Act on Special Measures Concerning Taxation

Where an individual seeks the application of two or more of the provisions listed in the following items in a year, if the total of the creditable tax amounts (meaning the amount specified in each of those items according to the category of provisions listed in that item) under the provisions for which the individual seeks application exceeds the amount equivalent to 90 percent of the income tax on business income before adjustment prescribed in Article 10, paragraph (8), item (iv) of the individual for that year, the amount of that excess (hereinafter referred to in this Article as the "excess over income tax on business income before adjustment") is not deducted from the amount of income tax on the amount of gross income of the individual for that year, notwithstanding the provisions listed in those items. In this case, the excess over income tax on business income before adjustment is to consist of the amounts specified in the following items, in order beginning with the one with the longest creditable period.

the provisions of Article 10, paragraph (1): the amount obtained by deducting, from the maximum tax credit prescribed in that paragraph, the amount that remains undeducted even after the deduction under the provisions of that paragraph;

the provisions of Article 10, paragraph (4) or paragraph (7): the amount obtained by deducting, from the maximum credit for small and medium sized business operators prescribed in paragraph (4) of that Article, the amount that remains undeducted even after the deduction under the provisions of that paragraph, or the amount obtained by deducting, from the excess carried-forward tax credit amount prescribed in paragraph (7) of that Article, the amount that remains undeducted even after the deduction under the provisions of that paragraph, respectively;

the provisions of Article 10-2, paragraph (1): the amount obtained by deducting, from the maximum tax credit prescribed in that paragraph, the amount that remains undeducted even after the deduction under the provisions of that paragraph;

the provisions of Article 10-2-2, paragraph (1) or paragraph (2): the amount obtained by deducting, from the maximum tax credit prescribed in paragraph (1) of that Article, the amount that remains undeducted even after the deduction under the provisions of that paragraph, or the amount obtained by deducting, from the carried-over excess of the tax credit limit prescribed in paragraph (2) of that Article, the amount that remains undeducted even after the deduction under the provisions of that paragraph, respectively;

the provisions of Article 10-3, paragraph (3) or paragraph (4): the amount obtained by deducting, from the maximum tax credit prescribed in paragraph (3) of that Article, the amount that remains undeducted even after the deduction under the provisions of that paragraph, or the amount obtained by deducting, from the excess carried-forward tax credit amount prescribed in paragraph (4) of that Article, the amount that remains undeducted even after the deduction under the provisions of that paragraph, respectively;

the provisions of Article 10-4, paragraph (3): the amount obtained by deducting, from the maximum tax credit prescribed in that paragraph, the amount that remains undeducted even after the deduction under the provisions of that paragraph;

the provisions of Article 10-5, paragraph (3): the amount obtained by deducting, from the maximum tax credit prescribed in that paragraph, the amount that remains undeducted even after the deduction under the provisions of that paragraph;

the provisions of Article 10-5-3, paragraph (3) or paragraph (4): the amount obtained by deducting, from the maximum tax credit prescribed in paragraph (3) of that Article, the amount that remains undeducted even after the deduction under the provisions of that paragraph, or the amount obtained by deducting, from the excess carried-forward tax credit amount prescribed in paragraph (4) of that Article, the amount that remains undeducted even after the deduction under the provisions of that paragraph, respectively;

the provisions of Article 10-5-4, paragraphs (1) through (3): the amount obtained by deducting, from the maximum tax credit prescribed in paragraph (1) of that Article, the amount that remains undeducted even after the deduction under the provisions of that paragraph, the amount obtained by deducting, from the maximum credit for small and medium sized business operators prescribed in paragraph (2) of that Article, the amount that remains undeducted even after the deduction under the provisions of that paragraph, or the amount obtained by deducting, from the excess carried-forward tax credit amount prescribed in paragraph (3) of that Article, the amount that remains undeducted even after the deduction under the provisions of that paragraph, respectively;

the provisions of Article 10-5-5, paragraph (3): the amount obtained by deducting, from the maximum tax credit prescribed in that paragraph, the amount that remains undeducted even after the deduction under the provisions of that paragraph;

the provisions of paragraph (3) or paragraph (4) of the preceding Article: the amount obtained by deducting, from the maximum tax credit prescribed in paragraph (3) of that Article, the amount that remains undeducted even after the deduction under the provisions of that paragraph, or the amount obtained by deducting, from the excess carried-forward tax credit amount prescribed in paragraph (4) of that Article, the amount that remains undeducted even after the deduction under the provisions of that paragraph, respectively;

beyond what is listed in the preceding items, provisions specified by Cabinet Order as provisions that prescribe special provisions on the calculation of the amount of income tax: the amount specified by Cabinet Order as an amount similar to the amounts specified in those items.

The creditable period prescribed in the preceding paragraph means the period from January 1 of the year following the year in which the provisions of that paragraph were applied to December 31 of the last year in which the amount specified in each item of that paragraph could be deducted from the amount of income tax on the amount of gross income for that year if the provisions on carry-forward tax credits (meaning the provisions of Article 10, paragraph (7), Article 10-2-2, paragraph (2), Article 10-3, paragraph (4), Article 10-5-3, paragraph (4), Article 10-5-4, paragraph (3) or paragraph (4) of the preceding Article that would apply if the amount specified in each of those items were deemed to be an amount that remained undeducted even after the deduction under the provisions listed in that item, and any other provisions specified by Cabinet Order as provisions on carry-forward tax credits for income tax similar to these; the same applies in the following paragraph and paragraph (4)) were applied to it.

For each year following the year in which the provisions of paragraph (1) were applied to the individual referred to in that paragraph (hereinafter referred to in this paragraph and the following paragraph as the "excess year") (limited to each year where the individual has filed blue returns for income tax for each year from the year following the excess year to that year), the provisions on carry-forward tax credits apply to the amount equivalent to the portion of the amount specified in each item of paragraph (1) that has been made to constitute the excess over income tax on business income before adjustment pursuant to the provisions of the second sentence of that paragraph, as an amount that remained undeducted even after the deduction under the provisions listed in that item for that excess year, but only to the extent of the amount that would fall under the excess carried-forward tax credit amount prescribed in Article 10, paragraph (8), item (vii), Article 10-2-2, paragraph (4), item (v), Article 10-3, paragraph (5), Article 10-5-3, paragraph (5), Article 10-5-4, paragraph (4), item (ix) or paragraph (5) of the preceding Article if those provisions were applied, or any other amount specified by Cabinet Order as similar thereto.

The provisions of the preceding paragraph apply only where the tax returns for the excess year and each subsequent year have attached to them a written statement of the excess over income tax on business income before adjustment, and the tax return for the year for which the individual seeks the application of the provisions of that paragraph (including, where an amended return form or a written request for reassessment that increases the amount to be deducted under the provisions on carry-forward tax credits applied pursuant to the provisions of that paragraph is submitted, that amended return form or written request for reassessment) has attached to it a document stating the excess over income tax on business income before adjustment that is subject to the deduction under the provisions on carry-forward tax credits applied pursuant to the provisions of that paragraph, the amount to be deducted and the details of the calculation of that amount.

Where an individual (excluding a small and medium sized business operator prescribed in Article 10, paragraph (8), item (vi); the same applies in item (i) and item (ii)) seeks the application of the provisions listed in paragraph (1), item (i), item (iii), item (iii)-2 (limited to the part pertaining to Article 10-2-2, paragraph (1)), item (v) or item (ix) (hereinafter referred to in this paragraph and the following paragraph as the "specified tax credit provisions") in any year from 2019 to 2029 (hereinafter referred to in this paragraph and the following paragraph as a "covered year"), if the individual meets none of the following requirements in that covered year (for the provisions listed in paragraph (1), item (v) and item (ix), if the individual fails to meet any of those requirements; and excluding the case specified by Cabinet Order as a case where the covered year is none of the year that includes the day on which the individual commenced business, the year that includes the day on which the individual succeeded to a business through inheritance or universal legacy, and the year that includes the day on which the individual transferred or took over a business, and the amount of business income for the covered year is equal to or less than the amount of business income for the year preceding the covered year), the specified tax credit provisions do not apply.

the ratio of the amount obtained by deducting the individual's comparative amount of salary or other wages paid to continuing employees prescribed in Article 10-5-4, paragraph (4), item (v) (hereinafter referred to in this item and paragraph (7) as the "comparative amount of salary or other wages paid to continuing employees") from the individual's amount of salary or other wages paid to continuing employees prescribed in paragraph (4), item (iv) of that Article (referred to in paragraph (7) as the "amount of salary or other wages paid to continuing employees") to that comparative amount of salary or other wages paid to continuing employees is 1 percent (or, where both of the following cases apply, 2 percent) or more:

where the number of employees regularly employed by the individual exceeds 2,000 as of December 31 of the covered year;

the case specified by Cabinet Order as a case where the covered year is none of the year that includes the day on which the individual commenced business, the year that includes the day on which the individual succeeded to a business through inheritance or universal legacy, and the year that includes the day on which the individual transferred or took over a business, and the amount of business income for the year preceding the covered year exceeds zero, or the case where the covered year is the year that includes the day on which the individual commenced business, the year that includes the day on which the individual succeeded to a business through inheritance or universal legacy, or the year that includes the day on which the individual transferred or took over a business;

the amount listed in (a) exceeds the amount equivalent to 30 percent (or, where both of the cases listed in (a) and (b) of the preceding item apply, 40 percent) of the amount listed in (b):

the total acquisition cost of domestic assets (meaning machinery and equipment and other assets specified by Cabinet Order that are put to use for the individual's business in Japan) for which the individual carried out an acquisition, etc. (meaning acquisition or manufacture or construction, excluding acquisition through inheritance, bequest, gift, exchange or a distribution in kind prescribed in Article 2, item (xii)-5-2 of the Corporation Tax Act and any other acquisition specified by Cabinet Order) in the covered year and which the individual holds as of December 31 of the covered year;

the total amount that the individual has included in necessary expenses as depreciation allowances for the depreciable assets the individual holds in calculating the amount of business income for the covered year.

With regard to the application of the provisions of Article 10, paragraph (10), Article 10-2, paragraph (3), Article 10-2-2, paragraph (5), Article 10-4, paragraph (6) and Article 10-5-5, paragraph (7) in the case where the individual prescribed in the preceding paragraph applies the specified tax credit provisions in a covered year (limited to the case where the provisions of that paragraph do not apply because the individual meets any of the requirements listed in the items of that paragraph (for the provisions listed in paragraph (1), item (v) and item (ix) among the specified tax credit provisions, because the individual meets all of the requirements listed in those items)), the documents to be attached pursuant to those provisions are the documents prescribed in those provisions and a document clarifying that the individual meets any of the requirements listed in those items (for the provisions listed in paragraph (1), item (v) and item (ix) among the specified tax credit provisions, that the individual meets all of the requirements listed in those items).

Beyond what is provided for in paragraph (4) and the preceding paragraph, the determination of the amounts specified in the items of paragraph (1) that are to constitute the excess over income tax on business income before adjustment in the case where the creditable periods prescribed in that paragraph pertaining to the amounts specified in those items are the same, the determination of whether the requirement listed in paragraph (5), item (i) is met in the case where the amount of salary or other wages paid to continuing employees and the comparative amount of salary or other wages paid to continuing employees are zero, and other necessary matters concerning the application of the provisions of paragraphs (1) through (3) or paragraph (5) are specified by Cabinet Order.