Act on Special Measures Concerning Taxation

In the case where, as a result of an individual who holds an equity interest in a certified medical care corporation (limited to a medical care corporation that has received approval by the Minister of Health, Labour and Welfare during the period from the effective date of the provisions listed in Article 1, item (ii) of the Supplementary Provisions of the Act on the Arrangement of Related Acts for Promoting the Comprehensive Securing of Medical and Long-Term Care in Communities (Act No. 83 of 2014) (referred to as the "effective date of the 2014 Medical Care Act amendments" hereinafter through Article 70-7-12) to December 31, 2029) (referred to as the "donor" in paragraph (4)) having waived all or part of that equity interest, gift tax is imposed on another individual who holds an equity interest in that certified medical care corporation (referred to as the "donee" hereinafter in this Article), with regard to the gift tax equivalent to the gift tax subject to deferral (meaning the amount calculated by deeming the value of that economic benefit to be the taxable value of gift tax for that year relating to that donee and 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); the same applies hereinafter in this Article) relating to the value of the benefit received through that waiver (referred to as the "economic benefit" hereinafter through Article 70-7-11 and in Article 70-7-14) for which that gift tax return states that the donee seeks the application of the provisions of this paragraph, out of the amount of the gift tax of that donee for the year that includes the day on which that waiver took place that is payable upon the filing of the return filed by the due date under the provisions of Article 28, paragraph (1) of the Inheritance Tax Act (including, in the case where that donee has died before the due date for filing that return filed by the due date, the return filed by the due date under the provisions of Article 28, paragraph (2) of that Act filed by the heir of that donee (including a universal legatee; the same applies hereinafter in this Article); referred to as the "gift tax return" hereinafter through Article 70-7-11), notwithstanding the provisions of Article 33 of that Act, a grace period is granted for the payment of that tax until the transition deadline stated in the certified transition plan, 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 this Article through Article 70-7-14, the meanings of the terms listed in the following items are as prescribed respectively in those items:

certified medical care corporation: This means a certified medical care corporation prescribed in Article 10-4, paragraph (1) of the Supplementary Provisions of the Act Partially Amending the Medical Care Act, etc. for Establishing a System for Providing Quality Medical Care (Act No. 84 of 2006; referred to as the "2006 Medical Care Act, etc. Amendment Act" hereinafter in this Article, Article 70-7-12 and Article 70-7-14);

equity interest: This means an equity interest prescribed in Article 10-3, paragraph (3), item (ii) of the Supplementary Provisions of the 2006 Medical Care Act, etc. Amendment Act;

certified transition plan: This means a certified transition plan prescribed in Article 10-4, paragraph (2) of the Supplementary Provisions of the 2006 Medical Care Act, etc. Amendment Act;

approval by the Minister of Health, Labour and Welfare: This means the approval by the Minister of Health, Labour and Welfare under the provisions of Article 10-3, paragraph (1) of the Supplementary Provisions of the 2006 Medical Care Act, etc. Amendment Act;

transition deadline: This means the deadline for the transition stated in the certified transition plan pursuant to the provisions of Article 10-3, paragraph (2) of the Supplementary Provisions of the 2006 Medical Care Act, etc. Amendment Act;

fund-contribution type medical care corporation: This means a fund-contribution type medical care corporation prescribed in Article 10-3, paragraph (2), item (i), (c) of the Supplementary Provisions of the 2006 Medical Care Act, etc. Amendment Act.

In the case where any of the following persons receives the application of the provisions of paragraph (1) with regard to an economic benefit as a result of the specified donor prescribed in Article 21-9, paragraph (5) of the Inheritance Tax Act relating to that person having waived an equity interest in a certified medical care corporation, the provisions of Chapter II, Section 3 of that Act do not apply to that economic benefit:

a person subject to taxation for settlement at the time of inheritance prescribed in Article 21-9, paragraph (5) of the Inheritance Tax Act;

a person who submits the written notification referred to in Article 21-9, paragraph (2) 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)) with regard to property other than the economic benefit to which the provisions of paragraph (1) apply that the person received by gift from that specified donor during the year that includes the day on which the waiver by that specified donor of the equity interest in the certified medical care corporation to which the provisions of that paragraph apply took place.

The provisions of paragraph (1) do not apply in the case where the donee seeking the application of the provisions of that paragraph has received a refund according to the amount of contribution based on the equity interest in the certified medical care corporation referred to in that paragraph or has made a transfer of that equity interest during the period from the day on which the waiver of the equity interest in the certified medical care corporation by the donor referred to in that paragraph took place until the due date for filing the gift tax return relating to the economic benefit referred to in that paragraph, or in the case where the donee receives the application of the provisions of paragraph (1) of the following Article.

In the case where the donee who receives the application of the provisions of paragraph (1) or the certified medical care corporation to which the provisions of that paragraph apply 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 for the gift tax equivalent to the gift tax subject to deferral to which the provisions of that paragraph apply is the day on which two months have elapsed from the day specified in the relevant item (or, in the case where that donee has died during the period from the day specified in the relevant item until the day on which those two months elapse, the day on which six months have elapsed from the day following the day on which the heir of that donee came to know of the commencement of the succession due to the death of that donee):

in the case where that donee has received a refund according to the amount of contribution based on the equity interest in that certified medical care corporation during the period from the due date for filing the gift tax return referred to in paragraph (1) until the transition deadline stated in the certified transition plan of that certified medical care corporation: the day on which that refund was received;

in the case where that donee has made a transfer of the equity interest in that certified medical care corporation during the period from the due date for filing the gift tax return referred to in paragraph (1) until the transition deadline stated in the certified transition plan of that certified medical care corporation: the day on which that transfer was made;

in the case where that certified medical care corporation has not made the transition to a new medical care corporation prescribed in Article 10-2 of the Supplementary Provisions of the 2006 Medical Care Act, etc. Amendment Act by the transition deadline stated in the certified transition plan of that certified medical care corporation: that transition deadline;

in the case where the approval by the Minister of Health, Labour and Welfare has been revoked with regard to the certified transition plan of that certified medical care corporation pursuant to the provisions of Article 10-4, paragraph (2) of the Supplementary Provisions of the 2006 Medical Care Act, etc. Amendment Act: the day on which that approval by the Minister of Health, Labour and Welfare was revoked;

in the case where that certified medical care corporation has dissolved (excluding the case where it is extinguished through a merger): the day of that dissolution;

in the case where that certified medical care corporation has been extinguished through a merger (excluding the case where a medical care corporation is established through the merger and that donee does not receive delivery of money or other property in lieu of the equity interest, and any other case specified by Cabinet Order): the day of that extinction.

In the case where the certified medical care corporation to which the provisions of paragraph (1) apply makes the transition to a fund-contribution type medical care corporation by the transition deadline stated in the certified transition plan, when the donee who receives the application of the provisions of that paragraph has waived, pursuant to the provisions of Order of the Ministry of Finance, part of the equity interest in that certified medical care corporation held by the donee and has contributed the remaining part as a fund prescribed in Article 10-3, paragraph (2), item (i), (c) of the Supplementary Provisions of the 2006 Medical Care Act, etc. Amendment Act of that fund-contribution type medical care corporation (referred to as the "fund" in this paragraph and paragraph (11), item (ii)), notwithstanding the provisions of paragraph (1), the deadline of the tax payment grace period under the provisions of paragraph (1) 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 amount contributed as the fund, out of the gift tax subject to deferral of that donee, is the day on which two months have elapsed from the day on which the authorization of the prefectural governor under the provisions of Article 54-9, paragraph (3) of the Medical Care Act was granted for the change to the articles of incorporation for the transition to that fund-contribution type medical care corporation (or, in the case where that donee has died during the period from the day on which that authorization was granted until the day on which those two months elapse, the day on which six months have elapsed from the day following the day on which the heir of that donee came to know of the commencement of the succession due to the death of that donee).

In the case where the donee seeking the application of the provisions of paragraph (1) has provided all of the equity interest in the certified medical care corporation to which the provisions of that paragraph apply held by the donee as security for the gift tax subject to deferral, even when the value of that equity interest is less than that gift tax subject to deferral, security equivalent to that gift tax subject to deferral is deemed to have been provided with regard to the application of the provisions of that paragraph; provided, however, that this does not apply in the case where all or part of the security so provided has subsequently been changed.

The provisions of paragraph (1) do not apply in the case where the gift tax return relating to the economic benefit of the donee seeking the application of the provisions of that paragraph does not state that the donee seeks the application of the provisions of that paragraph for that economic benefit, or where details of the equity interest relating to that economic benefit, details concerning the calculation of the gift tax subject to deferral and other documents specified by Order of the Ministry of Finance are not attached to that return.

If the donee who receives the application of the provisions of paragraph (1) 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, 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 gift tax subject to deferral. In this case, the provisions of Article 49, paragraphs (2) and (3) of that Act 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 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, and the provisions concerning delinquent tax in the Act on General Rules for National Taxes apply to each of those tax amounts;

in the case where the donee seeking the application of the provisions of paragraph (1) provides all of the equity interest in the certified medical care corporation held by the donee as security pursuant to the provisions of the main clause of paragraph (7), the phrase "securities that the district director, etc. (or, in the case where the Commissioner of the National Tax Agency or the regional commissioner is to collect security pursuant to the provisions of the Acts on national tax, the Commissioner of the National Tax Agency or the regional commissioner; the same applies hereinafter in this Article and the following Article) finds to be reliable" in Article 50, item (ii) of the Act on General Rules for National Taxes is deemed to be replaced with "securities and the equity interest prescribed in Article 70-7-9, paragraph (2), item (ii) (Tax Payment Grace Period and Exemption for Gift Tax on Economic Benefits Relating to Equity Interests in Medical Care Corporations) of the Act on Special Measures Concerning Taxation (limited to one that satisfies the requirements specified by Order of the Ministry of Finance, such as not being the subject of a pledge or other security interest)", and the provisions of Article 51, paragraph (1) of that Act do not apply;

in the case referred to in the preceding item, when the proviso to paragraph (7) applies, the provisions of that item do not apply;

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) 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 70-7-9, paragraph (1) (Tax Payment Grace Period and Exemption for Gift Tax on Economic Benefits Relating to Equity Interests in Medical Care Corporations) of the Act on Special Measures Concerning Taxation)", and the phrase "deferred payment," in Article 73, paragraph (4) of that Act is deemed to be replaced with "deferred payment (including a tax payment grace period under the provisions of Article 70-7-9, paragraph (1) (Tax Payment Grace Period and Exemption for Gift Tax on Economic Benefits Relating to Equity Interests in Medical Care Corporations) of the Act on Special Measures Concerning Taxation; the same applies hereinafter in this paragraph),";

the deadline of the tax payment grace period under the provisions of paragraph (1) (including that deadline under the provisions of paragraph (5), paragraph (6) or the preceding paragraph) 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;

with regard to gift tax for which a tax payment grace period has been granted under the provisions of paragraph (1), the phrase "when it is so found, the district director, etc." in Article 52, paragraph (4) of the Act on General Rules for National Taxes is deemed to be replaced with "when it is so found (or, in the case where the equity interest in the certified medical care corporation referred to in Article 70-7-9, paragraph (1) (Tax Payment Grace Period and Exemption for Gift Tax on Economic Benefits Relating to Equity Interests in Medical Care Corporations) of the Act on Special Measures Concerning Taxation relating to the economic benefit prescribed in that paragraph has been provided as security for the tax payment grace period under the provisions of that paragraph, when it is so found or when there is no buyer even if that equity interest in the certified medical care corporation is put up for realization), the district director, etc.", the phrase "one year or more before" in Article 35, paragraph (1) of the National Tax Collection Act is deemed to be replaced with "one year or more before (or, in the case where the national tax relating to that delinquency is gift tax, before the gift relating to that gift tax)", and the phrase "property" in Article 48, paragraph (1) of that Act is deemed to be replaced with "property (excluding, in the case where the equity interest in the certified medical care corporation referred to in Article 70-7-9, paragraph (1) (Tax Payment Grace Period and Exemption for Gift Tax on Economic Benefits Relating to Equity Interests in Medical Care Corporations) of the Act on Special Measures Concerning Taxation relating to the economic benefit prescribed in that paragraph has been provided as security for the tax payment grace period under the provisions of that paragraph, the other property of the donee prescribed in that paragraph who provided that security when there is no buyer even if that equity interest in the certified medical care corporation is put up for realization)";

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 (5), paragraph (6) or the preceding paragraph.

In the case where, by the transition deadline stated in the certified transition plan of the certified medical care corporation to which the provisions of paragraph (1) apply, it has come to fall under any of the cases listed in the following items (excluding the case where, before the day on which it came to fall under that case, it has come to fall under any of the cases listed in the items of paragraph (5), and the case where the deadline of the tax payment grace period has been accelerated under the provisions of paragraph (9)), the gift tax equivalent to the amount specified in the relevant item according to the category of cases listed in the following items is exempted pursuant to the provisions of Cabinet Order:

in the case where the donee who receives the application of the provisions of paragraph (1) has waived, pursuant to the provisions of Order of the Ministry of Finance, all of the equity interest in the certified medical care corporation to which the provisions of that paragraph apply held by the donee: the gift tax subject to deferral;

in the case where that certified medical care corporation makes the transition to a fund-contribution type medical care corporation, when the donee who receives the application of the provisions of paragraph (1) has waived, pursuant to the provisions of Order of the Ministry of Finance, part of the equity interest in that certified medical care corporation held by the donee and has contributed the remaining part as the fund of that fund-contribution type medical care corporation: the remaining amount after deducting the amount calculated pursuant to the provisions of Cabinet Order prescribed in paragraph (6) from the gift tax subject to deferral.

In the case falling under any of the cases listed in the following items, the donee who receives the application of the provisions of paragraph (1) must pay, together with the gift tax prescribed in the relevant item, interest tax equivalent to the amount calculated by multiplying the amount equivalent to the gift tax prescribed in the relevant item, as the base, by a rate of 6.6 percent per annum according to the period from the day following the due date for filing the gift tax return relating to that gift tax until the deadline of the tax payment grace period specified in the relevant item:

in the case where the provisions of paragraph (5) have been applied (excluding the case falling under the case listed in item (iii)): the deadline of the tax payment grace period under the provisions of that paragraph relating to the gift tax prescribed in that paragraph;

in the case where the provisions of paragraph (6) have been applied (excluding the case falling under the case listed in the following item): the deadline of the tax payment grace period under the provisions of that paragraph relating to the gift tax equivalent to the amount calculated pursuant to the provisions of Cabinet Order prescribed in that paragraph;

in the case where the provisions of paragraph (9) have been applied: the deadline of the tax payment grace period as accelerated under the provisions of that paragraph relating to the gift tax prescribed in that paragraph.

In the case where the donee who receives the application of the provisions of paragraph (1) has died by the transition deadline stated in the certified transition plan of the certified medical care corporation to which the provisions of that paragraph apply, the obligation to pay the gift tax subject to deferral relating to that donee is succeeded to by the heir of that donee. In this case, necessary matters are specified by Cabinet Order.

The Minister of Health, Labour and Welfare, or the Director-General of the Regional Bureau of Health and Welfare or the Director-General of the Regional Branch Bureau of Health and Welfare, must, in the case where they have come to know, with regard to the donee who receives the application of the provisions of paragraph (1) or the certified medical care corporation to which the provisions of that paragraph apply, that a fact relating to the fixing of the deadline of the tax payment grace period under the provisions of paragraph (5) or paragraph (6) has occurred, through having accepted a report or performed any other act concerning that fact pursuant to the provisions of laws and regulations, or in the case where they have given certification under the provisions of Article 10-4, paragraph (1) of the Supplementary Provisions of the 2006 Medical Care Act, etc. Amendment Act for a change (limited to one relating to the transition deadline) to the certified transition plan of that certified medical care corporation, notify the Commissioner of the National Tax Agency or the district director with jurisdiction over the place for tax payment of that donee in writing, without delay, that the fact has occurred with regard to that donee or that certified medical care corporation or that the certification has been given for that change, and of other matters specified by Order of the Ministry of Finance.

When the district director, in the case referred to in paragraph (1), finds it necessary in order for the affairs of the Minister of Health, Labour and Welfare or the Director-General of the Regional Bureau of Health and Welfare or the Director-General of the Regional Branch Bureau of Health and Welfare (limited to affairs concerning the donee who receives the application of the provisions of that paragraph that relate to the application of the provisions of the preceding paragraph) to be processed properly and reliably, the district director may notify the Minister of Health, Labour and Welfare, or that Director-General of the Regional Bureau of Health and Welfare or that Director-General of the Regional Branch Bureau of Health and Welfare, that the 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.