Act on Special Measures Concerning Taxation

A person in charge of handling payment in Japan that is specified by Cabinet Order (referred to in paragraph (3) and paragraph (8) as the "person in charge of handling payment") of the following interest and similar income (meaning interest and similar income prescribed in Article 23, paragraph (1) of the Income Tax Act; hereinafter the same applies in this paragraph and paragraph (8)) or dividends and similar income that are specified by Cabinet Order (limited to those paid in Japan, and excluding distributions of proceeds to which the provisions of Article 9-4-2, paragraph (1) apply; hereinafter referred to in this Article as "dividends and similar income on listed shares, etc.") and that are paid on or after January 1, 2016 to an individual, a domestic corporation (excluding a domestic corporation listed in Appended Table 1 of that Act), or a foreign corporation, must, when delivering the dividends and similar income on listed shares, etc. to the individual, domestic corporation, or foreign corporation, collect income tax in the amount calculated by multiplying the amount to be delivered (where there is an amount specified in any item of paragraph (3) to be deducted pursuant to the provisions of that paragraph, the amount obtained by adding that amount and any other amount specified by Cabinet Order) by a tax rate of 15 percent (or 20 percent, for dividends and similar income listed in item (i) delivered to a major shareholder, etc. of the domestic corporation paying the dividends and similar income), and pay it to the State by the 10th day of the month following the month that includes the day of collection:

interest and similar income or dividends and similar income on shares, etc. listed in Article 37-11, paragraph (2), item (i);

distributions of proceeds from an investment trust for which the public offering of beneficial rights at its establishment was conducted through a public offering as prescribed in item (ii) of the preceding Article (excluding a specified stock investment trust);

dividends and similar income on investment units of a specified investment corporation (meaning a specified investment corporation as prescribed in item (iii) of the preceding Article);

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));

interest on specified public and corporate bonds prescribed in Article 3, paragraph (1), item (i).

The provisions of Article 181, paragraph (1) and Article 212, paragraphs (1) and (3) of the Income Tax Act, insofar as they pertain to dividends and similar income on listed shares, etc., do not apply to a person who pays the dividends and similar income on listed shares, etc. subject to the provisions of the preceding paragraph.

In the case referred to in paragraph (1), where there is an amount specified in any of the following items according to the category of dividends and similar income on listed shares, etc. delivered by a person in charge of handling payment listed in those items, the amount specified in that item is deducted from the amount of income tax to be collected and paid pursuant to the provisions of that paragraph with respect to the dividends and similar income on listed shares, etc., up to the amount of that income tax:

distributions of proceeds from an investment trust (limited to a trust listed in Article 2, item (xxix), (b) of the Corporation Tax Act; hereinafter referred to in this item as a "securities investment trust, etc.") or a specified trust that issues beneficiary certificates: the amount calculated, as specified by Cabinet Order, as the amount of the portion corresponding to the distributions of proceeds, out of the amount of income tax prescribed in Article 176, paragraph (3) or Article 180-2, paragraph (3) of the Income Tax Act paid by the domestic corporation or foreign corporation that has undertaken the securities investment trust, etc. or the specified trust that issues beneficiary certificates with respect to the trust property of the securities investment trust, etc. or the specified trust that issues beneficiary certificates (including, where the securities investment trust, etc. falls under an investment trust specified by Cabinet Order whose purpose is to invest its trust property in beneficial rights of another securities investment trust specified by Cabinet Order, the trust property of that other securities investment trust);

dividends of profits of a specific purpose company (meaning dividends of profits as prescribed in Article 24, paragraph (1) of the Income Tax Act; hereinafter the same applies in this item): the amount calculated, as specified by Cabinet Order, as the amount of the portion corresponding to the dividends of profits, out of the amount of foreign country's corporate tax (meaning the amount of creditable foreign country's corporate tax as prescribed in Article 69, paragraph (1) of the Corporation Tax Act; hereinafter the same applies in this paragraph) paid by the specific purpose company;

dividends and similar income on investment units of an investment corporation: the amount calculated, as specified by Cabinet Order, as the amount of the portion corresponding to the dividends and similar income, out of the amount of foreign country's corporate tax paid by the investment corporation;

dividends of surplus on beneficial interests in a special purpose trust: the amount calculated, as specified by Cabinet Order, as the amount of the portion corresponding to the dividends of surplus, out of the amount of foreign country's corporate tax paid by the Trust Corporation prescribed in Article 9-6-3, paragraph (1) of the special purpose trust.

Income tax to be collected and paid pursuant to the provisions of paragraph (1) 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.

Where the provisions of paragraph (3) apply, with regard to the application of the provisions of Article 170, Article 175, and Article 179 of the Income Tax Act, the phrase "calculated amount" in Article 170, Article 175, items (i) and (ii), and Article 179, items (i) and (iii) of that Act is deemed to be replaced with "calculated amount (where the provisions of Article 9-3-2, paragraph (3) of the Act on Special Measures Concerning Taxation (Special Provisions on Withholding Obligation, etc. for Dividends and Similar Income on Listed Shares, etc.) apply, the amount obtained by deducting the amount specified in each item of that paragraph which has been deducted pursuant to the provisions of that paragraph)".

Where the provisions of paragraph (3) apply and the person who receives delivery of dividends and similar income on listed shares, etc. is an individual, with regard to the application of the provisions of the Income Tax Act to the individual: in Article 93, paragraph (1) of that Act, the phrase "payment of distribution of proceeds" is deemed to be replaced with "payment of distribution of proceeds or delivery of dividends and similar income on listed shares, etc. prescribed in Article 9-3-2, paragraph (1) of the Act on Special Measures Concerning Taxation (Special Provisions on Withholding Obligation, etc. for Dividends and Similar Income on Listed Shares, etc.) (hereinafter referred to as "dividends and similar income on listed shares, etc.")", the phrase "that paragraph" is deemed to be replaced with "Article 176, paragraph (3)", and the phrase "amount (" is deemed to be replaced with "amount and the amount specified by Cabinet Order as the amount of the portion other than the portion corresponding to the amount of income tax (hereinafter referred to as the "amount equivalent to foreign tax for adjustment") out of the amount equivalent to the amount specified in each item of Article 9-3-2, paragraph (3) of that Act which has been deducted pursuant to the provisions of that paragraph with respect to the dividends and similar income on listed shares, etc. (hereinafter referred to as the "listed share dividend deduction amount") ("; in Article 120, paragraph (1), item (iv) of that Act (including as applied mutatis mutandis pursuant to Article 166 of that Act), the phrase "amount." is deemed to be replaced with "amount, and where dividends and similar income on listed shares, etc. have been delivered, it is to be the amount obtained by adding the amount specified by Cabinet Order as the amount of the portion corresponding to the amount of income tax out of the listed share dividend deduction amount pertaining to the dividends and similar income on listed shares, etc. (excluding those falling under the domestic source income referred to in Article 170 (Tax Rates for Income Taxes under Separate Taxation) to which the provisions of that Article have been applied, and interest and similar income and dividends and similar income prescribed in Article 8-5, paragraph (1) of the Act on Special Measures Concerning Taxation (Dividend Income, etc. for Which No Final Return Is Required) to which the provisions of that paragraph have been applied)."; and in Article 165-5-3, paragraph (1) of that Act, the phrase "payment of distribution of proceeds" is deemed to be replaced with "payment of distribution of proceeds or delivery of dividends and similar income on listed shares, etc. (excluding those falling under the domestic source income referred to in Article 170 (Tax Rates for Income Taxes under Separate Taxation) to which the provisions of that Article have been applied)", the phrase "limited to cases where it receives payment" is deemed to be replaced with "limited to cases where it receives payment or delivery", and the phrase "amount (" is deemed to be replaced with "amount and the amount equivalent to foreign tax for adjustment pertaining to the dividends and similar income on listed shares, etc. (".

Where the provisions of paragraph (3) apply and the person who receives delivery of dividends and similar income on listed shares, etc. is a domestic corporation or a foreign corporation prescribed in paragraph (1), with regard to the application of the provisions of the Corporation Tax Act and the Local Corporation Tax Act to the domestic corporation or foreign corporation: for the domestic corporation, in Article 68, paragraph (1) of the Corporation Tax Act, the phrase "excluding" is deemed to be replaced with "excluding (excluding the amount specified by Cabinet Order as the amount of the portion other than the portion corresponding to the amount of income tax (hereinafter referred to as the "amount equivalent to foreign tax for adjustment") out of the amount equivalent to the amount specified in each item of Article 9-3-2, paragraph (3) of the Act on Special Measures Concerning Taxation (Special Provisions on Withholding Obligation, etc. for Dividends and Similar Income on Listed Shares, etc.) which has been deducted pursuant to the provisions of that paragraph (hereinafter referred to as the "listed share dividend deduction amount")), and adding the amount specified by Cabinet Order as the amount of the portion corresponding to the amount of income tax out of the listed share dividend deduction amount pertaining to dividends and similar income on listed shares, etc. prescribed in Article 9-3-2, paragraph (1) of the Act on Special Measures Concerning Taxation (hereinafter referred to as "dividends and similar income on listed shares, etc.") delivered to the domestic corporation", and in Article 69-2, paragraph (1) of that Act, the phrase "payment of distribution of proceeds" is deemed to be replaced with "payment of distribution of proceeds or delivery of dividends and similar income on listed shares, etc.", and the phrase "amount (" is deemed to be replaced with "amount and the amount equivalent to foreign tax for adjustment pertaining to the dividends and similar income on listed shares, etc. ("; and for the foreign corporation, in Article 144 of that Act, the phrase "Article 68 (" is deemed to be replaced with "Article 68 as applied by replacing the terms pursuant to the provisions of Article 9-3-2, paragraph (7) of the Act on Special Measures Concerning Taxation (Special Provisions on Withholding Obligation, etc. for Dividends and Similar Income on Listed Shares, etc.) (", the phrase "Article 68, paragraph (1)" is deemed to be replaced with "Article 68, paragraph (1) as applied by replacing the terms pursuant to the provisions of that paragraph", the phrase "excluding" is deemed to be replaced with "excluding those", and the phrase "(that Act" is deemed to be replaced with "(the Income Tax Act", and in Article 144-2-2, paragraph (1) of that Act, the phrase "payment of distribution of proceeds" is deemed to be replaced with "payment of distribution of proceeds or delivery of dividends and similar income on listed shares, etc.", the phrase "payment of those" is deemed to be replaced with "payment or delivery of those", and the phrase "amount (" is deemed to be replaced with "amount and the amount equivalent to foreign tax for adjustment pertaining to the dividends and similar income on listed shares, etc. (".

Where income tax is to be collected pursuant to the provisions of paragraph (1) on dividends and similar income on listed shares, etc., the provisions of Article 8-5 apply to a resident or a nonresident who has a permanent establishment who has the dividends and similar income on listed shares, etc., by deeming the amount to be delivered by the person in charge of handling payment in Japan of the dividends and similar income on listed shares, etc. to be the amount of interest and similar income or the amount of dividends and similar income to be received prescribed in paragraph (4) of that Article.

Beyond what is provided for in paragraph (2) through the preceding paragraph, special provisions of Article 224 and Article 225 of the Income Tax Act pertaining to dividends and similar income on listed shares, etc. subject to the provisions of paragraph (1) and other necessary matters concerning the application of the provisions of that paragraph are specified by Cabinet Order.