Act on Special Measures Concerning Taxation

Where a domestic corporation (excluding a domestic corporation listed in Appended Table 1 of the Income Tax Act; the same applies in the following paragraph and paragraph (4)) receives delivery, through a person in charge of handling payment in Japan that is specified by Cabinet Order (hereinafter referred to in this Article as the "person in charge of handling payment"), of dividends and similar income prescribed in Article 24, paragraph (1) of the Income Tax Act pertaining to dividends of surplus or dividends of profits (meaning dividends of profits as prescribed in that paragraph) on shares (including preferred equity investments as prescribed in Article 2, paragraph (5) of the Act on the Securitization of Assets) issued outside Japan which it is to receive on or after April 1, 1988 (limited to those paid outside Japan; hereinafter referred to in this Article as "dividends and similar income on foreign shares"), the domestic corporation is to be liable to pay income tax on the dividends and similar income on foreign shares to be received, and income tax is imposed by applying a tax rate of 20 percent to the amount to be received.

A person in charge of handling payment in Japan of dividends and similar income on foreign shares to be paid to a resident or a domestic corporation on or after April 1, 1988 must, when delivering the dividends and similar income on foreign shares to the resident or domestic corporation, collect income tax in the amount calculated by multiplying the amount to be delivered by a tax rate of 20 percent, and pay it to the State by the 10th day of the month following the month that includes the day of collection.

In the cases referred to in the preceding two paragraphs, where there is an amount of foreign income tax prescribed in Article 95, paragraph (1) of the Income Tax Act (including the tax specified by Cabinet Order) collected at the time of payment of dividends and similar income on foreign shares, the amount to be received prescribed in paragraph (1) and the amount to be delivered prescribed in the preceding paragraph are to be the amount remaining after deducting an amount equivalent to the amount of the foreign income tax from the amount of the dividends and similar income on foreign shares.

Income tax to be collected and paid pursuant to the provisions of paragraph (2) is deemed to be income tax pertaining to withholding at the source as prescribed in Article 2, paragraph (1), item (xlv) of the Income Tax Act, and the provisions of that Act, the Act on General Rules for National Taxes, and the National Tax Collection Act apply thereto. In this case, where the person who is to receive the dividends and similar income on foreign shares is a domestic corporation, with regard to the application of the provisions of the Corporation Tax Act to the domestic corporation, the phrase "or prize money" in Article 68, paragraph (1) of that Act is deemed to be replaced with "or prize money, or dividends and similar income on foreign shares prescribed in Article 9-2, paragraph (1) of the Act on Special Measures Concerning Taxation (Special Provisions on Withholding at the Source, etc. for Dividend Income from Shares Issued Outside Japan)", and the phrase "that Act" is deemed to be replaced with "the Income Tax Act or the Act on Special Measures Concerning Taxation".

Where income tax is to be collected pursuant to the provisions of paragraph (2) on dividends and similar income on foreign shares, the provisions of Article 8-5 apply to a resident who has the dividends and similar income on foreign shares as follows:

the amount to be delivered by the person in charge of handling payment in Japan of the dividends and similar income on foreign shares (where the provisions of paragraph (3) apply, the amount remaining after the deduction prescribed in that paragraph) is deemed to be the amount to be received prescribed in Article 8-5, paragraph (1), item (i) or the amount of dividends and similar income to be received prescribed in paragraph (4) of that Article;

the dividends and similar income on foreign shares are deemed to be received from a domestic corporation.

Beyond what is provided for in the preceding two paragraphs, special provisions of Article 224 and Article 225 of the Income Tax Act pertaining to dividends and similar income on foreign shares and other necessary matters concerning the application of the provisions of paragraphs (1) through (3) are specified by Cabinet Order.

With regard to the application of the provisions of Article 170, Article 175, Article 179, Article 182, and Article 213 of the Income Tax Act, Article 8-3, paragraphs (2) and (3), and paragraphs (1) and (2) of the preceding Article to dividends and similar income prescribed in Article 24, paragraph (1) of that Act (hereinafter referred to in this Article and the following Article as "dividends and similar income") to be received on or after January 1, 2016 which are listed in the following items, the tax rate of 20 percent prescribed in Article 170, Article 175, item (ii), Article 179, item (i), Article 182, item (ii), and Article 213, paragraph (1), item (i) and paragraph (2), item (ii) of that Act, Article 8-3, paragraph (2), item (ii), and paragraphs (1) and (2) of the preceding Article is to be a tax rate of 15 percent:

dividends and similar income on shares, etc. listed in Article 37-11, paragraph (2), item (i), which are received by a person other than an individual who holds, as of the record date for the payment of the dividends and similar income paid by a domestic corporation (where the dividends and similar income pertain to those deemed to be a dividend of surplus, a dividend of profits, a distribution of surplus, or a distribution of monies pursuant to the provisions of Article 25, paragraph (1) of the Income Tax Act, the date specified by Cabinet Order), shares or capital contributions that account for 3 percent or more of the total number or the total amount of issued shares of or capital contributions to the domestic corporation (referred to in paragraph (1) of the following Article as a "major shareholder, etc.");

distributions of proceeds from any of the following investment trusts for which the public offering of beneficial rights at its establishment was conducted through a public offering (meaning a solicitation of offers to acquire as prescribed in Article 2, paragraph (3) of the Financial Instruments and Exchange Act which is specified by Cabinet Order as falling under the case listed in item (i) of that paragraph) (excluding a specified stock investment trust):

a securities investment trust other than a bond investment trust;

an investment trust other than a securities investment trust (excluding a bond-based investment trust under public offering);

dividends and similar income on investment units of a specified investment corporation (meaning an investment corporation whose articles of incorporation provide that it will refund investment units at the request of its unitholders as prescribed in Article 2, paragraph (16) of the Act on Investment Trusts and Investment Corporations, and for which the public offering of securities as prescribed in Article 2, paragraph (3) of the Financial Instruments and Exchange Act with respect to its investment units at its incorporation was conducted through a solicitation of offers to acquire as prescribed in that paragraph which is specified by Cabinet Order as falling under the case listed in item (i) of that paragraph);

distributions of proceeds from a specified trust that issues beneficiary certificates (limited to one for which the public offering of beneficial rights acquired by the settlor at the time of conclusion of its trust contract was conducted through a public offering as prescribed in Article 8-4, paragraph (1), item (iv));

dividends of surplus on bond-type beneficial interests in a special purpose trust (limited to one for which the public offering of bond-type beneficial interests held by the original entrustor at the time of conclusion of its trust contract was conducted through a public offering as prescribed in Article 8-2, paragraph (1), item (ii)).