Act on Special Measures Concerning Taxation

Where a nonresident who does not have a permanent establishment has made a transfer (meaning a transfer prescribed in Article 37-10, paragraph (1); the same applies in paragraph (3)) of general shares, etc. (meaning general shares, etc. prescribed in paragraph (1) of that Article; the same applies in the following paragraph) on or after January 1, 2016, with regard to capital gains, etc. on general shares, etc. prescribed in Article 37-10, paragraph (1) (hereinafter referred to in this paragraph and the following paragraph as "domestic source income from the transfer of general shares, etc."), out of the domestic source income of the nonresident listed in Article 164, paragraph (1), item (ii) of the Income Tax Act, notwithstanding the provisions of Article 165 of that Act, income tax is imposed, separately from other income, on the amount calculated pursuant to the provisions of Cabinet Order as the amount of domestic source income from the transfer of general shares, etc. for that year (hereinafter referred to in this paragraph and paragraph (5) as the "amount of domestic source income from the transfer of general shares, etc."), in an amount equivalent to 15 percent of the amount of domestic source income from the transfer of general shares, etc. (where the provisions of Article 72, Article 78, Article 86 and Article 87 of that Act as applied pursuant to the provisions of Article 37-10, paragraph (6), item (v) as applied mutatis mutandis pursuant to paragraph (7) apply, the amount after that application).

The amounts listed in Article 37-10, paragraph (3), items (i) through (vii) that a nonresident who does not have a permanent establishment and holds general shares, etc. receives with regard to those general shares, etc. (excluding the portion of the amount that falls under the provisions of Article 25, paragraph (1) of the Income Tax Act; the same applies in paragraph (4)), and the amount specified by Cabinet Order prescribed in Article 37-10, paragraph (3) that the nonresident receives with regard to those general shares, etc. due to a reason specified by Cabinet Order prescribed in that paragraph (limited to those that fall under the domestic source income of the nonresident listed in Article 164, paragraph (1), item (ii) of that Act), are deemed to be revenue pertaining to domestic source income from the transfer of general shares, etc., and the provisions of that Act and this Chapter apply.

Where a nonresident who does not have a permanent establishment has made a transfer of listed shares, etc. (meaning listed shares, etc. prescribed in Article 37-11, paragraph (2); the same applies in the following paragraph) on or after January 1, 2016, with regard to capital gains, etc. on listed shares, etc. prescribed in Article 37-11, paragraph (1) (hereinafter referred to in this paragraph and the following paragraph as "domestic source income from the transfer of listed shares, etc."), out of the domestic source income of the nonresident listed in Article 164, paragraph (1), item (ii) of the Income Tax Act, notwithstanding the provisions of Article 165 of that Act, income tax is imposed, separately from other income, on the amount calculated pursuant to the provisions of Cabinet Order as the amount of domestic source income from the transfer of listed shares, etc. for that year (hereinafter referred to in this paragraph and paragraph (5) as the "amount of domestic source income from the transfer of listed shares, etc."), in an amount equivalent to 15 percent of the amount of domestic source income from the transfer of listed shares, etc. (where the provisions of Article 72, Article 78, Article 86 and Article 87 of that Act as applied pursuant to the provisions of Article 37-10, paragraph (6), item (v) as applied mutatis mutandis pursuant to paragraph (8) apply, the amount after that application).

The amounts listed in Article 37-10, paragraph (3), items (i) through (vii) that a nonresident who does not have a permanent establishment and holds listed shares, etc. receives with regard to those listed shares, etc., and the amount specified by Cabinet Order prescribed in that paragraph that the nonresident receives with regard to those listed shares, etc. due to a reason specified by Cabinet Order prescribed in that paragraph (limited to those that fall under the domestic source income of the nonresident listed in Article 164, paragraph (1), item (ii) of the Income Tax Act), are deemed to be revenue pertaining to domestic source income from the transfer of listed shares, etc., and the provisions of that Act and this Chapter apply.

In the cases referred to in paragraph (1) and paragraph (3), if there is an amount of loss arising in the calculation of the amount of domestic source income from the transfer of general shares, etc. and the amount of domestic source income from the transfer of listed shares, etc., the amount of loss is deemed not to have arisen for the purpose of applying the provisions of the Income Tax Act and other laws and regulations concerning income tax.

Beyond what is prescribed in paragraph (2) and the preceding two paragraphs, necessary matters concerning the application of the provisions of paragraph (1) and paragraph (3) are specified by Cabinet Order.

The provisions of Article 37-10, paragraph (6), items (iii) through (v) and item (vii) apply mutatis mutandis to the case where the provisions of paragraph (1) apply. In this case, in item (iii) of paragraph (6) of that Article, the phrase "the amount of capital gains on general shares, etc." is deemed to be replaced with "the portion of the amount of domestic source income from the transfer of general shares, etc. prescribed in Article 37-12, paragraph (1) (Special Provisions on Taxation on Domestic Source Income Pertaining to the Transfer of Shares, etc. by Nonresidents Without a Permanent Establishment) of the Act on Special Measures Concerning Taxation (hereinafter referred to as the 'amount of domestic source income from the transfer of general shares, etc.') that falls under capital gains"; in item (iv) of that paragraph, the phrase "capital gains, etc. on general shares, etc. prescribed in Article 37-10, paragraph (1) (Special Provisions on Taxation on Capital Gains, etc. Pertaining to General Shares, etc.)" is deemed to be replaced with "domestic source income from the transfer of general shares, etc. prescribed in Article 37-12, paragraph (1) (Special Provisions on Taxation on Domestic Source Income Pertaining to the Transfer of Shares, etc. by Nonresidents Without a Permanent Establishment)", and the phrase "the amount of capital gains, etc. on general shares, etc." is deemed to be replaced with "the amount of domestic source income from the transfer of general shares, etc."; and in item (v) of that paragraph, the phrase "Article 71 and Articles 72 through 87" is deemed to be replaced with "Article 71, Article 72, Article 78, Article 86 and Article 87", and the phrase "the amount of capital gains, etc. on general shares, etc." is deemed to be replaced with "the amount of domestic source income from the transfer of general shares, etc.".

The provisions of the preceding paragraph apply mutatis mutandis to the case where the provisions of paragraph (3) apply. In this case, in the preceding paragraph, the phrase "Article 37-12, paragraph (1)" is deemed to be replaced with "Article 37-12, paragraph (3)", and the phrase "of general shares, etc." is deemed to be replaced with "of listed shares, etc.".