Act on Special Measures Concerning Taxation

Where a corporation that holds the amount of the reserve for exploration referred to in paragraph (1) of the preceding Article (excluding that subject to the provisions of paragraph (6) of that Article) has, in any business year, made an expenditure of new mineral deposit exploration expenses prescribed in paragraph (1) of that Article, or has depreciated exploration machinery and equipment specified by Cabinet Order (referred to in item (i) and the following paragraph as "exploration machinery and equipment"), the amount equivalent to the smallest of the following amounts is included in deductible expenses in calculating the amount of income for that business year, in addition to the amount included in deductible expenses pertaining to that expenditure or depreciation.

the sum of the amount equivalent to the amount of those new mineral deposit exploration expenses expended in that business year (where there is a subsidy from the national government granted for carrying out exploration in that business year, the amount obtained by deducting the amount equivalent to that subsidy) and the amount of depreciation of that exploration machinery and equipment for that business year (where it exceeds the depreciation limit for that exploration machinery and equipment calculated pursuant to the provisions of this Act and Article 31 of the Corporation Tax Act, the amount equivalent to that depreciation limit);

the amount equivalent to the amount, out of the amount of the reserve for exploration referred to in paragraph (1) of the preceding Article carried over from the preceding business year (where there is an amount that was included in gross profit by the end of the preceding business year pursuant to the provisions of paragraph (4) or paragraph (5) of that Article, the amount obtained by deducting that amount), that has been included, or is to be included, in gross profit in that business year pursuant to the provisions of paragraph (4) or paragraph (5) of that Article;

the amount calculated, as specified by Cabinet Order, as the amount of income for that business year.

Where a corporation that holds the amount of the reserve for overseas exploration referred to in paragraph (2) of the preceding Article (excluding that subject to the provisions of paragraph (6) of that Article) has, in any business year, made an expenditure of new mineral deposit exploration expenses prescribed in paragraph (2) of that Article (referred to in item (i) of this paragraph as "overseas new mineral deposit exploration expenses"), or has depreciated exploration machinery and equipment used exclusively for business outside Japan (referred to in item (i) of this paragraph as "overseas exploration machinery and equipment"), the amount equivalent to the smallest of the following amounts is included in deductible expenses in calculating the amount of income for that business year, in addition to the amount included in deductible expenses pertaining to that expenditure or depreciation.

out of the sum listed in item (i) of the preceding paragraph, the sum of the amount equivalent to the amount of those overseas new mineral deposit exploration expenses expended in that business year and the amount of depreciation of that overseas exploration machinery and equipment for that business year (where the amount listed in item (ii) of that paragraph exceeds the amount obtained by deducting that sum from the amount listed in item (i) of that paragraph, the amount obtained by deducting the amount equivalent to the excess);

the amount equivalent to the amount, out of the amount of the reserve for overseas exploration referred to in paragraph (2) of the preceding Article carried over from the preceding business year (where there is an amount that was included in gross profit by the end of the preceding business year pursuant to the provisions of paragraph (4) or paragraph (5) of that Article, the amount obtained by deducting that amount), that has been included, or is to be included, in gross profit in that business year pursuant to the provisions of paragraph (4) or paragraph (5) of that Article;

the amount obtained by deducting the amount included in deductible expenses pursuant to the provisions of the preceding paragraph from the amount listed in item (iii) of that paragraph.

Where the provisions of the preceding two paragraphs are applied to each business year of a group tax sharing corporation that is a corporation prescribed in those paragraphs (limited to a business year ending on the day of the end of the business year of the group tax sharing parent corporation pertaining to that group tax sharing corporation), the amount listed in paragraph (1), item (iii) is the amount specified by Cabinet Order as the amount of income of that group tax sharing corporation calculated pursuant to the provisions of Article 64-5 and Article 64-7 of the Corporation Tax Act on the basis of the income before group tax sharing and the deficit before group tax sharing prescribed in Article 64-5, paragraph (1) of that Act for that business year, or for the business year ending on that day, of that group tax sharing corporation and the other group tax sharing corporations (limited to those that have a group tax sharing full controlling interest with that group tax sharing corporation on that day).

The provisions of paragraph (1) or paragraph (2) apply only where the final return, etc. for the business year for which the corporation seeks the application of those provisions contains a statement of the inclusion in deductible expenses of the amount to be included in deductible expenses pursuant to those provisions, and a written statement concerning the calculation of the amount to be included in deductible expenses is attached to that final return, etc. In this case, the amount to be included in deductible expenses pursuant to those provisions is limited to the amount to be included in deductible expenses pertaining to that statement.

Where the amount of the new mineral deposit exploration expenses prescribed in paragraph (1) or the overseas new mineral deposit exploration expenses prescribed in paragraph (2) expended by a corporation to which the provisions of paragraph (1) or paragraph (2) have been applied in the business year for which those provisions were applied includes the amount of an investment in an overseas exploration corporation, the provisions of Article 55, paragraph (1) and paragraph (8) do not apply to that investment in an overseas exploration corporation.

With regard to the application of the provisions of Article 67, paragraph (3) and paragraph (5) of the Corporation Tax Act, any amount included, pursuant to the provisions of paragraph (1) or paragraph (2), in the amount of deductible expenses of a corporation subject to those provisions is to be included in the amount of income, etc. prescribed in these provisions.

Beyond what is provided for in the preceding three paragraphs, the calculation of the amount of revenue reserves of a corporation to which the provisions of paragraph (1) or paragraph (2) have been applied, and other necessary matters concerning the application of the provisions of paragraphs (1) through (3) are specified by Cabinet Order.