Act on Special Measures Concerning Taxation

Where a corporation seeks the application of two or more of the provisions listed in the following items in a business 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 corporation seeks application (excluding the provisions listed in item (iii)) exceeds the amount equivalent to 90 percent of the corporation tax before adjustment (meaning the corporation tax before adjustment prescribed in Article 42-4, paragraph (19), item (ii); hereinafter the same applies in this paragraph and the following paragraph) on income of the corporation for that business year (where the corporation seeks the application of the provisions listed in item (iii), the amount equivalent to 90 percent of the amount obtained by deducting the amount specified in that item from that corporation tax before adjustment), the amount of that excess (hereinafter referred to in this Article as the "excess over corporation tax before adjustment") is not deducted from the corporation tax before adjustment on income of the corporation for that business year, notwithstanding the provisions listed in those items. In this case, the excess over corporation tax 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 42-4, 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 42-4, paragraph (4) or paragraph (7): the amount obtained by deducting, from the maximum credit for small and medium sized enterprises, etc. 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 42-4, paragraph (14) (including as applied mutatis mutandis pursuant to Article 42-4-2, paragraph (2) or Article 42-5, paragraph (3), item (ii); hereinafter the same applies in this item): the amount obtained by deducting, from the amount equivalent to the calculated amount prescribed in Article 42-4, paragraph (14), the amount that remains undeducted even after the deduction under the provisions of that paragraph;

the provisions of Article 42-4-2, 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 42-5, 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 42-6, paragraph (2) or paragraph (3): the amount obtained by deducting, from the maximum tax credit 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 42-9, 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 excess carried-forward tax credit amount 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 42-10, paragraph (2): 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 42-11, paragraph (2): 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 42-11-2, paragraph (2): 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 42-12, paragraph (2): 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 42-12-2, 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 42-12-4, paragraph (2) or paragraph (3): the amount obtained by deducting, from the maximum tax credit 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 42-12-5, 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 enterprises, etc. 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 42-12-6, paragraph (2): 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 42-12-6, paragraph (3), paragraph (4), paragraph (6) or paragraph (7): the amount obtained by deducting, from the semiconductor tax credit limit prescribed in paragraph (3) 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 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, the amount obtained by deducting, from the maximum credit for specified products prescribed in paragraph (6) 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 paragraph (2) or paragraph (3) of the preceding Article: the amount obtained by deducting, from the maximum tax credit 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;

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 corporation 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 the day following the day of the end of the business year in which the provisions of that paragraph were applied to the day of the end of the last business year in which the amount specified in each item of that paragraph could be deducted from the corporation tax before adjustment on income for each business year if the provisions on carry-forward tax credits (meaning the provisions of Article 42-4, paragraph (7), Article 42-5, paragraph (2), Article 42-6, paragraph (3), Article 42-9, paragraph (2), Article 42-12-4, paragraph (3), Article 42-12-5, paragraph (3), Article 42-12-6, paragraph (4) or paragraph (7) or paragraph (3) 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 corporation tax similar to these; the same applies in the following paragraph and paragraph (4)) were applied to it.

For each business year after the business year in which the provisions of paragraph (1) were applied to the corporation referred to in that paragraph (hereinafter referred to in this paragraph and the following paragraph as the "excess business year") (limited to each business year where the corporation has continuously filed blue returns up to that business 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 corporation tax 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 business year, but only to the extent of the amount that would fall under the excess carried-forward tax credit amount prescribed in Article 42-4, paragraph (19), item (x), Article 42-5, paragraph (5), item (v), Article 42-6, paragraph (4), Article 42-9, paragraph (3), Article 42-12-4, paragraph (4), Article 42-12-5, paragraph (4), item (x), Article 42-12-6, paragraph (5) or paragraph (8) or paragraph (4) 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 prescribed in Article 2, item (xxxi) of the Corporation Tax Act for the excess business year and each subsequent business year have attached to them a written statement of the excess over corporation tax before adjustment, and the final return, etc. for the business year for which the corporation 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 corporation tax 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 a corporation (excluding a small and medium sized enterprise prescribed in Article 42-4, paragraph (19), item (vii) (excluding one that falls under an excluded business operator prescribed in item (viii) of that paragraph or a group tax sharing excluded business operator prescribed in item (viii)-2 of that paragraph) and an agricultural cooperative, etc. prescribed in item (ix) of that paragraph; the same applies in item (i) and item (ii)) seeks the application of the provisions listed in paragraph (1), item (i), item (iv), item (iv)-2 (limited to the part pertaining to Article 42-5, paragraph (1)), item (ix) or item (xiv) (hereinafter referred to in this paragraph and paragraph (8) as the "specified tax credit provisions") in any business year beginning during the period from April 1, 2018 to March 31, 2029 (hereinafter referred to in this Article as a "covered fiscal year"), if the corporation meets none of the following requirements in that covered fiscal year (for the provisions listed in paragraph (1), item (ix) and item (xiv), if the corporation fails to meet any of those requirements; and excluding the case specified by Cabinet Order as a case where the covered fiscal year is neither the business year of establishment prescribed in Article 42-12-5, paragraph (4), item (i) (referred to in item (i), (b) and the following paragraph as the "business year of establishment") nor a business year of the merger, etc., and the amount of income for the covered fiscal year is equal to or less than the amount of income for the business year preceding the covered fiscal year), the specified tax credit provisions do not apply.

the ratio of the amount obtained by deducting the corporation's comparative amount of salary or other wages paid to continuing employees prescribed in Article 42-12-5, paragraph (4), item (vi) (hereinafter referred to in this Article as the "comparative amount of salary or other wages paid to continuing employees") from the corporation's amount of salary or other wages paid to continuing employees prescribed in paragraph (4), item (v) of that Article (referred to in paragraph (7), item (iii) and paragraph (9) 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, at the end of the covered fiscal year, the amount of stated capital or the amount of contributions of the corporation is 1 billion yen or more and the number of employees regularly employed by the corporation is 1,000 or more, or where, at the end of the covered fiscal year, the number of employees regularly employed by the corporation exceeds 2,000;

the case specified by Cabinet Order as a case where the covered fiscal year is neither the business year of establishment nor a business year of the merger, etc. and the amount of income for the business year preceding the covered fiscal year exceeds zero, or the case where the covered fiscal year is the business year of establishment or a business year of the merger, etc.;

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 corporation's business in Japan) for which the corporation carried out an acquisition, etc. (meaning acquisition or manufacture or construction, excluding acquisition through a merger, company split, gift, exchange, capital contribution in kind 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 fiscal year and which the corporation holds as of the day of the end of the covered fiscal year;

the total amount that the corporation has entered, through accounting as an expense or loss, as depreciation allowances for the depreciable assets it holds in the covered fiscal year (including the amount set aside as a reserve for special depreciation through accounting as an expense or loss or through the method of setting it aside as a reserve through the appropriation of surplus by the day on which the settlement of accounts for the covered fiscal year is finalized, and excluding the amount deemed to be included in the amount entered through accounting as an expense or loss prescribed in Article 31, paragraph (1) of the Corporation Tax Act pursuant to the provisions of paragraph (4) of that Article).

The business year of the merger, etc. prescribed in the preceding paragraph means a business year that includes the day of the merger, etc., the day of the transfer, etc. or the day of the succession, in the case where the corporation prescribed in that paragraph is a merging corporation, a splitting corporation, a succeeding corporation in a company split, a corporation making a capital contribution in kind or a corporation receiving a capital contribution in kind pertaining to a merger, company split or capital contribution in kind (for a company split or capital contribution in kind, limited to one that transfers a business; hereinafter referred to in this paragraph as a "merger, etc."), is a corporation that transferred a business or a corporation that acquired a business pertaining to the transfer or acquisition of a business (hereinafter referred to in this paragraph as a "transfer, etc."), or is a predecessor corporation or a successor corporation pertaining to a succession under a special law, or in any other case specified by Cabinet Order, or a business year that includes any other day specified by Cabinet Order (excluding the business year of establishment of that corporation).

With regard to the application of the provisions of paragraph (5) (limited to the part pertaining to the provisions listed in those items) in the case where a group tax sharing corporation referred to in Article 42-4, paragraph (8), item (iii) (including as applied mutatis mutandis pursuant to Article 42-4-2, paragraph (2) or Article 42-5, paragraph (3), item (ii)) seeks the application of the provisions listed in paragraph (1), item (i), item (iv) or item (iv)-2 (limited to the part pertaining to Article 42-5, paragraph (1)) in a business year subject to application prescribed in Article 42-4, paragraph (8), item (ii) (including as applied mutatis mutandis pursuant to Article 42-4-2, paragraph (2) or Article 42-5, paragraph (3), item (ii)), the following provisions apply:

a group tax sharing corporation that falls under an excluded business operator prescribed in Article 42-4, paragraph (19), item (viii), or an agricultural cooperative, etc. prescribed in item (ix) of that paragraph that is a group tax sharing parent corporation, which does not fall under an excluded business operator or agricultural cooperative, etc. prescribed in paragraph (4) of that Article, is deemed not to fall under an excluded business operator or agricultural cooperative, etc. referred to in paragraph (5);

the covered fiscal year of a group tax sharing subsidiary corporation is the business year of that group tax sharing subsidiary corporation that ends on the day of the end of the covered fiscal year of the group tax sharing parent corporation pertaining to that group tax sharing subsidiary corporation;

the requirement listed in paragraph (5), item (i) is that the ratio of the amount obtained by deducting the total of the comparative amounts of salary or other wages paid to continuing employees of that group tax sharing corporation and the other group tax sharing corporations from the total of the amounts of salary or other wages paid to continuing employees of that group tax sharing corporation and of the other group tax sharing corporations having a group tax sharing full controlling interest with that group tax sharing corporation as of the day of the end of the covered fiscal year of that group tax sharing corporation (hereinafter referred to in this item and the following item as "other group tax sharing corporations"), to that total of the comparative amounts, is 1 percent (or, where both of the following cases apply, 2 percent) or more:

where that group tax sharing corporation or any of the other group tax sharing corporations has, at the end of that covered fiscal year, an amount of stated capital or an amount of contributions of 1 billion yen or more and a number of employees regularly employed of 1,000 or more, or where that group tax sharing corporation or any of the other group tax sharing corporations has, at the end of that covered fiscal year, a number of employees regularly employed exceeding 2,000;

the case specified by Cabinet Order as a case where the covered fiscal year of that group tax sharing corporation does not fall under a business year of the merger, etc. (meaning a business year that includes the day specified in each of the following sub-items in the case where that group tax sharing corporation or any of the other group tax sharing corporations falls under any of the cases listed in those sub-items; the same applies in (b) and item (v)) and the total amount of income for the business year preceding that covered fiscal year and for the business year preceding the covered fiscal year of each other group tax sharing corporation that ends on the day of the end of that covered fiscal year (referred to in that item as the "other covered year") exceeds zero, or the case where the covered fiscal year of that group tax sharing corporation falls under a business year of the merger, etc.:

where it is a splitting corporation or a corporation making a capital contribution in kind pertaining to a company split or capital contribution in kind (limited to one that transfers a business; referred to in (1) and (2) as a "corporate split, etc.") (excluding the case where the succeeding corporation in a company split or the corporation receiving a capital contribution in kind pertaining to that corporate split, etc. is a corporation having a group tax sharing full controlling interest with that group tax sharing corporation or any other group tax sharing corporation): the day of that corporate split, etc.;

where it is a merging corporation pertaining to a merger, or a succeeding corporation in a company split or a corporation receiving a capital contribution in kind pertaining to a corporate split, etc. (excluding the case where the splitting corporation or the corporation making a capital contribution in kind pertaining to that corporate split, etc. is a corporation having a group tax sharing full controlling interest with that group tax sharing corporation or any other group tax sharing corporation): the day of that merger or corporate split, etc.;

where it is a corporation that transferred a business (excluding the case where the corporation that acquired that business is a corporation having a group tax sharing full controlling interest with that group tax sharing corporation or any other group tax sharing corporation): the day of that transfer;

where it is a corporation that acquired a business (excluding the case where the corporation that transferred that business is a corporation having a group tax sharing full controlling interest with that group tax sharing corporation or any other group tax sharing corporation): the day of that acquisition;

where it is a predecessor corporation pertaining to a succession under a special law (excluding the case where the successor corporation pertaining to that succession is a corporation having a group tax sharing full controlling interest with that group tax sharing corporation or any other group tax sharing corporation): the day of that succession;

where it is a successor corporation pertaining to a succession under a special law (excluding the case where the predecessor corporation pertaining to that succession is a corporation having a group tax sharing full controlling interest with that group tax sharing corporation or any other group tax sharing corporation): the day of that succession;

where another corporation has come to have a group tax sharing full controlling interest with the group tax sharing parent corporation pertaining to that group tax sharing corporation (excluding the case where it came to have that group tax sharing full controlling interest on the day of establishment of that other corporation): the day on which it came to have it;

where another corporation has ceased to have a group tax sharing full controlling interest with the group tax sharing parent corporation pertaining to that group tax sharing corporation: the day on which it ceased to have it;

the requirement listed in paragraph (5), item (ii) is that the total of the amounts listed in (a) of that item of that group tax sharing corporation and the other group tax sharing corporations 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 total of the amounts listed in (b) of that item of that group tax sharing corporation and the other group tax sharing corporations;

the case where none of them applies, prescribed in the part of paragraph (5) other than the items, is the case where the covered fiscal year of that group tax sharing corporation does not fall under a business year of the merger, etc., and the case specified by Cabinet Order prescribed in the part of that paragraph other than the items is the case specified by Cabinet Order as a case where the total amount of income for the covered fiscal year of that group tax sharing corporation and for the other covered year is equal to or less than the total amount of income for the business year preceding that covered fiscal year and for the business year preceding that other covered year.

With regard to the application of the provisions of Article 42-4, paragraph (9) (including as applied mutatis mutandis pursuant to Article 42-4-2, paragraph (2) or Article 42-5, paragraph (3), item (ii)) and paragraph (21), Article 42-4-2, paragraph (4), Article 42-5, paragraph (6), Article 42-11-2, paragraph (5) and Article 42-12-6, paragraph (12) in the case where the corporation prescribed in paragraph (5) applies the specified tax credit provisions in a covered fiscal year (limited to the case where the provisions of paragraph (5) do not apply because the corporation meets any of the requirements listed in the items of that paragraph (for the provisions listed in paragraph (1), item (ix) and item (xiv) among the specified tax credit provisions, because the corporation 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 corporation meets any of the requirements listed in those items (for the provisions listed in paragraph (1), item (ix) and item (xiv) among the specified tax credit provisions, that the corporation 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 corporation tax 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 (including the case where the total of the amounts of salary or other wages paid to continuing employees prescribed in paragraph (7), item (iii) and the total of the comparative amounts of salary or other wages paid to continuing employees prescribed in that item are zero), and other necessary matters concerning the application of the provisions of paragraphs (1) through (3) or paragraphs (5) through (7) are specified by Cabinet Order.