Act on Special Measures Concerning Taxation

Income tax is not imposed on interest on public and corporate bonds or deposits and savings or distributions of proceeds from jointly managed trusts accruing from the trust property of a trust established under a specified donation trust contract (hereinafter referred to in this Article as a "specified donation trust") (for interest on public and corporate bonds or distributions of proceeds from loan trusts, limited to the part equivalent to the amount calculated pursuant to the provisions of Cabinet Order as the amount of the part corresponding to the period during which the public and corporate bonds or the beneficial interests in the loan trust continued to belong to the trust property, where the public and corporate bonds or the beneficial interests in the loan trust are managed by means of entries or records in a transfer account book prescribed in the Act on Book-Entry Transfer of Corporate Bonds and Shares or any other method specified by Cabinet Order; referred to in paragraph (3) and paragraph (8) as "interest and similar income").

The specified donation trust contract prescribed in the preceding paragraph means a trust contract concluded by a resident with a trust company (limited to one that has obtained a license under Article 3 or Article 53, paragraph (1) of the Trust Business Act (Act No. 154 of 2004), and including a financial institution prescribed in Article 1, paragraph (1) of the Act on Engagement in Trust Business by Financial Institutions (Act No. 43 of 1943) that engages in the trust business prescribed in that paragraph pursuant to that Act), under which the resident is the beneficiary and which prescribes the requirements specified by Cabinet Order as requirements for the proper implementation of planned donations, such as that its main purpose is to expend the trust property as specified donations prescribed in Article 78, paragraph (2) of the Income Tax Act (including those deemed to be specified donations pursuant to the provisions of Article 41-18-2, paragraph (1)) that are specified by Cabinet Order as contributing to a business for the purpose of public interest conducted by a private organization (referred to in paragraph (8) as "covered specified donations").

The provisions of paragraph (1) apply only where the resident referred to in the preceding paragraph has, after the conclusion of the specified donation trust contract prescribed in that paragraph and by the day preceding the day on which the resident first receives payment of interest and similar income for which the resident seeks the application of the provisions of paragraph (1), submitted a return stating the resident's name, address, and individual number (meaning the individual number prescribed in Article 2, paragraph (5) of the Act on the Use of Numbers to Identify a Specific Individual in Administrative Procedures (Act No. 27 of 2013); the same applies hereinafter in this Chapter) and other matters specified by Order of the Ministry of Finance (hereinafter referred to in this Article as a "return for a specified donation trust"), with a copy of the contract document of the specified donation trust contract attached thereto, to the district director with jurisdiction over the location of the business office or similar place of the trustee of the specified donation trust, via the business office, other office, or any other equivalent place (hereinafter referred to in this Article as the "business office or similar place") of the trustee of the specified donation trust pertaining to the specified donation trust contract.

In the case referred to in the preceding paragraph, when a return for a specified donation trust has been submitted to the district director prescribed in that paragraph, it is deemed to have been submitted on the day on which it was accepted at the business office or similar place of the trustee of the specified donation trust referred to in that paragraph.

The resident referred to in paragraph (3) may, in lieu of submitting a return for a specified donation trust under that paragraph, provide the business office or similar place of the trustee of the specified donation trust referred to in that paragraph with the matters to be stated in the return for a specified donation trust by electronic or magnetic means (meaning the electronic or magnetic means prescribed in Article 3-3, paragraph (8); the same applies in paragraph (7)). In this case, the resident is deemed to have submitted the return for a specified donation trust to the business office or similar place of the trustee of the specified donation trust.

With regard to the application of the provisions of paragraph (4) in the case where the provisions of the preceding paragraph apply, in that paragraph, the phrase "a return for a specified donation trust has been submitted to" is deemed to be replaced with "the matters to be stated in a return for a specified donation trust have been submitted to", and the phrase "the day on which it was accepted" is deemed to be replaced with "the day on which the provision was received".

Where the resident referred to in paragraph (3) provides the matters to be stated in a return for a specified donation trust by electronic or magnetic means pursuant to the provisions of paragraph (5), the resident may, in lieu of submitting a copy of the contract document of the specified donation trust contract prescribed in paragraph (3) under that paragraph, provide the business office or similar place of the trustee of the specified donation trust referred to in that paragraph with the matters to be stated in the copy by electronic or magnetic means. In this case, the resident is deemed to have submitted the return for a specified donation trust with the copy attached thereto pursuant to the provisions of that paragraph.

Where, with regard to a specified donation trust contract prescribed in paragraph (2) or its performance, a fact specified by Cabinet Order as a fact by which planned donations are found not to be properly implemented has arisen, such as that the main purpose of the contract has ceased to be the expenditure of the trust property as covered specified donations, the provisions of this Act and the Income Tax Act apply by deeming that the provisions of paragraph (1) have not applied to the interest and similar income paid during the period from the time of conclusion of the specified donation trust contract to the day on which the fact arose, and by deeming, respectively, that the interest and similar income was paid on the day on which the fact arose and that the trustee of the specified donation trust pertaining to the specified donation trust contract paid the interest and similar income.

With regard to the application of the provisions of Article 78 of the Income Tax Act and the provisions of Article 41-18-2 and Article 41-18-3 in the case where the provisions of paragraph (1) apply, in Article 78, paragraph (2) of that Act, the phrase "excluding those made in connection with admission to a school" is deemed to be replaced with "excluding the part equivalent to the amount of interest and similar income prescribed in Article 4-5, paragraph (1) (Tax Exemption on Interest Income of Specified Donation Trusts) of the Act on Special Measures Concerning Taxation to which the provisions of that paragraph have been applied, and those made in connection with admission to a school", and in Article 41-18-2, paragraph (1), the phrase "the person who made the donation" is deemed to be replaced with "the part equivalent to the amount of interest and similar income prescribed in Article 4-5, paragraph (1) to which the provisions of that paragraph have been applied, and the person who made the donation".

Beyond what is prescribed in paragraph (3) through the preceding paragraph, matters concerning the books to be kept with regard to the trust property of a specified donation trust, matters concerning notification in the case where a person who has submitted a return for a specified donation trust has changed or is to change the matters stated in the return for a specified donation trust after its submission, and other necessary matters concerning the application of the provisions of paragraph (1) are specified by Cabinet Order.

Income tax is not imposed on interest on tax payment reserve deposits; provided, however, that if any amount has been withdrawn from the deposits for a purpose other than the payment of taxes, income tax is imposed on the interest corresponding to the calculation period of interest that includes the day of the withdrawal.

The tax payment reserve deposits prescribed in the preceding paragraph means deposits made with a bank or any other financial institution specified by Cabinet Order for the purpose of appropriating them for the payment of taxes, which the financial institution accounts for separately from other deposits.