Act on Special Measures Concerning Taxation

interest on corporate bonds (meaning corporate bonds as prescribed in Article 2, paragraph (1), item (ix) of the Income Tax Act which fall under the rights prescribed in Article 29-2, paragraph (1), item (viii) of the Financial Instruments and Exchange Act; hereinafter the same applies in this item, item (ii) of the following paragraph, and paragraph (3), item (ii)) which are held as proprietary property of a financial institution by a specified management method (meaning a method that satisfies the requirements specified by Cabinet Order, such as imposing restrictions on the transfer of corporate bonds; hereinafter the same applies in this item, item (ii) of the following paragraph, and paragraph (3), item (ii)), or which have been placed in custody by a specified management method with a financial instruments business operator as prescribed in Article 2, paragraph (9) of that Act (limited to a person engaged in type I financial instruments business as prescribed in Article 28, paragraph (1) of that Act; referred to in item (ii) of the following paragraph and paragraph (3), item (ii) as a "financial instruments business operator") or with a registered financial institution as prescribed in Article 2, paragraph (11), item (i) of that Act (referred to in item (ii) of the following paragraph and paragraph (3), item (ii) as a "registered financial institution") (excluding the interest on corporate bonds so placed in custody of a financial institution prescribed in the preceding item which is specified by Cabinet Order);

Where a resident or a nonresident who has a permanent establishment transfers general shares, etc. (meaning shares, etc. other than listed shares, etc. prescribed in paragraph (2) of the following Article; hereinafter the same applies in this Article) on or after January 1, 2016 (excluding a transfer made by the method of the transaction listed in Article 28, paragraph (810), item (iii), (a) of the Financial Instruments and Exchange Act (referred to as a "securities futures transaction" in Article 37-11-2, paragraph (2)), and a transfer pertaining to the acquisition, prescribed in paragraph (3), item (v), of a corporation's own shares or capital contributions or to the redemption of public and corporate bonds by the method of purchase; hereinafter the same applies in this paragraph and in paragraph (1) of the following Article), with respect to the business income, capital gains and miscellaneous income from the transfer of the general shares, etc. (excluding business income and miscellaneous income falling under the provisions of Article 41-2 of the Income Tax Act and capital gains falling under the provisions of Article 32, paragraph (2); referred to as "capital gains, etc. on general shares, etc." in paragraphs (3) and (4)), notwithstanding the provisions of Articles 22 and 89 and Article 165 of that Act, income tax is imposed, separately from other income, on the amount calculated pursuant to the provisions of Cabinet Order as the amount of business income, the amount of capital gains and the amount of miscellaneous income pertaining to the transfer of the general shares, etc. during that year (hereinafter referred to as the "amount of capital gains, etc. on general shares, etc." in this paragraph), in an amount equivalent to 15 percent of the amount of taxable capital gains, etc. on general shares, etc. (meaning the amount of capital gains, etc. on general shares, etc. (where the provisions of Articles 72 through 87 of that Act as replaced pursuant to the provisions of paragraph (6), item (v) apply, the amount after that application)). In this case, if there is an amount of losses arising in the calculation of the amount of capital gains, etc. on general shares, etc., the amount of losses is deemed not to have arisen for the purpose of applying the provisions of that Act and other laws and regulations concerning income tax.

specified account: an account that a resident or a nonresident who has a permanent establishment, in order to receive the application of the provisions of the preceding two paragraphs, has opened, by submitting, pursuant to the provisions of Cabinet Order, to the head of a business office (meaning a business office or office located in Japan; hereinafter the same applies in this Article, the following Article and Article 37-11-6) of a financial instruments business operator prescribed in Article 2, paragraph (9) of the Financial Instruments and Exchange Act (limited to a person engaged in type I financial instruments business prescribed in Article 28, paragraph (1) of that Act), a registered financial institution prescribed in Article 2, paragraph (11), item (i) of that Act or an investment trust management company prescribed in Article 2, paragraph (11) of the Act on Investment Trusts and Investment Corporations (hereinafter referred to as a "financial instruments business operator, etc." in this Article, the following Article and Article 37-11-6) a written notification stating the name of the account, the name and location of the business office of the financial instruments business operator, etc., the types of account to be set up in the account, a statement to the effect that the person is to receive the application of the provisions of paragraph (1) or the preceding paragraph to the calculation of the amount of business income, the amount of capital gains or the amount of miscellaneous income from transfers of listed shares, etc. that are entered or recorded in the transfer account book pertaining to the account or custody of which has been entrusted to the account and from transfers of listed shares, etc. through margin transactions, etc. processed in the account, and other matters specified by Order of the Ministry of Finance (hereinafter referred to as a "written notification for opening a specified account" up to paragraph (6)) (the submission includes the provision, by electronic or magnetic means (meaning the method of using an electronic data processing system or any other method using information and communications technology; the same applies in paragraph (1) of the following Article and Article 37-11-6, paragraph (2)), of the matters to be stated in the written notification for opening a specified account in lieu of submitting the written notification for opening a specified account; hereinafter the same applies up to paragraph (6)), based on a contract for custody of listed shares, etc. or a contract for margin trading, etc. in listed shares, etc. concluded with the financial instruments business operator, etc., for the entry or recording in the transfer account book or custody of listed shares, etc. or for margin transactions, etc. in listed shares, etc. (limited to an account in which no matters concerning transactions other than those based on these contracts and on a contract entrusting receipt of listed share dividends, etc. prescribed in Article 37-11-6, paragraph (4), item (i) are handled);

a transfer of listed shares, etc. made by entrusting the sale to a financial instruments business operator prescribed in Article 2, paragraph (9) of the Financial Instruments and Exchange Act (limited to a person that engages in Type I Financial Instruments Business prescribed in Article 28, paragraph (1) of that Act; referred to as a "financial instruments business operator" in the following item) or a registered financial institution prescribed in Article 2, paragraph (11), item (i) of that Act (referred to as a "registered financial institution" in item (iii));

Where a resident or nonresident who has a permanent establishment who has opened a tax-exempt account at a business office (meaning a business office prescribed in Article 37-11-3, paragraph (3), item (i); the same applies hereinafter in this Article and the following Article) of a financial instruments business operator, etc. (meaning a financial instruments business operator, etc. prescribed in that item; the same applies hereinafter in this Article and the following Article) has made the transfer specified in each of the following items (including a transfer specified by Cabinet Order as being similar thereto, and excluding a transfer made by the method of transaction listed in Article 28, paragraph (810), item (iii), (a) of the Financial Instruments and Exchange Act; the same applies hereinafter in this Article and the following Article) of the listed shares, etc. prescribed in item (i) that are listed in that item and are entered or recorded in the transfer account book (meaning the transfer account book prescribed in the Act on Book-Entry Transfer of Corporate Bonds and Shares; the same applies hereinafter in this Article and the following Article) pertaining to the tax-exempt account, or the custody of which has been entrusted to the tax-exempt account, under a contract for managing tax-exempt listed shares, etc., the listed shares, etc. prescribed in item (i) that are listed in item (ii) and are entered or recorded in the transfer account book pertaining to the tax-exempt account, or the custody of which has been entrusted to the tax-exempt account, under a tax-exempt cumulative investment contract, or the listed shares, etc. prescribed in item (i) that are listed in item (iii) or the listed shares, etc. prescribed in item (i) that are listed in item (iv) and are entered or recorded in the transfer account book pertaining to the tax-exempt account, or the custody of which has been entrusted to the tax-exempt account, under a specified tax-exempt cumulative investment contract (collectively referred to as "listed shares, etc. in a tax-exempt account" hereinafter in this Article), income tax is not imposed on business income, capital gains and miscellaneous income from that transfer (excluding business income and miscellaneous income that fall under the provisions of Article 41-2 of the Income Tax Act and capital gains that fall under the provisions of Article 32, paragraph (2)):

the specified bonds that it has issued are expected to be held only by institutional investors (meaning financial instruments business operators prescribed in Article 2, paragraph (9) of the Financial Instruments and Exchange Act (limited to those engaged in the type I financial instruments business prescribed in Article 28, paragraph (1) of that Act that falls under the securities-related business prescribed in paragraph (810) of that Article, or in the investment management business prescribed in paragraph (4) of that Article) and others specified by Order of the Ministry of Finance; hereinafter the same applies in this item) and others specified by Cabinet Order as similar thereto;

an investment corporation whose issued investment units are, at the end of the business year, held by 50 or more persons or held only by institutional investors (meaning financial instruments business operators prescribed in Article 2, paragraph (9) of the Financial Instruments and Exchange Act (limited to persons engaged in, out of the type I financial instruments business prescribed in Article 28, paragraph (1) of that Act, that which falls under the securities-related business prescribed in paragraph (810) of that Article, or in the investment management business prescribed in paragraph (4) of that Article) and other persons specified by Order of the Ministry of Finance).

the bond-type beneficial interests have been underwritten only by institutional investors (meaning financial instruments business operators prescribed in Article 2, paragraph (9) of the Financial Instruments and Exchange Act (limited to persons engaged in, out of the type I financial instruments business prescribed in Article 28, paragraph (1) of that Act, that which falls under the securities-related business prescribed in paragraph (810) of that Article, or in the investment management business prescribed in paragraph (4) of that Article) and other persons specified by Order of the Ministry of Finance; hereinafter the same applies in this item) through the public offering of bond-type beneficial interests conducted by its issuer;