Act on Special Measures Concerning Taxation

Where an individual has made, to a certified specified nonprofit corporation, etc. (meaning a certified specified nonprofit corporation prescribed in Article 2, paragraph (3) of the Act on Promotion of Specified Non-profit Activities (Act No. 7 of 1998) and a special certified specified nonprofit corporation prescribed in paragraph (4) of that Article; hereinafter the same applies in this Article), a donation related to a project pertaining to specified non-profit activities prescribed in Article 2, paragraph (1) of that Act (referred to as "specified non-profit activities" in the following paragraph) conducted by the certified specified nonprofit corporation, etc. (excluding a donation that is found to confer a special benefit on the person who made it and a donation that is clearly to be used for operations related to investment; hereinafter the same applies in this paragraph and the following paragraph) (excluding the case where the provisions of the following paragraph are applied to income tax for the year in which the expenditure pertaining to the donation was made), the expenditure pertaining to the donation is deemed to be a specified donation prescribed in Article 78, paragraph (2) of the Income Tax Act, and the provisions of that Act apply.

With respect to expenditures pertaining to donations related to a project pertaining to specified non-profit activities conducted by a certified specified nonprofit corporation, etc., expended by an individual to that certified specified nonprofit corporation, etc. (hereinafter referred to in this paragraph as "donations for specified non-profit activities"), where the total amount of donations for specified non-profit activities expended during the year (where the amount obtained by adding to that total amount the amount of specified donations, etc. expended during the year (meaning the sum of the amount of specified donations prescribed in Article 78, paragraph (2) of the Income Tax Act, the amount of those deemed to be specified donations pursuant to the provisions of paragraph (1) of the preceding Article, and the amount specified by Cabinet Order prescribed in Article 41-18-4, paragraph (1) as the amount required for the acquisition of deductible specified new shares prescribed in that paragraph; hereinafter the same applies in this paragraph) exceeds the amount equivalent to 40 percent of the sum of the amount of gross income, the amount of retirement income and the amount of timber income of the individual for that year, the balance after deducting the amount of the specified donations, etc. from that amount equivalent to 40 percent) exceeds 2,000 yen (where there is an amount of specified donations, etc. expended during the year, the balance after deducting the amount of the specified donations, etc. from 2,000 yen), the amount equivalent to 40 percent of the excess amount (if that amount includes a fraction of less than 100 yen, the fraction is to be rounded down) is deducted from the amount of income tax for that year. In this case, if the amount to be deducted exceeds the amount equivalent to 25 percent of the amount of income tax of the individual for that year (where the provisions of paragraph (1) of the following Article apply, the balance after deducting the amount to be deducted under the provisions of that paragraph from that amount equivalent to 25 percent; hereinafter the same applies in this paragraph), the amount to be deducted is limited to that amount equivalent to 25 percent (if that amount includes a fraction of less than 100 yen, the fraction is to be rounded down).

The provisions of the preceding paragraph apply only where the tax return contains a statement concerning the deduction with regard to the amount to be deducted under the provisions of that paragraph and, pursuant to the provisions of Order of the Ministry of Finance, has attached to it a written statement concerning the calculation of that amount and documents evidencing the amounts forming the basis of that calculation and other matters.

The provisions of Article 92, paragraph (2) of the Income Tax Act apply mutatis mutandis to the amount to be deducted under the provisions of paragraph (2). In this case, the phrase "credit under the preceding paragraph" in paragraph (2) of that Article is deemed to be replaced with "credit under the preceding paragraph and Article 41-18-2, paragraph (2) (Special Income Tax Credit Where a Donation Is Made to a Certified Specified Nonprofit Corporation, etc.) of the Act on Special Measures Concerning Taxation", and the phrase "the amount allowed as a credit" is deemed to be replaced with "the total of the amounts allowed as these credits".

With regard to the calculation of the amount of income tax listed in Article 120, paragraph (1), item (iii) of the Income Tax Act in the case where the provisions of paragraph (2) are applied to income tax for the year, the phrase "Chapter III (Calculating the Amount of Taxes)" in that item is deemed to be replaced with "Chapter III (Calculating the Amount of Taxes) and Article 41-18-2, paragraph (2) (Special Income Tax Credit Where a Donation Is Made to a Certified Specified Nonprofit Corporation, etc.) of the Act on Special Measures Concerning Taxation".

Beyond what is prescribed in the preceding three paragraphs, Cabinet Order provides for the necessary particulars concerning the application of the provisions of paragraph (2).

With respect to the specified donations prescribed in Article 78, paragraph (2) of the Income Tax Act expended by an individual that are listed below (excluding those to which the provisions of paragraph (1) of that Article are applied; hereinafter referred to in this paragraph as "donations eligible for tax credit"), where the total amount of donations eligible for tax credit expended during the year (where the amount of specified donations, etc. expended during the year (meaning the sum of the amount of specified donations prescribed in paragraph (2) of that Article, the amount of those deemed to be specified donations pursuant to the provisions of Article 41-18, paragraph (1) or paragraph (1) of the preceding Article, and the amount specified by Cabinet Order prescribed in paragraph (1) of the following Article as the amount required for the acquisition of deductible specified new shares prescribed in that paragraph; hereinafter the same applies in this paragraph) exceeds the amount equivalent to 40 percent of the sum of the amount of gross income, the amount of retirement income and the amount of timber income of the individual for that year, the balance after deducting the amount of donations eligible for income deduction (meaning the balance after deducting the total amount of donations eligible for tax credit from the amount of the specified donations, etc.; hereinafter the same applies in this paragraph) from that amount equivalent to 40 percent) exceeds 2,000 yen (where there is an amount of donations eligible for income deduction expended during the year, the balance after deducting the amount of donations eligible for income deduction from 2,000 yen), the amount equivalent to 40 percent of the excess amount (if that amount includes a fraction of less than 100 yen, the fraction is to be rounded down) is deducted from the amount of income tax for that year. In this case, if the amount to be deducted exceeds the amount equivalent to 25 percent of the amount of income tax of the individual for that year, the amount to be deducted is limited to that amount equivalent to 25 percent (if that amount includes a fraction of less than 100 yen, the fraction is to be rounded down).

donations to the following corporations (limited to those that satisfy the requirements specified by Cabinet Order regarding the appropriateness of their operational organization and business activities and the receipt of support from citizens):

incorporated public interest associations and incorporated public interest foundations;

school corporations prescribed in Article 3 of the Private Schools Act (Act No. 270 of 1949) and corporations established pursuant to the provisions of Article 152, paragraph (5) of that Act;

social welfare corporations;

offender rehabilitation corporations.

among donations to the following corporations (limited to those that satisfy the requirements specified by Cabinet Order regarding the appropriateness of their operational organization and business activities and the receipt of support from citizens), those specified by Cabinet Order as being certain to be used for projects to support students in their studies:

national university corporations;

public university corporations;

the Independent Administrative Agency National Institute of Technology and the Independent Administrative Agency Japan Student Services Organization.

among donations to the following corporations (limited to those that satisfy the requirements specified by Cabinet Order regarding the appropriateness of their operational organization and business activities and the receipt of support from citizens), those specified by Cabinet Order as being certain to be used for projects for grants to students or researchers in unstable employment for research conducted by them, or for projects to improve their abilities as researchers:

national university corporations and inter-university research institute corporations;

public university corporations;

the Independent Administrative Agency National Institute of Technology.

The provisions of the preceding paragraph apply only where the tax return contains a statement concerning the deduction with regard to the amount to be deducted under the provisions of that paragraph and, pursuant to the provisions of Order of the Ministry of Finance, has attached to it a written statement concerning the calculation of that amount and documents evidencing the amounts forming the basis of that calculation and other matters.

The provisions of Article 92, paragraph (2) of the Income Tax Act apply mutatis mutandis to the amount to be deducted under the provisions of paragraph (1). In this case, the phrase "credit under the preceding paragraph" in paragraph (2) of that Article is deemed to be replaced with "credit under the preceding paragraph and Article 41-18-3, paragraph (1) (Special Income Tax Credit Where a Donation Is Made to an Incorporated Public Interest Association, etc.) of the Act on Special Measures Concerning Taxation", and the phrase "the amount allowed as a credit" is deemed to be replaced with "the total of the amounts allowed as these credits".

With regard to the calculation of the amount of income tax listed in Article 120, paragraph (1), item (iii) of the Income Tax Act in the case where the provisions of paragraph (1) are applied to income tax for the year, the phrase "Chapter III (Calculating the Amount of Taxes)" in that item is deemed to be replaced with "Chapter III (Calculating the Amount of Taxes) and Article 41-18-3, paragraph (1) (Special Income Tax Credit Where a Donation Is Made to an Incorporated Public Interest Association, etc.) of the Act on Special Measures Concerning Taxation".

Beyond what is prescribed in the preceding three paragraphs, Cabinet Order provides for the necessary particulars concerning the application of the provisions of paragraph (1).