Act on Special Measures Concerning Taxation

In applying the provisions of the preceding paragraph, if the replacement assets for the year include land, etc., and the area of the land, etc. calculated for each category, where the land, etc. is categorized according to the right-hand column of each item of the table in that paragraph, exceeds the area calculated pursuant to the provisions of Cabinet Order on the basis of the area of the land, etc. listed in the left-hand column of the relevant item that was transferred during that year, then, notwithstanding the provisions of that paragraph, the portion of the land, etc. that is a replacement asset corresponding to the area of the excess is not to fall under the replacement asset referred to in that paragraph.

The provisions of the preceding two paragraphs apply mutatis mutandis where an individual who has, between January 1, 1970 and December 31, 2029 (or, for the assets listed in the left-hand column of item (iii) of the table in paragraph (1), March 31 of that year, and, for those of the assets listed in the left-hand column of item (iv) of that table that are used for the construction business or any other business specified by Cabinet Order prescribed in that column, December 31, 2028), transferred assets listed in the left-hand column of the items of that table that are used for business, has acquired an asset listed in the right-hand column of the relevant item during the year preceding the year that includes the day of the transfer (or, where there are unavoidable circumstances specified by Cabinet Order, such as the period required for the construction of a factory, etc. normally exceeding one year, within the period specified by Cabinet Order), and has, within one year from the day of the acquisition, used the acquired asset (limited to one for which the individual has, pursuant to the provisions of Cabinet Order, notified the district director with jurisdiction over the place for tax payment that the individual seeks the application of the provisions of this paragraph) for the individual's business within the area prescribed in the right-hand column of the relevant item (excluding the case where the individual has ceased to use it for that business within one year from the day of the acquisition). In this case, in paragraph (1), the phrase "with regard to that transfer in the case where the individual has, pursuant to the provisions of Cabinet Order, notified the district director with jurisdiction over the place for tax payment that the individual seeks the application of the provisions of this paragraph" is deemed to be replaced with "pursuant to the provisions of Cabinet Order".

The provisions of paragraphs (1) and (2) apply mutatis mutandis where an individual who has, between January 1, 1970 and December 31, 2029 (or, for the assets listed in the left-hand column of item (iii) of the table in paragraph (1), March 31 of that year, and, for those of the assets listed in the left-hand column of item (iv) of that table that are used for the construction business or any other business specified by Cabinet Order prescribed in that column, December 31, 2028), transferred assets listed in the left-hand column of the items of that table that are used for business is expected to acquire an asset listed in the right-hand column of the relevant item within the period from January 1 until December 31 of the year following the year that includes the day of the transfer (or, where, due to the unavoidable circumstances specified by Cabinet Order prescribed in the preceding paragraph, it is difficult to acquire an asset listed in the right-hand column of the relevant item by that day and the individual has obtained the approval of the district director pursuant to the provisions of Cabinet Order, the period until the day, within two years after that day, recognized by the district director as the day by which the asset can be acquired; referred to in paragraph (2), item (ii) of the following Article as the "designated acquisition period"), and is expected to use the acquired asset for the individual's business within the area prescribed in the right-hand column of the relevant item within one year from the day of the acquisition. In this case, in paragraph (1), the phrase "then, with regard to that transfer in the case where the individual has, pursuant to the provisions of Cabinet Order, notified the district director with jurisdiction over the place for tax payment that the individual seeks the application of the provisions of this paragraph," is deemed to be replaced with "then,", and the phrase "acquisition price" is deemed to be replaced with "estimated amount of the acquisition price".

The provisions of paragraph (1) (including as applied mutatis mutandis pursuant to the preceding two paragraphs; hereinafter the same applies in this Article) do not apply to the transfer of land, etc. for which the holding period is five years or less as of January 1 of that year (including land, etc. acquired during that year that is specified by Cabinet Order) (excluding a transfer for which it has been certified, pursuant to the provisions of Order of the Ministry of Finance, that it falls under a transfer of land, etc. listed in the items of Article 28-4, paragraph (3)).

The provisions of paragraph (1) apply only if the tax return for the year that includes the day on which the person seeking the application of the provisions of that paragraph made the transfer referred to in that paragraph contains a statement to the effect that the person seeks the application of the provisions of that paragraph, and a written statement concerning the transfer value of the transferred assets and the acquisition price of the replacement asset or its estimated amount and any other documents specified by Order of the Ministry of Finance are attached to that return.

Even in the case where no tax return has been filed, or a tax return without the statement or attachment referred to in the preceding paragraph has been filed, if the district director finds that there were unavoidable circumstances for the failure to file the return or to include the statement or attachment, the district director may apply the provisions of paragraph (1), but only if there has been a submission of a document containing that statement, and the written statement and the documents specified by Order of the Ministry of Finance referred to in that paragraph.

If it has become difficult for an individual to acquire an asset listed in the right-hand column of the items of the table in paragraph (1) within the designated acquisition period prescribed in paragraph (4) due to unavoidable circumstances arising from an extraordinary disaster designated as a specified extraordinary disaster pursuant to the provisions of Article 2, paragraph (1) of the Act on Special Measures concerning Preservation of Rights and Interests of Victims of Specified Disaster, and the individual is expected to acquire an asset listed in the right-hand column of the relevant item during the period from the first day of the designated acquisition period until the day specified by Cabinet Order that falls within two years after the last day of the designated acquisition period and has obtained the approval of the district director with jurisdiction over the place for tax payment pursuant to the provisions of Order of the Ministry of Finance, then, with regard to the application of the provisions of that paragraph and the following Article, the designated acquisition period prescribed in that paragraph is to be the period from that first day until the day specified by Cabinet Order.

The provisions of Article 33, paragraph (7) apply mutatis mutandis to a person who files the tax return prescribed in paragraph (6). In this case, the phrase "substitute assets" in paragraph (7) of that Article is deemed to be replaced with "replacement assets".

In applying the provisions of paragraph (1) (limited to the part pertaining to item (iii) of the table in that paragraph), if the assets listed in the left-hand column of that item that an individual has transferred fall under assets located within the area listed in item (i), and the assets listed in the right-hand column of item (iii) of that table that the individual has acquired or is expected to acquire (hereinafter referred to in this paragraph as "item (iii) replacement assets") fall under assets located within the area listed in item (ii) or item (iii), or if the assets listed in the left-hand column of item (iii) of that table that an individual has transferred fall under principal office assets (meaning buildings and structures used as the individual's principal office and land, etc. used as their site; hereinafter the same applies in this paragraph) located within the area listed in item (iii), and the item (iii) replacement assets that the individual has acquired or is expected to acquire fall under principal office assets located within the area listed in item (i), then, with regard to the application of the provisions of paragraph (1), the provisions specified in the following items apply according to which of the areas listed in those items the item (iii) replacement assets are located within:

an area other than the concentrated area prescribed in Article 5, paragraph (4), item (v), (a) of the Local Revitalization Act (referred to as a "concentrated area" in the following item): the phrase "80 percent" in paragraph (1) is deemed to be replaced with "90 percent";

a concentrated area (excluding the area listed in the following item): the phrase "80 percent" in paragraph (1) is deemed to be replaced with "75 percent";

an area specified by Cabinet Order as prescribed in Article 17-2, paragraph (1), item (i) of the Local Revitalization Act: the phrase "80 percent" in paragraph (1) is deemed to be replaced with "70 percent", and the phrase "falls under the assets listed in the left-hand column of item (ii) of that table and the replacement asset falls under the assets listed in the right-hand column of that item (limited to those located within the area listed in (c) of that column; the same applies in Article 37-3, paragraph (2)), 60 percent" is deemed to be replaced with "and the replacement asset both fall under the principal office assets prescribed in paragraph (10), 60 percent".

Beyond what is specified in paragraph (2) and in paragraph (6) through the preceding paragraph, the calculation of the amount of the portion deemed not to have been transferred pursuant to the provisions of paragraph (1) in the case where the asset transferred as referred to in that paragraph falls under the assets listed in the left-hand column of two or more items of the table in that paragraph, and other necessary matters concerning the application of the provisions of that paragraph are specified by Cabinet Order.

The provisions of paragraph (5) do not apply to a transfer of land, etc. made by an individual during the period from January 1, 1998 to March 31, 2029.