Act on Special Measures Concerning Taxation

Where a corporation that files a blue return and that is listed in any of the following items or is specified by Cabinet Order, in each business year (excluding the business year that includes the day of dissolution and each business year during liquidation), in setting aside the policy reserve under the provisions of the law specified in that item (for a corporation specified by that Cabinet Order, the law specified by Cabinet Order) (referred to in paragraph (8) as the "policy reserve"), sets aside as a reserve for abnormal risks, by the method of accounting as an expense or loss, an amount not exceeding the amount calculated pursuant to the provisions of Cabinet Order on the basis of the net premium income prescribed in paragraph (3) of the preceding Article or the net mutual aid premium income prescribed in paragraph (4) of that Article of that nuclear insurance or earthquake insurance for that business year, in order to appropriate it for compensating losses from nuclear disasters pertaining to nuclear insurance (meaning insurance specified by Cabinet Order whose subject matter is nuclear facilities, liability for compensation for damage pertaining to nuclear disasters, etc.; the same applies hereinafter in this Article) or losses from earthquake disasters pertaining to earthquake insurance (meaning insurance, or mutual aid specified by Cabinet Order, whose subject matter is residential buildings or movables for daily life and whose insured event or mutual aid event is an earthquake or volcanic eruption, or a tsunami caused by either of these; the same applies hereinafter in this Article) (including where it sets aside the amount as a reserve for abnormal risks by the method of setting it aside as a reserve fund through the appropriation of surplus by the day on which the settlement of accounts for that business year is finalized), the amount so set aside is included in deductible expenses in calculating the amount of income for that business year.

a corporation that carries on casualty insurance business under the license prescribed in Article 3, paragraph (1) of the Insurance Business Act: Article 116, paragraph (1) of that Act;

a corporation that carries on casualty insurance business under the license prescribed in Article 185, paragraph (1) of the Insurance Business Act: Article 116, paragraph (1) of that Act as applied mutatis mutandis pursuant to Article 199 of that Act.

The loss from nuclear disasters prescribed in the preceding paragraph means the loss corresponding to the total amount of insurance proceeds paid, or finalized as payable, in each business year (where there are reinsurance proceeds received, or finalized as receivable, in that business year, the amount obtained by deducting that amount) as a result of insurance liability under nuclear insurance having arisen due to the occurrence of damage at a nuclear facility, the occurrence of a disaster caused by nuclear energy or any other accident, etc., and the loss from earthquake disasters prescribed in that paragraph means the loss corresponding to the total amount of insurance proceeds or mutual aid proceeds paid, or finalized as payable, in each business year (where there are reinsurance proceeds, insurance proceeds or mutual aid proceeds received, or finalized as receivable, in that business year, the amount obtained by deducting those amounts) as a result of insurance liability or mutual aid liability under earthquake insurance having arisen due to the occurrence of damage from fire, destruction, burial or washing away directly or indirectly caused by an earthquake or volcanic eruption, or a tsunami caused by either of these.

Where a loss from nuclear disasters or loss from earthquake disasters prescribed in paragraph (1) has arisen for a corporation that has set aside the reserve for abnormal risks pertaining to nuclear insurance or the reserve for abnormal risks pertaining to earthquake insurance referred to in that paragraph, the amount equivalent to the amount of that loss from nuclear disasters or loss from earthquake disasters, out of the amount of the reserve for abnormal risks pertaining to nuclear insurance or the reserve for abnormal risks pertaining to earthquake insurance as of the day on which that loss from nuclear disasters or loss from earthquake disasters arose (where there are amounts that have been included, or are to be included, in gross profit by that day pursuant to the provisions of this paragraph or paragraph (5), or amounts that were included in gross profit by the end of the preceding business year pursuant to the provisions of the following paragraph or the provisions of paragraph (9) of the preceding Article as applied mutatis mutandis pursuant to paragraph (6), the amount obtained by deducting those amounts; the same applies hereinafter in this Article), is included in gross profit in calculating the amount of income for the business year that includes the day on which that loss from nuclear disasters or loss from earthquake disasters arose.

Where the amount of the reserve for abnormal risks pertaining to nuclear insurance carried over from the preceding business year as of the end of each business year of a corporation that has set aside the reserve for abnormal risks pertaining to nuclear insurance referred to in paragraph (1) includes an amount set aside in a business year that ended on or before the day 10 years before that day (where that corporation is the merging corporation, succeeding corporation in a company split or corporation receiving a capital contribution in kind in a merger, company split or capital contribution in kind, including an amount set aside by the merged corporation, splitting corporation or corporation making a capital contribution in kind in that merger, company split or capital contribution in kind in a business year that ended on or before the day 10 years before that day (where that corporation is a succeeding corporation in a company split or a corporation receiving a capital contribution in kind, limited to the amount succeeded to by that corporation)), that amount is included in gross profit in calculating the amount of income for that business year.

Where a corporation that has set aside the reserve for abnormal risks pertaining to nuclear insurance or the reserve for abnormal risks pertaining to earthquake insurance referred to in paragraph (1) comes to fall under any of the cases listed in the following items, the amount equivalent to the amount specified in that item is included in gross profit in calculating the amount of income for the business year that includes the day on which it came to fall under that case.

where the corporation has discontinued its nuclear insurance operations or its earthquake insurance operations (for a corporation listed in paragraph (1), item (ii), where it has discontinued those operations in Japan): the amount of the reserve for abnormal risks pertaining to nuclear insurance or the reserve for abnormal risks pertaining to earthquake insurance as of the day of the discontinuation;

where the corporation has dissolved (excluding dissolution through a merger): the amount of the reserve for abnormal risks pertaining to nuclear insurance or the reserve for abnormal risks pertaining to earthquake insurance as of the day of dissolution;

where the corporation has reversed the amount of the reserve for abnormal risks pertaining to nuclear insurance or the reserve for abnormal risks pertaining to earthquake insurance in a case other than the cases referred to in the preceding two paragraphs, the preceding two items and the following paragraph: the amount equivalent to the amount reversed out of the amount of that reserve for abnormal risks as of the day of the reversal.

The provisions of paragraph (9) and paragraph (10) of the preceding Article apply mutatis mutandis where a corporation that has set aside the reserve for abnormal risks pertaining to nuclear insurance or the reserve for abnormal risks pertaining to earthquake insurance referred to in paragraph (1) has had the approval for filing blue returns revoked, or has submitted a written notification to the effect that it will discontinue filing returns by blue return, and thereafter has again obtained approval for filing blue returns, and, out of the amounts set aside as a reserve for abnormal risks pertaining to nuclear insurance or reserve for abnormal risks pertaining to earthquake insurance after obtaining that approval, there is an amount that is to be included in deductible expenses pursuant to the provisions of that paragraph in calculating the amount of income for the business year in which it was set aside. In this case, the phrase "paragraph (6) through the preceding paragraph" in paragraph (10) of that Article is deemed to be replaced with "paragraphs (3) through (5) of the following Article and the preceding paragraph".

The provisions of Article 56, paragraph (6) apply mutatis mutandis where the provisions of paragraph (1) are applied.

Where a corporation that files a blue return and that is listed in any of the items of paragraph (1), in each business year (excluding each business year during liquidation), transfers all of the insurance policies of nuclear insurance or earthquake insurance to a succeeding corporation in a company split or a corporation receiving a capital contribution in kind through a company split or capital contribution in kind, if, in setting aside the policy reserve, in order to appropriate it for compensating the loss from nuclear disasters prescribed in paragraph (2) pertaining to nuclear insurance or the loss from earthquake disasters prescribed in that paragraph pertaining to earthquake insurance, it sets aside as a reserve for abnormal risks an amount not exceeding the amount equivalent to the amount calculated pursuant to the provisions of Cabinet Order prescribed in paragraph (1) for that nuclear insurance or earthquake insurance that would be calculated pursuant to the provisions of that paragraph if the time immediately before that company split or capital contribution in kind were the end of that business year, the amount so set aside is included in deductible expenses in calculating the amount of income for that business year.

The provisions of the preceding paragraph apply only where the corporation prescribed in that paragraph has submitted, within two months after the date of the company split or capital contribution in kind, a document stating the amount of the reserve for abnormal risks referred to in that paragraph and other matters specified by Order of the Ministry of Finance to the district director having jurisdiction over the place for tax payment.

The provisions of Article 55, paragraph (10) and paragraph (11) apply mutatis mutandis where a corporation that has set aside the reserve for abnormal risks pertaining to nuclear insurance or the reserve for abnormal risks pertaining to earthquake insurance referred to in paragraph (1) has transferred all of the insurance policies of nuclear insurance or earthquake insurance to the merging corporation through a merger, and the provisions of the first sentence of paragraph (12) of that Article apply mutatis mutandis where a corporation that has set aside the reserve for abnormal risks pertaining to nuclear insurance referred to in paragraph (1) has transferred all of the insurance policies pertaining to nuclear insurance to the merging corporation through a merger. In this case, the term "qualified merger" in paragraph (10) and paragraph (11) of that Article is deemed to be replaced with "merger", and the term "qualified merger" in the first sentence of paragraph (12) of that Article with "merger" and the term "paragraph (3)" with "Article 57-6, paragraph (4)".

Where a corporation that has set aside the reserve for abnormal risks pertaining to nuclear insurance or the reserve for abnormal risks pertaining to earthquake insurance referred to in paragraph (1) or paragraph (8) has transferred all of the insurance policies of nuclear insurance or earthquake insurance pertaining to that reserve for abnormal risks to a succeeding corporation in a company split through a company split, the amount of that reserve for abnormal risks immediately before the company split is to be succeeded to by that succeeding corporation in a company split. In this case, the amount of the reserve for abnormal risks succeeded to by the succeeding corporation in a company split is deemed to be the amount of the reserve for abnormal risks referred to in paragraph (1) held by that succeeding corporation in a company split as of the date of the company split.

The provisions of the first sentence of Article 55, paragraph (14) and the first sentence of paragraph (16) of that Article apply mutatis mutandis where a corporation that has set aside the reserve for abnormal risks referred to in the preceding paragraph has transferred all of the insurance policies of nuclear insurance pertaining to that reserve for abnormal risks to a succeeding corporation in a company split through a company split, and the provisions of paragraph (15) of that Article apply mutatis mutandis where a corporation that has set aside the reserve for abnormal risks referred to in the preceding paragraph has transferred all of the insurance policies of nuclear insurance or earthquake insurance pertaining to that reserve for abnormal risks to a succeeding corporation in a company split through a company split. In this case, the term "qualified company split" in the first sentence of paragraph (14) of that Article is deemed to be replaced with "company split" and the term "paragraph (3)" with "Article 57-6, paragraph (4)"; the term "qualified company split" in paragraph (15) of that Article with "company split"; and the term "qualified company split" in the first sentence of paragraph (16) of that Article with "company split" and the term "paragraph (3)" with "Article 57-6, paragraph (4)".

Where a corporation that has set aside the reserve for abnormal risks pertaining to nuclear insurance or the reserve for abnormal risks pertaining to earthquake insurance referred to in paragraph (1) or paragraph (8) has transferred all of the insurance policies of nuclear insurance or earthquake insurance pertaining to that reserve for abnormal risks to a corporation receiving a capital contribution in kind through a capital contribution in kind, the amount of that reserve for abnormal risks immediately before the capital contribution in kind is to be succeeded to by that corporation receiving a capital contribution in kind. In this case, the amount of the reserve for abnormal risks succeeded to by the corporation receiving a capital contribution in kind is deemed to be the amount of the reserve for abnormal risks referred to in paragraph (1) held by that corporation receiving a capital contribution in kind as of the date of the capital contribution in kind.

The provisions of the first sentence of Article 55, paragraph (18) and the first sentence of paragraph (20) of that Article apply mutatis mutandis where a corporation that has set aside the reserve for abnormal risks referred to in the preceding paragraph has transferred all of the insurance policies of nuclear insurance pertaining to that reserve for abnormal risks to a corporation receiving a capital contribution in kind through a capital contribution in kind, and the provisions of paragraph (19) of that Article apply mutatis mutandis where a corporation that has set aside the reserve for abnormal risks referred to in the preceding paragraph has transferred all of the insurance policies of nuclear insurance or earthquake insurance pertaining to that reserve for abnormal risks to a corporation receiving a capital contribution in kind through a capital contribution in kind. In this case, the term "qualified capital contribution in kind" in the first sentence of paragraph (18) of that Article is deemed to be replaced with "capital contribution in kind" and the term "paragraph (3)" with "Article 57-6, paragraph (4)"; the term "qualified capital contribution in kind" in paragraph (19) of that Article with "capital contribution in kind"; and the term "qualified capital contribution in kind" in the first sentence of paragraph (20) of that Article with "capital contribution in kind" and the term "paragraph (3)" with "Article 57-6, paragraph (4)".

Beyond what is provided for in paragraph (7), necessary matters concerning the application of the provisions of paragraphs (1) through (6) and paragraph (8) through the preceding paragraph are specified by Cabinet Order.