Act on Special Measures Concerning Taxation

Where the amount specified by Cabinet Order as the amount of loss from the partnership business (meaning the business carried on under that limited liability business partnership agreement; hereinafter the same applies in this Article) for that business year of a corporation that is a partner that has concluded a limited liability business partnership agreement prescribed in Article 3, paragraph (1) of the Limited Liability Partnership Act exceeds the amount calculated pursuant to the provisions of Cabinet Order on the basis of the value of the contribution of the corporation pertaining to that partnership business, an amount equivalent to the excess (referred to as the "excess partnership loss" in paragraph (3)) is not included in deductible expenses in calculating the amount of income for that business year.

Where a corporation filing a final return, etc. has a total excess partnership loss in any business year, the amount of that total excess partnership loss up to the amount specified by Cabinet Order as the amount of profit of that corporation for that business year from the partnership business (limited to one pertaining to that total excess partnership loss) is included in deductible expenses in calculating the amount of income for that business year.

The total excess partnership loss prescribed in the preceding paragraph means the amount obtained by totaling, for each partnership business, of the excess partnership losses in each business year up to and including the business year preceding that business year of that corporation, each excess partnership loss in the case where the corporation has continuously filed tax returns prescribed in Article 2, item (xxxi) of the Corporation Tax Act (hereinafter referred to as a "tax return" in this paragraph) from the business year for which the provisions of paragraph (1) were applied to that excess partnership loss (hereinafter referred to as the "applicable business year" in this paragraph) through the preceding business year (where the applicable business year is the preceding business year, in the case where it has filed the tax return for that applicable business year) (where there is an amount included in deductible expenses in calculating the amount of income for any business year up to the preceding business year pursuant to the provisions of the preceding paragraph, the amount after deducting the amount so included).

Beyond what is provided for in the preceding paragraph, matters concerning the application of the provisions of paragraph (1) in the case where a corporation has succeeded, through a qualified merger in which it is the merging corporation, to the status as a partner of a merged corporation that is a partner prescribed in that paragraph, and other necessary matters concerning the application of the provisions of paragraph (1) or paragraph (2), are specified by Cabinet Order.

Where a specific purpose company prescribed in Article 2, paragraph (3) of the Act on the Securitization of Assets (hereinafter referred to as the "Asset Securitization Act" in this paragraph) (hereinafter referred to as a "specific purpose company" in this Article) that satisfies the requirements listed in item (i) pays dividends of profits (including distributions of monies prescribed in Article 115, paragraph (1) of the Asset Securitization Act; hereinafter the same applies in this paragraph), the amount of those dividends of profits (including, where the amount of money delivered to its investors by that specific purpose company due to the grounds listed in Article 24, paragraph (1), items (iv) through (vi) of the Corporation Tax Act exceeds the amount specified by Cabinet Order as the amount of the portion, out of the amount of stated capital, etc. of that specific purpose company prescribed in Article 2, item (xvi) of that Act, corresponding to the contribution to that specific purpose company that gave rise to the delivery, the amount of the excess; hereinafter the same applies in this paragraph and paragraph (4)) that pertains to a business year that satisfies the requirements listed in item (ii) (hereinafter referred to as a "business year of application" in this paragraph) is included in deductible expenses in calculating the amount of income for that business year of application; provided, however, that where the amount of those dividends of profits exceeds the amount specified by Cabinet Order as the amount of income for that business year of application, the amount to be included in deductible expenses is limited to the amount so specified by Cabinet Order.

all of the following requirements:

it is registered in the specific purpose company register referred to in Article 8, paragraph (1) of the Asset Securitization Act;

it falls under any of the following:

the total issue price of the specified bonds (meaning specified bonds prescribed in Article 2, paragraph (7) of the Asset Securitization Act (excluding specified short-term bonds prescribed in paragraph (8) of that Article); hereinafter the same applies in this paragraph) that it has issued (limited to an issuance where the public offering of securities prescribed in Article 2, paragraph (3) of the Financial Instruments and Exchange Act pertaining to that issuance is a solicitation of offers to acquire prescribed in that paragraph that falls under the case listed in item (i) of that paragraph) is 100 million yen or more;

the specified bonds that it has issued are expected to be held only by institutional investors (meaning financial instruments business operators prescribed in Article 2, paragraph (9) of the Financial Instruments and Exchange Act (limited to those engaged in the type I financial instruments business prescribed in Article 28, paragraph (1) of that Act that falls under the securities-related business prescribed in paragraph (10) of that Article, or in the investment management business prescribed in paragraph (4) of that Article) and others specified by Order of the Ministry of Finance; hereinafter the same applies in this item) and others specified by Cabinet Order as similar thereto;

the preferred equity investments (meaning preferred equity investments prescribed in Article 2, paragraph (5) of the Asset Securitization Act; hereinafter the same applies in this item) that it has issued have been subscribed for by 50 or more persons;

the preferred equity investments that it has issued have been subscribed for only by institutional investors;

each public offering pertaining to the preferred equity investments that it has issued and to the base specified equity (meaning specified equity (meaning specified equity prescribed in Article 2, paragraph (6) of the Asset Securitization Act) pertaining to an asset securitization plan (meaning an asset securitization plan prescribed in Article 2, paragraph (4) of the Asset Securitization Act; the same applies in (a) of the following item) that does not state the matters specified by Order of the Ministry of Finance as matters concerning the rights (meaning the rights listed in the items of Article 27, paragraph (2) of the Asset Securitization Act) of specified members (meaning specified members prescribed in Article 2, paragraph (5) of the Asset Securitization Act); hereinafter the same applies in this item) (for base specified equity, the allotment or public offering under the provisions of Article 17, paragraph (1), item (i) or Article 36, paragraph (1) of the Asset Securitization Act) falls under a public offering specified by Cabinet Order as one conducted mainly in Japan; and

any other requirement specified by Cabinet Order.

all of the following requirements:

it conducts the business pertaining to the securitization of assets prescribed in Article 195, paragraph (1) of the Asset Securitization Act and business incidental thereto in accordance with the asset securitization plan;

there is no fact that it engages in other business prescribed in Article 195, paragraph (1) of the Asset Securitization Act;

it has placed in trust the specified assets prescribed in Article 200, paragraph (1) of the Asset Securitization Act as trust property, or has entrusted the business pertaining to the management and disposal of those specified assets (limited to the assets listed in the items of paragraph (2) of that Article) to another person;

at the end of that business year, it does not fall under the category of family corporations prescribed in Article 2, item (x) of the Corporation Tax Act that are specified by Cabinet Order (excluding one that falls under (b)(1) or (2) of the preceding item);

the amount of dividends of profits paid for that business year exceeds the amount equivalent to 90 percent of the amount specified by Cabinet Order as the amount of distributable profit for that business year (where the specific purpose company has issued specified bonds, the amount after deducting the amount specified by Cabinet Order from that amount);

it has not become a partner with unlimited liability prescribed in Article 195, paragraph (2) of the Asset Securitization Act;

any other requirement specified by Cabinet Order.

With regard to the application of the provisions of Article 62-3, paragraph (3), Article 66-8, paragraphs (1) and (7), and Article 66-9-4, paragraphs (1) and (6) to a specific purpose company, the phrase "falls under" in Article 62-3, paragraph (3) is deemed to be replaced with "falls under, and a transfer made by a specific purpose company prescribed in Article 2, paragraph (3) of the Act on the Securitization of Assets in a business year that satisfies the requirements listed in Article 67-14, paragraph (1), item (ii) (excluding (e))", the phrase "a foreign corporation (excluding one that falls under a foreign subsidiary prescribed in Article 23-2, paragraph (1) of the Corporation Tax Act; hereinafter the same applies in this paragraph)" in Article 66-8, paragraph (1) is deemed to be replaced with "a foreign corporation", the phrase "that Act" is deemed to be replaced with "the Corporation Tax Act", the phrase "a foreign corporation (excluding one that falls under a foreign subsidiary prescribed in Article 23-2, paragraph (1) of the Corporation Tax Act; hereinafter the same applies in this paragraph)" in paragraph (7) of that Article is deemed to be replaced with "a foreign corporation", the phrase "a foreign corporation (excluding one that falls under a foreign subsidiary prescribed in Article 23-2, paragraph (1) of the Corporation Tax Act; hereinafter the same applies in this paragraph)" in Article 66-9-4, paragraph (1) is deemed to be replaced with "a foreign corporation", the phrase "that Act" is deemed to be replaced with "the Corporation Tax Act", and the phrase "a foreign corporation (excluding one that falls under a foreign subsidiary prescribed in Article 23-2, paragraph (1) of the Corporation Tax Act; hereinafter the same applies in this paragraph)" in paragraph (6) of that Article is deemed to be replaced with "a foreign corporation".

The provisions of Article 23, paragraph (1) of the Corporation Tax Act do not apply to the amount of dividends of profits that a corporation receives from a specific purpose company.

The provisions of Article 62-4, paragraph (1) of the Corporation Tax Act do not apply to a transfer of assets or liabilities by a corporation to a specific purpose company through a capital contribution in kind.

The provisions of paragraph (1) apply only if the final return, etc. for the business year for which the corporation seeks the application of the provisions of that paragraph contains a statement concerning the inclusion in deductible expenses of the amount to be included in deductible expenses pursuant to the provisions of that paragraph and has attached to it a written statement concerning the calculation of the amount to be included in deductible expenses, and the corporation preserves documents that make clear that it satisfies the requirements listed in paragraph (1), item (i), (b) and (c).

Even where a final return, etc. has been filed without the statement or the written statement set forth in the preceding paragraph attached thereto, or the documents set forth in that paragraph have not been preserved, the district director may, when the district director finds any unavoidable reason for the failure to make the statement, attach the written statement or preserve the documents, apply the provisions of paragraph (1).

Beyond what is provided for in the preceding two paragraphs, necessary matters concerning the application of the provisions of paragraphs (1) through (5) and other necessary matters concerning the application of the provisions of laws and regulations concerning corporation tax to specific purpose companies and their members are specified by Cabinet Order.