the notice under the provisions of paragraph (21) is issued;

in the case where the special business donee to whom the provisions of paragraph (1) apply has received an exemption from all or part of the amount of gift tax under a grace period under the provisions of the following paragraph or paragraphs (16) through (18), if the succession of the donor of the special gifted business assets to which the provisions of paragraph (1) apply (limited to those to which the provisions of Article 21-9, paragraph (3) of the Inheritance Tax Act apply) has commenced, the provisions of Articles 21-14 through 21-16 of that Act do not apply to the part of those special gifted business assets corresponding to the amount of gift tax under a grace period from which that exemption was received;

in the case where the gift to which the provisions of paragraph (1) apply received by the special business donee to whom the provisions of that paragraph apply is a gift to which the provisions of the following paragraph (limited to the part relating to item (iii)) apply (limited to a gift relating to special gifted business assets to which the provisions of Article 21-9, paragraph (3) of the Inheritance Tax Act apply; referred to as a "second gift" hereinafter in this item), and those special gifted business assets are assets that the second donor (meaning the person who made that second gift; the same applies hereinafter in this item) acquired by gift from the first donor (meaning the person who made the gift of those special gifted business assets to the second donor before the second gift), the provisions of Articles 21-14 through 21-16 of that Act do not apply to those special gifted business assets acquired by the special business donee through that second gift, as at the time when that second donor dies;

the provisions of Article 38, paragraph (3) of the Inheritance Tax Act do not apply to gift tax that falls under the provisions of paragraph (3), paragraph (4) or the preceding two paragraphs.

In the case where the special business donee to whom the provisions of paragraph (1) apply or the donor relating to that special business donee has come to fall under any of the cases listed in the following items (excluding the case where, before the day on which they came to fall under that case, the deadline of the tax payment grace period under the provisions of paragraph (3), paragraph (4), paragraph (11) or paragraph (12) has been fixed for all of the gift tax equivalent to the amount of gift tax under a grace period), the gift tax specified in each of those items is exempted. In this case, the special business donee or the heir of the special business donee (including a universal legatee; the same applies in paragraph (26)) must, during the period from the day on which they came to fall under that case until the day on which six months have elapsed from that day (or, in the case where they have come to fall under the case listed in item (iii), from the day on which the person who received the gift of the special gifted business assets referred to in that item filed the gift tax return to which the provisions of paragraph (1) apply with regard to those special gifted business assets) (referred to as the "deadline for notification of exemption" in the following paragraph), submit to the district director with jurisdiction over the place for tax payment, pursuant to the provisions of Cabinet Order, a written notification stating the matters specified by Order of the Ministry of Finance.

in the case where the special business donee has died at or before the time of the death of that donor: the gift tax equivalent to the amount of gift tax under a grace period;

in the case where that donor has died: the gift tax equivalent to the amount calculated pursuant to the provisions of Cabinet Order as the amount of the part, out of the amount of gift tax under a grace period, that corresponds to the special gifted business assets of which that donor made the gift;

in the case where, after the day on which five years have elapsed from the day following the specified return due date, the special business donee has made a gift to which the provisions of paragraph (1) apply of all of the special gifted business assets to which the provisions of that paragraph apply: the gift tax equivalent to the amount of gift tax under a grace period;

in the case where the special business donee has become unable to continue the business relating to the special gifted business assets held by the special business donee (limited to the case where there is an unavoidable reason specified by Order of the Ministry of Finance for becoming unable to continue that business): the gift tax equivalent to the amount of gift tax under a grace period.

Even in the case where the written notification referred to in paragraph (9) or the preceding paragraph has not been submitted by the notification deadline or the deadline for notification of exemption, if the district director prescribed in those provisions finds that there were unavoidable circumstances for the failure to submit it within those time limits and that written notification has been submitted to that district director pursuant to the provisions of Cabinet Order, that written notification is deemed to have been submitted within those time limits with regard to the application of the provisions of paragraph (11) or the preceding paragraph.

In the case where the special business donee to whom the provisions of paragraph (1) apply has come to fall under any of the cases listed in the following items (excluding the case where, before the day on which the special business donee came to fall under that case, the deadline of the tax payment grace period under the provisions of paragraph (3), paragraph (4), paragraph (11) or paragraph (12) has been fixed for all of the gift tax equivalent to the amount of gift tax under a grace period), if the special business donee seeks an exemption from the gift tax specified in the relevant item, the special business donee must, by the day on which two months have elapsed from the day on which the special business donee came to fall under that case, submit to the district director with jurisdiction over the place for tax payment a written application stating that the special business donee wishes to receive that exemption, the amount equivalent to the gift tax for which the special business donee seeks that exemption (referred to as the "amount of gift tax applied for exemption" in paragraph (22)), details of its calculation and other matters specified by Order of the Ministry of Finance (limited to a written application to which the documents specified by Order of the Ministry of Finance as documents necessary for the procedure for that exemption are attached):

in the case where the special business donee has made a transfer or gift (referred to as a "transfer, etc." in this item and in item (i) of the following paragraph) of all of the special gifted business assets to which the provisions of paragraph (1) apply to a person specified by Cabinet Order as a single person among persons other than the specially related persons of the special business donee, or has made a transfer, etc. in order to carry out a rehabilitation plan under the provisions of the Civil Rehabilitation Act (Act No. 225 of 1999) (excluding a rehabilitation plan that specifies special provisions for housing funds loans prescribed in Article 196, item (iv) of that Act, and a rehabilitation plan relating to small-scale personal rehabilitation prescribed in Article 221, paragraph (1) of that Act or to rehabilitation of salary income earners, etc. prescribed in Article 239, paragraph (1) of that Act; the same applies hereinafter in this item and in paragraphs (18) and (20)) based on the confirmation order for that rehabilitation plan (or, in the case where a fact specified by Cabinet Order as equivalent to that order has occurred, a debt workout plan (meaning a plan specified by Cabinet Order as a plan for the disposition of debts; the same applies in paragraphs (18) and (20))), if the sum of the following amounts is less than the amount of gift tax under a grace period immediately before that transfer, etc.: the gift tax equivalent to the remaining amount after deducting that sum from that amount of gift tax under a grace period;

the amount equivalent to the market value, at the time of that transfer, etc., of the special gifted business assets for which that transfer, etc. was made (or, in the case where that amount is lower than the amount of consideration for the transfer, etc. of the special gifted business assets for which that transfer, etc. was made, that amount of consideration for the transfer, etc.);

the total amount of consideration, etc. not counted as necessary expenses that the specially related persons of the special business donee received from the special business donee within five years on or before the day on which that transfer, etc. took place;

in the case where an order commencing bankruptcy proceedings has been issued against the special business donee: the gift tax equivalent to the remaining amount after deducting the amount listed in (b) from the amount listed in (a).

the amount of gift tax under a grace period immediately before that order commencing bankruptcy proceedings;

the total amount of consideration, etc. not counted as necessary expenses that the specially related persons of the special business donee received from the special business donee within five years on or before the day on which that order commencing bankruptcy proceedings was issued.

In the case where the special business donee to whom the provisions of paragraph (1) apply has come to fall under any of the cases listed in the following items (limited to the case where a reason specified by Cabinet Order as a reason making it difficult for the special business donee to continue the business relating to the special gifted business assets has arisen, and excluding the case where, before the day on which the special business donee came to fall under that case, the deadline of the tax payment grace period under the provisions of paragraph (3), paragraph (4), paragraph (11) or paragraph (12) has been fixed for all of the gift tax equivalent to the amount of gift tax under a grace period), if the special business donee seeks an exemption from the gift tax specified in the relevant item, the special business donee must, by the day on which two months have elapsed from the day on which the special business donee came to fall under that case, submit to the district director with jurisdiction over the place for tax payment a written application stating that the special business donee wishes to receive that exemption, the amount equivalent to the gift tax for which the special business donee seeks that exemption (referred to as the "amount of gift tax applied for exemption" in paragraph (22)), details of its calculation and other matters specified by Order of the Ministry of Finance (limited to a written application to which the documents specified by Order of the Ministry of Finance as documents necessary for the procedure for that exemption are attached):

in the case where the special business donee has made a transfer, etc. of all of those special gifted business assets to a person other than the specially related persons of the special business donee, if the sum of the following amounts is less than the amount of gift tax under a grace period immediately before that transfer, etc.: the gift tax equivalent to the remaining amount after deducting that sum from that amount of gift tax under a grace period;

the amount calculated under the provisions of paragraph (2), item (iii) by deeming the amount of consideration for that transfer, etc. (or, in the case where that amount is one half or less of the amount equivalent to the market value, at the time of that transfer, etc., of those special gifted business assets for which that transfer, etc. was made, the amount equivalent to that one half) to be the value, at the time of the gift, of the special gifted business assets acquired through the gift to which the provisions of paragraph (1) apply;

the total amount of consideration, etc. not counted as necessary expenses that the specially related persons of the special business donee received from the special business donee within five years on or before the day on which that transfer, etc. took place;

in the case where the special business donee has discontinued the business relating to those special gifted business assets, if the sum of the following amounts is less than the amount of gift tax under a grace period immediately before that discontinuance: the gift tax equivalent to the remaining amount after deducting that sum from that amount of gift tax under a grace period.

the amount calculated under the provisions of paragraph (2), item (iii) by deeming the amount equivalent to the market value of those special gifted business assets immediately before that discontinuance to be the value, at the time of the gift, of the special gifted business assets acquired through the gift to which the provisions of paragraph (1) apply;

the total amount of consideration, etc. not counted as necessary expenses that the specially related persons of the special business donee received from the special business donee within five years on or before the day of that discontinuance.

In the case where a confirmation order for a rehabilitation plan under the provisions of the Civil Rehabilitation Act has been issued with regard to the special business donee referred to in paragraph (1) (including the case where a fact specified by Cabinet Order as equivalent to a confirmation order for a rehabilitation plan has occurred), when an assessment specified by Cabinet Order has been made of the assets held by the special business donee (excluding the case where, on or after the day on which that confirmation order was issued (or, in the case where the fact specified by that Cabinet Order has occurred, the day on which the debt workout plan was formed; referred to as the "date of the confirmation order" hereinafter through paragraph (20)) and before the day on which the notice under the provisions of paragraph (21) is issued, the deadline of the tax payment grace period under the provisions of paragraph (3), paragraph (4), paragraph (11) or paragraph (12) has been fixed for all of the gift tax equivalent to the amount of gift tax under a grace period, and limited, for a special business donee who is performing a rehabilitation plan, to the case where a supervisor or trustee has been appointed), the recalculated deferred gift tax is to be the amount of gift tax under a grace period relating to the special gifted business assets. In this case, notwithstanding the provisions of paragraph (1), the deadline of the tax payment grace period under the provisions of that paragraph for the gift tax equivalent to the amount listed in item (ii) is the day on which two months have elapsed from the day on which that notice is issued, and the gift tax equivalent to the remaining amount after deducting the sum of the following amounts from the amount of gift tax under a grace period (referred to as "gift tax exempted on recalculation" in paragraph (21)) is exempted:

that recalculated deferred gift tax;

the total amount of consideration, etc. not counted as necessary expenses that the specially related persons of the special business donee received from the special business donee within five years on or before the date of the confirmation order.

The term "recalculated deferred gift tax" referred to in the preceding paragraph means the amount calculated under the provisions of paragraph (2), item (iii) by deeming the value, as of the date of the confirmation order, of the special gifted business assets to which the provisions of paragraph (1) apply (limited to the part corresponding to the amount of gift tax under a grace period) to be the value, at the time of the gift, of the special gifted business assets acquired through the gift to which the provisions of that paragraph apply.

The provisions of paragraph (18) apply only in the case where the special business donee seeking the application of the provisions of that paragraph has, by the day on which two months have elapsed from the date of the confirmation order, submitted to the district director with jurisdiction over the place for tax payment a written application stating that the special business donee wishes to receive the application of the provisions of that paragraph, the recalculated deferred gift tax prescribed in the preceding paragraph, details of its calculation and other matters specified by Order of the Ministry of Finance (limited to a written application to which the documents specified by Order of the Ministry of Finance as documents concerning the rehabilitation plan (including a debt workout plan) for which the confirmation order prescribed in paragraph (18) was issued are attached).

In the case where a written application under the provisions of paragraph (16), paragraph (17) or the preceding paragraph has been submitted, the district director conducts an investigation into the matters stated in that written application, and either grants an exemption from the gift tax specified in the relevant item of paragraph (16) or paragraph (17) according to the category of the cases listed in those items or from the gift tax exempted on recalculation, or dismisses the application relating to that written application. In this case, the district director is to notify the special business donee who submitted that written application of the amount of the gift tax so exempted or the amount of that gift tax exempted on recalculation, or of the dismissal and the reason therefor, by means of a document stating them, within six months counting from the day following the deadline for the application relating to that written application.

If the district director, in the case where the written application referred to in paragraph (16) or paragraph (17) has been submitted, finds that there are reasonable grounds, the district director may grant a grace period for the collection of the gift tax equivalent to the amount of gift tax applied for exemption relating to that application, during the period from the due date for payment relating to that written application (meaning the day listed in the right-hand column of item (v) or item (vi) of the table in paragraph (25), according to the category of the cases listed in the left-hand column of item (v) or item (vi) of that table) or the day on which that written application was submitted, whichever is later, until the day on which one month has elapsed on or after the day following the day on which the notice under the provisions of the preceding paragraph was issued.

In the case where a special business donee receives the application of the provisions of paragraph (16), item (i) or paragraph (17), item (i) or (ii), if the district director finds that there is an unavoidable reason for the special business donee's being unable to determine the appropriate market value, the district director may grant an exemption from the amount of the part of the delinquent tax on the gift tax that has become payable as a result of coming to fall under the case listed in the left-hand column of item (v) or item (vi) of the table in paragraph (25) that corresponds to the period from the day following the due date for payment prescribed in the preceding paragraph until the day on which one month has elapsed on or after the day following the day on which the notice under the provisions of paragraph (21) was issued.

Beyond what is provided for in paragraph (20) through the preceding paragraph, necessary matters concerning the application of the provisions of paragraphs (16) through (18) are specified by Cabinet Order.

In the case where, by the deadline of the tax payment grace period prescribed in paragraph (3), paragraph (4), paragraph (11) or paragraph (18), the due date for submitting the written application prescribed in paragraph (16), paragraph (17) or paragraph (20), the due date for payment prescribed in paragraph (22), or the end of the period forming the basis for calculating the interest tax prescribed in the preceding paragraph (limited to the interest tax relating to item (v) or item (vi) of the table in that paragraph), the special business donee prescribed in those provisions has died, notwithstanding those provisions, the deadline of the tax payment grace period, the due date for submitting the written application, the due date for payment or the end of the period forming the basis for calculating the interest tax prescribed in those provisions is, respectively, the day on which six months have elapsed from the day following the day on which the heir of that special business donee came to know of the commencement of the succession due to the death of that special business donee.

The Minister of Economy, Trade and Industry or the Director-General of a Bureau of Economy, Trade and Industry (or, in the case where the special certification for business succession is to be made by a prefectural governor pursuant to the provisions of a Cabinet Order based on the provisions of Article 17 of the Act on Facilitation of Succession of Management of Small and Medium Sized Enterprises, that prefectural governor; the same applies in the following paragraph and in Article 70-6-10, paragraphs (28) and (29)) must, if any of them has come to know, as a result of having made a certification or confirmation, accepted a report or taken any other action based on the provisions of laws and regulations with regard to a fact relating to the fixing of the deadline of the tax payment grace period under the provisions of paragraph (3) or paragraph (4) with respect to the special business donee to whom the provisions of paragraph (1) apply, the special gifted business assets referred to in that paragraph or the business relating to those special gifted business assets, that the fact has occurred, notify the Commissioner of the National Tax Agency or the district director with jurisdiction over the place for tax payment of that special business donee in writing, without delay, that the fact has occurred with regard to that business and of other matters specified by Order of the Ministry of Finance.

If the district director, in the case referred to in paragraph (1), finds it necessary for the proper and reliable handling of the affairs of the Minister of Economy, Trade and Industry or the Director-General of a Bureau of Economy, Trade and Industry (limited to affairs concerning the special business donee to whom the provisions of that paragraph apply that relate to the application of the provisions of the preceding paragraph), the district director may notify the Minister of Economy, Trade and Industry or the Director-General of a Bureau of Economy, Trade and Industry that the special business donee receives the application of the provisions of paragraph (1), and of other matters specified by Order of the Ministry of Finance.

Beyond what is provided for in paragraph (3) through the preceding paragraph, necessary matters concerning the application of paragraph (1) are specified by Cabinet Order.