Act on Special Measures Concerning Taxation

In the case where a person specified by Cabinet Order as an individual who held unlisted shares or similar interests of a special certified gift succession company (limited to those with no restriction on voting rights; the same applies hereinafter in this paragraph) (excluding a person who has already made a gift to which the provisions of this paragraph apply with regard to the unlisted shares or similar interests of that special certified gift succession company; referred to as a "special donor" hereinafter in this Article and in Articles 70-7-7 and 70-7-8) has made a gift of unlisted shares or similar interests of that special certified gift succession company to a special business successor donee (limited to the first gift to which the provisions of this paragraph apply made during the period from January 1, 2018 to December 31, 2027, and a gift for which the due date for filing the gift tax return (meaning a 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) (or, in the case where that due date for filing has been extended under the provisions of Article 69-8, paragraph (3) or Article 10 or Article 11 of the Act on General Rules for National Taxes, the due date for filing before that extension) arrives during the period from the day of that gift until the last day of the special business gift succession period), if that gift is the gift specified in the relevant item according to the category of the cases listed in the following items, then, with regard to the gift tax equivalent to the gift tax subject to deferral relating to those unlisted shares or similar interests for which the gift tax return states that the special business successor donee seeks the application of the provisions of this paragraph (referred to as "special eligible gifted unlisted shares or similar interests" hereinafter in this Article and in Articles 70-7-7 and 70-7-8), out of the amount of gift tax for the year that includes the day of that gift payable by that special business successor donee upon filing the gift tax return, notwithstanding the provisions of Article 33 of the Inheritance Tax Act, payment of that tax is deferred until the date of death of that special donor (or, with regard to the gift tax equivalent to the gift tax subject to deferral relating to special eligible gifted unlisted shares or similar interests in the case where all or part of those special eligible gifted unlisted shares or similar interests are those to which the provisions of Article 70-7, paragraph (15) (limited to the part relating to item (iii), and including the case where it is applied mutatis mutandis pursuant to paragraph (11)) apply with regard to that special donor, the person who made a gift of unlisted shares or similar interests of the special certified gift succession company relating to those special eligible gifted unlisted shares or similar interests to the person specified by Cabinet Order as a person who received the application of the provisions of this paragraph or paragraph (1) of that Article; the same applies in item (vii) of the following paragraph, in paragraph (14), and in paragraph (15) of that Article as applied mutatis mutandis pursuant to paragraph (11)), only in the case where security equivalent to that gift tax subject to deferral has been provided by the due date for filing the gift tax return for that year pursuant to the provisions of Cabinet Order:

in the case where there is one special business successor donee: the gift specified below according to the category of the following gifts:

in the case where, immediately before that gift, the number or amount of unlisted shares or similar interests of that special certified gift succession company held by that special donor is equal to or more than the number or amount remaining after deducting the number or amount of unlisted shares or similar interests of that special certified gift succession company held by that special business successor donee from two-thirds of the total number or total amount of the issued shares of or capital contributions to that special certified gift succession company (limited to shares, etc. (meaning shares or capital contributions; the same applies hereinafter in this Article) with no restriction on voting rights; the same applies in the following item): a gift of unlisted shares or similar interests in a number or amount equal to or more than the number or amount remaining after that deduction;

in a case other than the case listed in (a): a gift of all of the unlisted shares or similar interests of that special certified gift succession company held by that special donor immediately before that gift;

in the case where there are two or three special business successor donees: a gift as a result of which the number or amount of unlisted shares or similar interests of that special certified gift succession company held by each special business successor donee after that gift is one-tenth or more of the total number or total amount of the issued shares of or capital contributions to that special certified gift succession company, and as a result of which the number or amount of unlisted shares or similar interests of that special certified gift succession company held by each special business successor donee exceeds the number or amount of unlisted shares or similar interests of that special certified gift succession company held by that special donor.

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

special certified gift succession company: a company that has obtained the special certification for business succession out of the small and medium sized enterprises prescribed in Article 2 of the Act on Facilitation of Succession of Management of Small and Medium Sized Enterprises (or, 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, the company specified by Order of the Ministry of Finance as equivalent to that company) that, at the time of the gift to which the provisions of the preceding paragraph apply, satisfies all of the following requirements:

the number of regular employees (meaning those specified by Order of the Ministry of Finance as employees who are regularly employed; the same applies in (e)) of the company is one or more;

the company does not fall under an asset-holding company or asset-management company that is specified by Cabinet Order;

the shares, etc. of the company (referred to as the "specified company" in (c)) and the shares, etc. of a company specified by Cabinet Order as a company having a close relationship with the specified company out of its specially related companies (meaning companies having a special relationship specified by Cabinet Order with the specified company; the same applies hereinafter in this paragraph) (referred to as a "specified specially related company" in (d)) fall under unlisted shares or similar interests;

neither the company nor its specified specially related companies fall under a sex-related business company prescribed in Article 70-7, paragraph (2), item (i), (d);

in the case where a specially related company of the company falls under a foreign company prescribed in Article 2, item (ii) of the Companies Act (limited to the case where the company, or a corporation with which the company has a relationship specified by Cabinet Order as a relationship in which a company directly or indirectly holds shares, etc. in a number or amount exceeding 50 percent of the total number or total amount of the issued shares of or capital contributions to another corporation (excluding its own shares, etc. held by that other corporation) (referred to as a "controlling relationship" in item (viii), (a), the following Article and Article 70-7-8, paragraph (2)), holds shares, etc. of that specially related company), the number of regular employees of the company is five or more;

beyond what is listed in (a) through (e), the company satisfies the requirements specified by Cabinet Order as those necessary for ensuring the smooth operation of the business of a company;

special certification for business succession: the certification by the Minister of Economy, Trade and Industry (or, in the case where it 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) referred to in Article 12, paragraph (1) of that Act (limited to the certification specified by Order of the Ministry of Finance as relating to item (i) of that paragraph);

asset-holding company: the company specified in Article 70-7, paragraph (2), item (viii);

asset-management company: the company specified in Article 70-7, paragraph (2), item (ix);

unlisted shares or similar interests: the shares, etc. specified in Article 70-7, paragraph (2), item (ii);

special business successor donee: an individual who has acquired unlisted shares or similar interests of a special certified gift succession company from a special donor through the gift to which the provisions of the preceding paragraph apply and who satisfies all of the following requirements (where there are two, or three or more, such individuals, limited to up to two or three individuals determined by that special certified gift succession company):

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

the individual holds, at the time of that gift, the authority of representation (excluding authority of representation that has been restricted; the same applies in the following Article and Article 70-7-8) of that special certified gift succession company;

at the time of that gift, the total number of voting rights pertaining to the unlisted shares or similar interests of that special certified gift succession company held by the individual and persons having a special relationship specified by Cabinet Order with the individual exceeds 50 percent of the total number of voting rights of all shareholders, etc. (meaning the number of voting rights of all shareholders (excluding shareholders who may not exercise voting rights with regard to any of the matters that may be resolved at a shareholders meeting) or of all members; the same applies in (d), 2., the following Article and Article 70-7-8) of that special certified gift succession company;

the individual satisfies the requirements specified below according to the category of the following cases:

in the case where there is one such individual: at the time of that gift, the number of voting rights pertaining to the unlisted shares or similar interests of that special certified gift succession company held by the individual is not less than the number of voting rights pertaining to the unlisted shares or similar interests of that special certified gift succession company held by any of the persons having the special relationship specified by Cabinet Order prescribed in (c) with the individual (excluding persons, other than the individual, to whom the provisions of the preceding paragraph, paragraph (1) of the following Article or Article 70-7-8, paragraph (1) apply; the same applies in 2.);

in the case where there are two or three such individuals: at the time of that gift, the number of voting rights pertaining to the unlisted shares or similar interests of that special certified gift succession company held by the individual is 10 percent or more of the total number of voting rights of all shareholders, etc. of that special certified gift succession company, and is not less than the number of voting rights pertaining to the unlisted shares or similar interests of that special certified gift succession company held by any of the persons having the special relationship specified by Cabinet Order prescribed in (c) with the individual;

the individual has continuously held, 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, in the case where the individual has died before that due date for filing, the date of that death), all of the special eligible gifted unlisted shares or similar interests of that special certified gift succession company acquired through that gift;

the individual holds, immediately before that gift, the position of officer of that special certified gift succession company or any other position specified by Order of the Ministry of Finance;

the individual has not received the application of the provisions of Article 70-7, paragraph (1), Article 70-7-2, paragraph (1) or paragraph (1) of the preceding Article with regard to the unlisted shares or similar interests of that special certified gift succession company;

the individual satisfies the requirements specified by Order of the Ministry of Finance as requirements by which the individual is found to reliably succeed to the management of that special certified gift succession company;

special business gift succession period: 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 the preceding paragraph apply until the earlier of the following days or the day before the date of death of the special business successor donee to whom the provisions of that paragraph apply or of the special donor relating to that special business successor donee, whichever is earlier:

the day on which five years have elapsed on or after the day following the due date for filing the gift tax return for the year that includes the day of the first gift of that special business successor donee to which the provisions of the preceding paragraph apply;

the day on which five years have elapsed on or after the day following the due date for filing the inheritance tax return prescribed in paragraph (1) of the following Article for the first inheritance of that special business successor donee to which the provisions of that paragraph apply;

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

in a case other than the case listed in (b): the amount calculated by applying the provisions of Article 21-5 and Article 21-7 of the Inheritance Tax Act (including the provisions of Article 70-2-4 and Article 70-2-5) and deeming the value of the special eligible gifted unlisted shares or similar interests to which the provisions of the preceding paragraph apply (or, in the case where the special certified gift succession company relating to those special eligible gifted unlisted shares or similar interests or a specially related company of that special certified gift succession company that is a corporation having a controlling relationship with that special certified gift succession company (referred to as a "special certified gift succession company, etc." in (a)) holds shares, etc. (including investment units prescribed in Article 2, paragraph (14) of the Act on Investment Trusts and Investment Corporations; the same applies in (a)) of a foreign company prescribed in Article 2, item (ii) of the Companies Act (limited to one that falls under a specially related company of that special certified gift succession company) or of any other corporation specified by Cabinet Order, the value calculated on the assumption that that special certified gift succession company, etc. did not hold those shares, etc.; the same applies in (b)) to be the taxable value of gift tax for that year relating to the special business successor donee referred to in the preceding paragraph;

in the case where the special eligible gifted unlisted shares or similar interests 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 cases 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)) apply: the amount calculated by applying the provisions of Article 21-11-2 through Article 21-13 of that Act (including the provisions of Article 70-3-2) and deeming the value of those special eligible gifted unlisted shares or similar interests to be the taxable value of gift tax for that year relating to the special business successor donee referred to in the preceding paragraph;

base date for management reports for a gift: the day specified in (a) or (b) according to the category of periods listed in (a) or (b) below:

the special business gift succession period: each day on which one year elapses 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 the preceding paragraph apply (or, in the case where the special business successor donee has received the application of the provisions of paragraph (1) of the following Article with regard to unlisted shares or similar interests of the special certified gift succession company relating to the special eligible gifted unlisted shares or similar interests referred to in the preceding paragraph before receiving the application of the provisions of that paragraph, the due date for filing the inheritance tax return prescribed in paragraph (1) of the following Article) (referred to as a "type 1 gift base date" in paragraph (6));

the period from the day following the last day of the special business gift succession period until the day on which the deadline of the tax payment grace period under the provisions of the preceding paragraph, Article 70-7, paragraphs (3) through (5) as applied mutatis mutandis pursuant to the following paragraph, paragraph (11) of that Article as applied mutatis mutandis pursuant to paragraph (8), paragraph (12) of that Article as applied mutatis mutandis pursuant to paragraph (9), or paragraph (14) of that Article as applied mutatis mutandis pursuant to paragraph (10) is fixed for all of the gift tax equivalent to the gift tax subject to deferral (or, in the case where the provisions of Article 70-7, paragraph (4) or (5) as applied mutatis mutandis pursuant to the following paragraph have already been applied, excluding the amount calculated pursuant to the provisions of Cabinet Order as the amount of the part corresponding to the value of the special eligible gifted unlisted shares or similar interests to which those provisions have been applied; referred to as the "amount of gift tax under a grace period" hereinafter in this Article and in Article 70-7-7, paragraph (1)): each day on which three years elapse from the day following that last day (referred to as a "type 2 gift base date" in paragraph (6)).

The provisions of Article 70-7, paragraph (3) (excluding item (ii)), paragraph (4) and paragraph (5) apply mutatis mutandis to the fixing of the deadline of the tax payment grace period under the provisions of paragraph (1). In this case, the phrase "paragraph (1) or Article 70-7-5, paragraph (1)" in item (iii) of paragraph (3) of that Article is deemed to be replaced with "Article 70-7, paragraph (1) or Article 70-7-5, paragraph (1)", the phrase "any of the persons" in item (iv) of that paragraph with "any of the persons (excluding special business successor donees other than that special business successor donee, special business successor heirs, etc. prescribed in Article 70-7-6, paragraph (2), item (vii) to whom the provisions of paragraph (1) of that Article apply, and special business successor donees upon inheritance prescribed in Article 70-7-8, paragraph (2), item (i) to whom the provisions of paragraph (1) of that Article apply)", and the phrase "paragraph (1) or Article 70-7-5, paragraph (1)" in the left-hand column of item (i) of the table in paragraph (4) of that Article with "Article 70-7, paragraph (1) or Article 70-7-5, paragraph (1)".

The provisions of Article 70-7, paragraph (6) apply mutatis mutandis in the case where a special business successor donee seeking the application of the provisions of paragraph (1) has provided, as security for the gift tax subject to deferral, all of the special eligible gifted unlisted shares or similar interests (or, in the case where the special certified gift succession company relating to those special eligible gifted unlisted shares or similar interests 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 those special eligible gifted unlisted shares or similar interests; the same applies hereinafter in this Article).

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

The special business successor donee to whom the provisions of paragraph (1) apply must, if there is a base date for management reports for a gift 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 that paragraph apply until the day on which the deadline of the tax payment grace period under the provisions of that paragraph, Article 70-7, paragraphs (3) through (5) as applied mutatis mutandis pursuant to paragraph (3) of this Article, paragraph (11) of that Article as applied mutatis mutandis pursuant to paragraph (8), paragraph (12) of that Article as applied mutatis mutandis pursuant to paragraph (9), or paragraph (14) of that Article as applied mutatis mutandis pursuant to paragraph (10) is fixed for all of the gift tax equivalent to the amount of gift tax under a grace period, submit to the district director with jurisdiction over the place for tax payment, by the notification deadline (meaning the day on which five months have elapsed from the day following a type 1 gift base date and the day on which three months have elapsed from the day following a type 2 gift base date; the same applies in paragraphs (8) and (21)), pursuant to the provisions of Cabinet Order, a written notification stating that the special business successor donee wishes to continue to receive the application of the provisions of paragraph (1) and matters concerning the management of the special certified gift succession company relating to the special eligible gifted unlisted shares or similar interests referred to in that paragraph.

The provisions of Article 70-7, paragraph (10) apply mutatis mutandis 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.

The provisions of Article 70-7, paragraph (11) apply mutatis mutandis in the case where the written notification referred to in paragraph (6) is not submitted to the district director with jurisdiction over the place for tax payment by the notification deadline.

The provisions of Article 70-7, paragraph (12) apply mutatis mutandis to the acceleration of the deadline of the tax payment grace period under the provisions of paragraph (1).

The provisions of Article 70-7, paragraphs (13) and (14) apply mutatis mutandis 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 successor 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. In this case, the phrase "or paragraph (21)" in item (ix) of paragraph (13) of that Article is deemed to be replaced with "or paragraph (21), or Article 70-7-5, paragraphs (12) through (14)"; and in paragraph (14) of that Article, the term "successor donee" with "special business successor donee", the term "donor" with "special donor", the phrase "Article 70-7, paragraph (2), item (i)" with "Article 70-7-5, paragraph (2), item (i)", the phrase "(Tax Payment Grace Period and Exemption for Gift Tax on Unlisted Shares or Similar Interests)" with "(Special Provisions on Tax Payment Grace Period and Exemption for Gift Tax on Unlisted Shares or Similar Interests)", the term "certified gift succession company" with "special certified gift succession company", the words "', the phrase 'its shareholders" with " or the special business successor donee prescribed in item (vi) of that paragraph', the phrase 'its shareholders", the phrase "referred to in paragraph (1) of that Article" with "that", the phrase "that paragraph" with "paragraph (1) of that Article", the phrase "determine the gift tax under the tax payment grace period to be exempted" with "determine the gift tax under the tax payment grace period to be exempted, or rescind the exemption from that gift tax", the phrase "Article 70-7, paragraph (1)" with "Article 70-7-5, paragraph (1)", and the phrase "Article 70-7" with "Article 70-7-5".

The provisions of Article 70-7, paragraphs (15) through (20) apply mutatis mutandis to the exemption from gift tax for which a tax payment grace period has been granted under the provisions of paragraph (1). In this case, the phrase "paragraph (1) or Article 70-7-5, paragraph (1)" in item (iii) of paragraph (15) of that Article is deemed to be replaced with "Article 70-7, paragraph (1) or Article 70-7-5, paragraph (1)", and the phrase "paragraph (27)" in paragraphs (18) and (19) of that Article with "Article 70-7-5, paragraph (22)".

In the case where the special business successor donee to whom the provisions of paragraph (1) apply or the special certified gift succession company relating to the special eligible gifted unlisted shares or similar interests referred to in that paragraph 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 that special certified gift succession company to continue its business has arisen, and excluding the case where the provisions of Article 70-7, paragraph (11) as applied mutatis mutandis pursuant to paragraph (8) have been applied before the day of coming to fall under that case and the case where the deadline of the tax payment grace period has been accelerated under the provisions of paragraph (12) of that Article as applied mutatis mutandis pursuant to paragraph (9) or paragraph (14) of that Article as applied mutatis mutandis pursuant to paragraph (10) before that day), if the special business successor donee seeks an exemption from the gift tax specified in the relevant item, the special business successor donee must, by the day on which two months have elapsed from the day of coming to fall under that case (or, in the case where the special business successor donee has died during the period from the day of coming to fall under that case until the day on which those two months have elapsed, the day on which six months have elapsed from the day following the day on which the heir (including a universal legatee; the same applies in paragraph (14), item (i) and paragraph (22)) of the special business successor donee came to know of the commencement of the succession due to the death of the special business successor donee; referred to as the "application deadline" in the following paragraph and paragraph (17)), submit to the district director with jurisdiction over the place for tax payment a written application stating that the special business successor donee wishes to receive that exemption, the amount equivalent to the gift tax for which the special business successor donee seeks the exemption, details of its calculation and other matters specified by Order of the Ministry of Finance (limited to a written application to which the documents necessary for the procedure for that exemption and other documents specified by Order of the Ministry of Finance are attached; the same applies in the following paragraph). In this case, with regard to the application of the provisions of Article 70-7, paragraph (5) as applied mutatis mutandis pursuant to paragraph (3), the phrase "items (viii) through (xii)" in item (i) of the table in that paragraph is deemed to be replaced with "item (viii)", the phrase "the amount of gift tax under a grace period" in that item with "the sum of the amounts listed in Article 70-7-5, paragraph (12), item (i), (a) and (b) or the sum of the amounts listed in item (iv), (a) and (b) of that paragraph", the phrase "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, corresponding to the number or amount of the covered gifted unlisted shares or similar interests for which that transfer, etc. was made" in the middle column of item (ii) of that table with "the sum of the amounts listed in Article 70-7-5, paragraph (12), item (i), (a) and (b)", the phrase "the amount of gift tax under a grace period (or, in the case where shares, etc. of the company surviving the absorption-type merger, etc. have been delivered upon that merger, excluding the amount calculated pursuant to the provisions of Cabinet Order as the amount of the part corresponding to the value of those shares, etc.)" in the middle column of item (iii) of that table with "the sum of the amount listed in Article 70-7-5, paragraph (12), item (ii), (a) (limited to the amount calculated pursuant to the provisions of Cabinet Order as the amount of the part corresponding to the value of the property other than the shares, etc. of the company surviving the absorption-type merger, etc. delivered upon that merger) and the amount listed in (b) of that item", and the phrase "the amount of gift tax under a grace period (or, in the case where shares, etc. of that other company have been delivered upon that share exchange, etc., excluding the amount calculated pursuant to the provisions of Cabinet Order as the amount of the part corresponding to the value of those shares, etc.)" in the middle column of item (iv) of that table with "the sum of the amount listed in Article 70-7-5, paragraph (12), item (iii), (a) (limited to the amount calculated pursuant to the provisions of Cabinet Order as the amount of the part corresponding to the value of the property other than the shares, etc. of that other company delivered upon that share exchange, etc.) and the amount listed in (b) of that item".

in the case where, on or after the day following the last day of the special business gift succession period, the special business successor donee has made a transfer, etc. (meaning a transfer or gift; the same applies hereinafter in this Article) of all or part of those special eligible gifted unlisted shares or similar interests (limited to the case where it is made to a person other than those who have a special relationship specified by Cabinet Order with the special business successor 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. (limited to the amount calculated pursuant to the provisions of Cabinet Order as the amount of the part corresponding to the number or amount of the special eligible gifted unlisted shares or similar interests for which that transfer, etc. was made): 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 (viii) 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 specified by Order of the Ministry of Finance as the amount equivalent to the market value, at the time of that transfer, etc., of those special eligible gifted unlisted shares or similar interests corresponding to the number or amount 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 eligible gifted unlisted shares or similar interests acquired through the gift to which the provisions of paragraph (1) apply;

the total of the amount of dividends of surplus, etc. (meaning dividends of surplus or dividends of profit pertaining to the shares, etc. of a company; the same applies hereinafter in this Article and in the following Article) that the special business successor donee and persons having a special relationship specified by Cabinet Order with the special business successor donee received from that special certified gift succession company and other amounts specified by Cabinet Order as amounts received from that special certified gift succession company, within five years on or before the day on which that transfer, etc. took place;

in the case where, on or after the day following the last day of the special business gift succession period, the special certified gift succession company relating to those special eligible gifted unlisted shares or similar interests has been extinguished through a merger (limited to the case where the company surviving the absorption-type merger, etc. (meaning a company surviving an absorption-type merger prescribed in Article 749, paragraph (1) of the Companies Act or a company incorporated through a consolidation-type merger prescribed in Article 753, paragraph (1) of that Act; the same applies hereinafter in this Article) is a person other than those who have a special relationship specified by Cabinet Order with the special business successor donee), if the sum of the following amounts is less than the amount of gift tax under a grace period immediately before that merger takes effect: 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 (viii) by deeming the amount of the consideration for the merger (meaning the property that the company surviving the absorption-type merger, etc. delivers, upon that merger, to the shareholders or members of the special certified gift succession company being extinguished) (or, in the case where that amount is one half or less of the amount specified by Order of the Ministry of Finance as the amount equivalent to the market value of those special eligible gifted unlisted shares or similar interests immediately before that merger takes effect, the amount equivalent to that one half) to be the value, at the time of the gift, of the special eligible gifted unlisted shares or similar interests acquired through the gift to which the provisions of paragraph (1) apply;

the total of the amount of dividends of surplus, etc. that the special business successor donee and persons having a special relationship specified by Cabinet Order with the special business successor donee received from that special certified gift succession company and other amounts specified by Cabinet Order as amounts received from that special certified gift succession company, within five years on or before the day on which that merger takes effect;

in the case where, on or after the day following the last day of the special business gift succession period, the special certified gift succession company relating to those special eligible gifted unlisted shares or similar interests has become a wholly owned subsidiary company resulting from a share exchange or share transfer (meaning a wholly owned subsidiary company resulting from the share exchange prescribed in Article 768, paragraph (1), item (i) of the Companies Act or a wholly owned subsidiary company resulting from a share transfer prescribed in Article 773, paragraph (1), item (v) of that Act; the same applies in (a) and in paragraph (14), item (i), (c)) of another company through a share exchange or share transfer (referred to as a "share exchange, etc." hereinafter in this Article) (limited to the case where that other company is a person other than those who have a special relationship specified by Cabinet Order with the special business successor donee), if the sum of the following amounts is less than the amount of gift tax under a grace period immediately before that share exchange, etc. takes effect: 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 (viii) by deeming the amount of the consideration for the share exchange, etc. (meaning the property that the other company delivers, upon that share exchange, etc., to the shareholders of the special certified gift succession company that has become the wholly owned subsidiary company resulting from a share exchange or share transfer) (or, in the case where that amount is one half or less of the amount specified by Order of the Ministry of Finance as the amount equivalent to the market value of those special eligible gifted unlisted shares or similar interests immediately before that share exchange, etc. takes effect, the amount equivalent to that one half) to be the value, at the time of the gift, of the special eligible gifted unlisted shares or similar interests acquired through the gift to which the provisions of paragraph (1) apply;

the total of the amount of dividends of surplus, etc. that the special business successor donee and persons having a special relationship specified by Cabinet Order with the special business successor donee received from that special certified gift succession company and other amounts specified by Cabinet Order as amounts received from that special certified gift succession company, within five years on or before the day on which that share exchange, etc. takes effect;

in the case where, on or after the day following the last day of the special business gift succession period, the special certified gift succession company relating to those special eligible gifted unlisted shares or similar interests has dissolved, if the sum of the following amounts is less than the amount of gift tax under a grace period immediately before that dissolution: 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 (viii) by deeming the amount specified by Order of the Ministry of Finance as the amount equivalent to the market value of those special eligible gifted unlisted shares or similar interests immediately before that dissolution to be the value, at the time of the gift, of the special eligible gifted unlisted shares or similar interests acquired through the gift to which the provisions of paragraph (1) apply;

the total of the amount of dividends of surplus, etc. that the special business successor donee and persons having a special relationship specified by Cabinet Order with the special business successor donee received from that special certified gift succession company and other amounts specified by Cabinet Order as amounts received from that special certified gift succession company, within five years on or before the day of that dissolution.

In the case of falling under the cases listed in the items of the preceding paragraph (excluding item (iv)) and also falling under any of the following cases, if the special business successor donee seeks the application of the provisions of the following paragraph, notwithstanding the provisions of the preceding paragraph, only in the case where the special business successor donee has provided, by the application deadline, security equivalent to the sum of the amounts listed in (a) and (b) of the items of that paragraph and has submitted, by that application deadline, to the district director with jurisdiction over the place for tax payment a written application stating that the special business successor donee seeks the application of the provisions of this paragraph, details of the calculation of that amount and other matters specified by Order of the Ministry of Finance, the remaining amount after deducting that sum from the deferred tax subject to recalculation (meaning, in the case of falling under the case listed in item (i) of the preceding paragraph, 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, corresponding to the number or amount of the special eligible gifted unlisted shares or similar interests for which the transfer, etc. referred to in that item was made, and, in the case of falling under the case listed in item (ii) or item (iii) of that paragraph, the amount equivalent to the amount of gift tax under a grace period; the same applies hereinafter in this paragraph) may be exempted, and that sum (or, in the case of falling under the case listed in item (i) of the preceding paragraph, the amount obtained by adding to that sum the remaining amount after deducting that deferred tax subject to recalculation from the amount of gift tax under a grace period) may be treated as the amount of gift tax under a grace period:

the case where the amount of consideration for the transfer, etc. prescribed in item (i), (a) of the preceding paragraph is one half or less of the amount specified by Order of the Ministry of Finance as the amount equivalent to the market value of the special eligible gifted unlisted shares or similar interests at the time of that transfer, etc.;

the case where the amount of the consideration for the merger prescribed in item (ii), (a) of the preceding paragraph is one half or less of the amount specified by Order of the Ministry of Finance as the amount equivalent to the market value of the special eligible gifted unlisted shares or similar interests immediately before the merger takes effect;

the case where the amount of the consideration for the share exchange, etc. prescribed in item (iii), (a) of the preceding paragraph is one half or less of the amount specified by Order of the Ministry of Finance as the amount equivalent to the market value of the special eligible gifted unlisted shares or similar interests immediately before the share exchange, etc. takes effect.

With regard to the deadline of the tax payment grace period for, and the exemption from, the gift tax equivalent to the amount treated as the amount of gift tax under a grace period under the provisions of the preceding paragraph, on the day on which two years have elapsed from the day of coming to fall under the cases listed in the items of paragraph (12) (excluding item (iv)) (or, in the case where the special business successor donee to whom the provisions of paragraph (1) apply or the special donor relating to that special business successor donee has died before the day on which those two years elapse, the day before the date of that death), it is as specified in the relevant item according to the category of the cases listed in the following items:

in the case specified by Cabinet Order as the case where the following company is continuing its business on the day on which those two years elapse: with regard to the gift tax equivalent to the special recalculated gift tax amount (or, in the case of falling under the case listed in item (ii) or item (iii) of the preceding paragraph, limited to the amount calculated pursuant to the provisions of Cabinet Order as the amount of the part corresponding to the value of the property other than shares, etc. delivered upon the merger referred to in item (ii) of that paragraph or the share exchange, etc. referred to in item (iii) of that paragraph), notwithstanding the provisions of paragraph (1), the deadline of the tax payment grace period under the provisions of paragraph (1) is the day on which two months have elapsed from the day on which those two years elapse (or, in the case where the special business successor donee has died during the period from the day on which those two years elapse until the day on which those two months have elapsed, the day on which six months have elapsed from the day following the day on which the heir of the special business successor donee came to know of the commencement of the succession due to the death of the special business successor donee; referred to as the "re-application deadline" in the following item and in paragraphs (16) and (17)), and the gift tax equivalent to the remaining amount after deducting the special recalculated gift tax amount from the amount treated as the amount of gift tax under a grace period under the provisions of the preceding paragraph is exempted:

in the case listed in item (i) of the preceding paragraph, the company relating to the special eligible gifted unlisted shares or similar interests for which the transfer, etc. referred to in that item was made;

in the case listed in item (ii) of the preceding paragraph, the company surviving the absorption-type merger, etc. relating to the merger referred to in that item;

in the case listed in item (iii) of the preceding paragraph, the wholly owned subsidiary company resulting from a share exchange or share transfer relating to the share exchange, etc. referred to in that item;

in the case where the company listed in (a) through (c) of the preceding item does not fall under the case specified by Cabinet Order prescribed in that item on the day on which those two years have elapsed: 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 that has been made the amount of gift tax under a grace period pursuant to the provisions of the preceding paragraph (or, in the case falling under the case listed in item (ii) or item (iii) of that paragraph, limited to the amount calculated pursuant to the provisions of Cabinet Order as the amount of the part corresponding to the value of property other than shares, etc. delivered upon the merger referred to in item (ii) of that paragraph or the share exchange, etc. referred to in item (iii) of that paragraph) is the re-application deadline.

The term "special recalculated gift tax amount" referred to in item (i) of the preceding paragraph means the amount obtained by adding the amount listed in paragraph (12), item (i), (b), item (ii), (b) or item (iii), (b) to the amount calculated under the provisions of paragraph (2), item (viii) by deeming the amount equivalent to the amount of consideration for the transfer, etc., the amount of the consideration for the merger or the amount of the consideration for the share exchange, etc. relating to the application of the provisions of that item to be the value, at the time of the gift, of the special eligible gifted unlisted shares or similar interests acquired through the gift to which the provisions of paragraph (1) apply.

A special business successor donee who seeks to receive the exemption from the gift tax referred to in paragraph (14), item (i) pursuant to the provisions of that item must, by the re-application deadline, submit to the district director with jurisdiction over the place for tax payment a written application stating that the special business successor donee wishes to receive the exemption referred to in that item, the amount equivalent to the gift tax for which the special business successor donee seeks the exemption, details of its calculation and other matters specified by Order of the Ministry of Finance (limited to a written application to which the documents necessary for the procedure for that exemption and other documents specified by Order of the Ministry of Finance are attached).

In the case where a written application under the provisions of paragraph (12), paragraph (13) 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 (12) according to the category of the cases listed in those items relating to that written application or from the gift tax prescribed in paragraph (13) or paragraph (14), item (i), or dismisses the application relating to that written application. In this case, the district director is to notify the special business successor donee who submitted that written application of the amount of the gift tax so exempted, or of the dismissal and the reason therefor, by means of a document stating them, within six months counting from the day following the application deadline or the re-application deadline relating to that written application.

The provisions of Article 70-7, paragraphs (18) and (19) apply mutatis mutandis in the case where the written application referred to in paragraph (12), paragraph (13) or paragraph (16) has been submitted. In this case, the phrase "item (vi) of the table in paragraph (27)" in paragraph (18) of that Article is deemed to be replaced with "item (ix) of the table in Article 70-7-5, paragraph (22)", the phrase "item (viii)" is deemed to be replaced with "item (xii)", the phrase "item (vi) of that table" is deemed to be replaced with "item (ix) of that table", and the phrase "the left-hand column of item (vi) of the table in paragraph (27) or item (viii) of that table" in paragraph (19) of that Article is deemed to be replaced with "items (ix) through (xi) of the table in Article 70-7-5, paragraph (22)".

Beyond what is provided for in the preceding three paragraphs, necessary matters concerning the application of paragraphs (12) through (14) are specified by Cabinet Order.

The provisions of Article 70-7, paragraphs (21) through (25) apply mutatis mutandis to the calculation of and exemption from the gift tax subject to deferral in the case where the assessment prescribed in paragraph (21) of that Article has been made with regard to a special certified gift succession company.

The provisions of Article 70-7, paragraph (26) apply mutatis mutandis in the case where the written notification referred to in paragraph (6), or in paragraph (15) of that Article as applied mutatis mutandis pursuant to paragraph (11), has not been submitted by the notification deadline or the deadline for notification of exemption referred to in that paragraph.

With regard to the application of the provisions of the preceding paragraph in the case where a special business successor donee to whom the provisions of paragraph (1) have been applied falls under the case listed in the left-hand column of items (iii) through (xiv) of the table in that paragraph (or, in the case falling under the case listed in the left-hand column of item (iv) or item (v) of that table, limited to the case where the special business successor donee has come to fall under the case prescribed in those provisions on or after the day following the last day of the special business gift succession period), the phrase "3.6 percent per annum" in that paragraph is deemed to be replaced with "3.6 percent per annum (0 percent per annum for the special business gift succession period)".

The provisions of Article 70-7, paragraph (29) apply mutatis mutandis in the case where the special certified gift succession company relating to the special eligible gifted unlisted shares or similar interests referred to in paragraph (1) has acquired property through a capital contribution in kind or a gift from the special business successor donee who seeks to receive the application of the provisions of that paragraph or from a person who has a special relationship specified by Cabinet Order with that special business successor donee.

The provisions of Article 70-7, paragraphs (30) through (34) apply mutatis mutandis in the case where the special certified gift succession company relating to the special eligible gifted unlisted shares or similar interests referred to in paragraph (1) has suffered damage from a disaster, etc. prescribed in paragraph (31) of that Article.

The provisions of Article 70-7, paragraph (35) apply mutatis mutandis in the case where 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, paragraphs (27) and (28) of the following Article, and Article 70-7-8, paragraphs (15) and (16)) has come to know, with regard to the special business successor donee who receives the application of the provisions of paragraph (1), the special eligible gifted unlisted shares or similar interests referred to in that paragraph or the special certified gift succession company relating to those special eligible gifted unlisted shares or similar interests, that a fact relating to the fixing of the deadline of the tax payment grace period under the provisions of Article 70-7, paragraphs (3) through (5) as applied mutatis mutandis pursuant to paragraph (3) has occurred, through having made a certification or confirmation, accepted a report or performed any other act concerning that fact pursuant to the provisions of laws and regulations.

The provisions of Article 70-7, paragraph (36) apply mutatis mutandis in the case where the district director finds it necessary in order for 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 successor donee who receives the application of the provisions of paragraph (1) that relate to the application of the provisions of paragraph (35) of that Article as applied mutatis mutandis pursuant to the preceding paragraph) to be processed properly and reliably.

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.