Act on Special Measures Concerning Taxation

With regard to the application of the provisions of the Corporation Tax Act and other laws and regulations concerning corporation tax to the income for each business year of a cooperative, etc. (limited to one pertaining to a specific district or region) in the case where its business year (excluding a business year during liquidation) falls under all of the following requirements, the phrase "19 percent" in Article 66, paragraph (3) of that Act is deemed to be replaced with "19 percent (or 22 percent, for the portion of the amount of income for each business year that exceeds 1,000,000,000 yen (or, for a cooperative, etc. whose business year is less than one year, the amount calculated by multiplying 1,000,000,000 yen by the number of months in that business year and dividing the result by 12))", and the phrase "paragraphs (4) and (7) and the preceding paragraph" in paragraph (12) of that Article is deemed to be replaced with "paragraph (3) as replaced and applied pursuant to the provisions of Article 68, paragraph (1) (Special Provisions on Corporation Tax Rates for Specified Cooperatives, etc.) of the Act on Special Measures Concerning Taxation".

the ratio of the revenue pertaining to the goods supply business (meaning the business of supplying goods (including animals and other things specified by Cabinet Order) to the members of that cooperative, etc. and other users; the same applies in item (iii)) for the business year to the gross revenue for the business year (excluding revenue from the transfer of fixed assets and other revenue specified by Cabinet Order) exceeds 50 percent;

the number of the members of the cooperative and other members at the end of the business year is 500,000 or more;

the revenue pertaining to the goods supply business conducted at stores in the business year is the amount calculated by multiplying 100,000,000,000 yen by the number of months in the business year and dividing the result by 12, or more.

The number of months referred to in item (iii) of the preceding paragraph is calculated according to the calendar, and a fraction of less than one month is counted as one month.

The calculation of the revenue prescribed in paragraph (1) and other necessary matters concerning the application of the provisions of that paragraph are specified by Cabinet Order.

With regard to the application of the provisions of the Corporation Tax Act and other laws and regulations in the case where a distribution in kind prescribed in Article 2, item (xii)-5-2 of the Corporation Tax Act conducted by a corporation that has received the certification referred to in Article 23, paragraph (1) of the Act on Strengthening Industrial Competitiveness on or after April 1, 2026 falls under a certified share distribution (meaning a specified dividend of surplus prescribed in Article 31, paragraph (1) of the Act on Strengthening Industrial Competitiveness made in accordance with the certified business restructuring plan prescribed in Article 24, paragraph (2) of that Act pertaining to that certification) (excluding the case where that certified share distribution would fall under a share distribution prescribed in Article 2, item (xii)-15-2 of the Corporation Tax Act if the provisions of this paragraph were not applied), the phrase "through which all of the issued shares, etc. of a corporation" in Article 2, item (xii)-15-2 of that Act is deemed to be replaced with "through which the issued shares, etc. of a corporation", and the phrase "that is specified by Cabinet Order as a share distribution for the wholly owned subsidiary corporation and the corporation making a distribution in kind to conduct their businesses independently (limited to one in which those shares" in item (xii)-15-3 of that Article is deemed to be replaced with "that is a certified share distribution prescribed in Article 68-2, paragraph (1) (Special Provisions on Taxation on Certified Share Distributions) of the Act on Special Measures Concerning Taxation and that satisfies the requirement that the ratio of the number (or, for capital contributions, the amount) of the shares of the wholly owned subsidiary corporation held by the corporation making a distribution in kind immediately after that certified share distribution to the total number or total amount of the issued shares, etc. of that wholly owned subsidiary corporation is less than 20 percent and other requirements specified by Cabinet Order (limited to one in which the shares of that wholly owned subsidiary corporation".

Necessary matters concerning the application of the provisions of the Corporation Tax Act and other laws and regulations in the case where the provisions of the preceding paragraph apply are specified by Cabinet Order.

With regard to the application of the provisions of the Corporation Tax Act and other laws and regulations in the case where a merger conducted by a domestic corporation falls under a specified intra-group merger (meaning a merger that falls under both of the following, excluding one that satisfies the requirement that any of the principal businesses conducted by the merged corporation before the merger and any of the businesses conducted by the merging corporation before that merger are related to each other and other requirements specified by Cabinet Order), the phrase "that merger" in the provisions of Article 2, item (xii)-8, (a) through (c) of that Act is deemed to be replaced with "that merger (excluding one that falls under a specified intra-group merger prescribed in Article 68-2-2, paragraph (1) (Special Provisions Concerning the Scope, etc. of Qualified Merger) of the Act on Special Measures Concerning Taxation)", and the phrase "has transferred" in Article 61-11, paragraph (1) of that Act is deemed to be replaced with "has transferred (excluding the case where it has transferred that transfer gain or loss adjustment asset to the merging corporation through a specified intra-group merger prescribed in Article 68-2-2, paragraph (1) (Special Provisions Concerning the Scope, etc. of Qualified Merger) of the Act on Special Measures Concerning Taxation)".

where there is a specified controlling interest between the merged corporation and the merging corporation; and

where shareholders, etc. of the merged corporation (meaning shareholders, etc. prescribed in Article 2, item (xiv) of the Corporation Tax Act; the same applies in item (iii) of the following paragraph) are provided with shares (including capital contributions; hereinafter the same applies in this Article) of any one corporation (limited to one that falls under the category of specified foreign corporation with less tax burden, etc.) out of the merging parent corporations prescribed in item (xii)-8 of that Article.

With regard to the application of the provisions of the Corporation Tax Act and other laws and regulations in the case where a company split conducted by a domestic corporation falls under a specified intra-group company split (meaning a company split that falls under all of the following, excluding one that satisfies the requirement that any of the businesses conducted by the splitting corporation before the company split that are to be conducted by the succeeding corporation in a company split as a result of that company split and any of the businesses conducted by the succeeding corporation in a company split before that company split are related to each other and other requirements specified by Cabinet Order), the phrase "that company split" in the provisions of Article 2, item (xii)-11, (a) through (c) of that Act is deemed to be replaced with "that company split (excluding one that falls under a specified intra-group company split prescribed in Article 68-2-2, paragraph (2) (Special Provisions Concerning the Scope, etc. of Qualified Merger) of the Act on Special Measures Concerning Taxation)", and the phrase "has transferred" in Article 61-11, paragraph (1) of that Act is deemed to be replaced with "has transferred (excluding the case where it has transferred that transfer gain or loss adjustment asset to the succeeding corporation in a company split through a specified intra-group company split prescribed in Article 68-2-2, paragraph (2) (Special Provisions Concerning the Scope, etc. of Qualified Merger) of the Act on Special Measures Concerning Taxation)".

where the split is a split specified by Cabinet Order as a split in which the majority of the assets and liabilities of the splitting corporation are transferred to the succeeding corporation in a company split;

where there is a specified controlling interest between the splitting corporation and the succeeding corporation in a company split; and

where a shareholder, etc. of the splitting corporation or the splitting corporation is provided with shares of any one corporation (limited to one that falls under the category of specified foreign corporation with less tax burden, etc.) out of the successor parent corporations in a company split prescribed in Article 2, item (xii)-11 of the Corporation Tax Act.

With regard to the application of the provisions of the Corporation Tax Act and other laws and regulations in the case where a share exchange conducted by a domestic corporation falls under a specified intra-group share exchange (meaning a share exchange that falls under both of the following, excluding one that satisfies the requirement that any of the principal businesses conducted by the wholly owned subsidiary corporation in a share exchange (meaning a wholly owned subsidiary corporation in a share exchange prescribed in Article 2, item (xii)-6 of that Act; hereinafter the same applies in this paragraph) before the share exchange and any of the businesses conducted by the wholly owning parent corporation resulting from a share exchange (meaning a wholly owning parent corporation resulting from a share exchange prescribed in item (xii)-6-3 of that Article; hereinafter the same applies in this paragraph, paragraph (5), item (i) and paragraph (3) of the following Article) before that share exchange are related to each other and other requirements specified by Cabinet Order), the phrase "that share exchange" in Article 2, item (xii)-17, (a) of that Act is deemed to be replaced with "that share exchange (excluding one that falls under a specified intra-group share exchange prescribed in Article 68-2-2, paragraph (3) (Special Provisions Concerning the Scope, etc. of Qualified Merger) of the Act on Special Measures Concerning Taxation)", the phrase "that share exchange, etc." in (b) of that item with "that share exchange, etc. (excluding one that falls under a specified intra-group share exchange prescribed in Article 68-2-2, paragraph (3) of the Act on Special Measures Concerning Taxation)", the phrase "that share exchange" in (c) of that item with "that share exchange (excluding one that falls under a specified intra-group share exchange prescribed in Article 68-2-2, paragraph (3) of the Act on Special Measures Concerning Taxation)", and the phrase "that share exchange in the case" in Article 62-9, paragraph (1) of that Act with "that share exchange (excluding one that falls under a specified intra-group share exchange prescribed in Article 68-2-2, paragraph (3) (Special Provisions Concerning the Scope, etc. of Qualified Merger) of the Act on Special Measures Concerning Taxation) in the case".

where there is a specified controlling interest between the wholly owned subsidiary corporation in a share exchange and the wholly owning parent corporation resulting from a share exchange; and

where a shareholder of the wholly owned subsidiary corporation in a share exchange is provided with shares of any one corporation (limited to one that falls under the category of specified foreign corporation with less tax burden, etc.) out of the fully controlling parent corporations in a share exchange prescribed in Article 2, item (xii)-17 of the Corporation Tax Act.

Where a capital contribution in kind whereby a domestic corporation transfers its assets or liabilities to a foreign corporation falls under the category of specified capital contribution in kind (meaning a capital contribution in kind whereby a domestic corporation transfers shares of a specified foreign subsidiary corporation in its possession to a specified foreign parent corporation, etc. of the domestic corporation), with regard to the application of the provisions of the Corporation Tax Act and any other laws and regulations, the term "capital contribution in kind that falls under any of the following (limited to" in Article 2, item (xii)-14 of that Act is deemed to be replaced with "capital contribution in kind that falls under any of the following (limited to a specified capital contribution in kind prescribed in Article 68-2-2, paragraph (4) (Special Provisions Concerning the Scope, etc. of Qualified Merger) of the Act on Special Measures Concerning Taxation,".

In this Article, the meanings of the terms listed in the following items are as prescribed respectively in those items:

specified foreign corporation with less tax burden, etc.: A specified foreign corporation with less tax burden, and a foreign corporation (excluding one that falls under the category of specified foreign corporation with less tax burden) that, immediately before a merger, company split or share exchange (referred to as a "merger, etc." in this item), directly or indirectly holds all of the issued shares, etc. of a specified foreign corporation with less tax burden (limited to one that, immediately before that merger, etc., directly or indirectly holds all of the issued shares of or capital contributions to (excluding its own shares held by itself; referred to as "issued shares, etc." in this paragraph) the merging corporation, the succeeding corporation in a company split or the wholly owning parent corporation resulting from a share exchange);

specified foreign corporation with less tax burden: A foreign corporation specified by Cabinet Order as a corporation whose tax burden to be imposed on its income earned in a state or territory where its head office or principal office is located is significantly lower than the tax burden to be imposed on the income of a corporation in Japan;

specified controlling interest: A relationship between two domestic corporations whereby either domestic corporation holds, directly or indirectly, shares that account for more than 50 percent of the total number or total amount of the issued shares, etc. of the other domestic corporation or any other special relationship specified by Cabinet Order;

specified foreign subsidiary corporation: A foreign corporation in which, at any time during the period from the first day of the earliest business year that commenced within two years before the first day of the business year of the foreign corporation that includes the date of the capital contribution in kind, until that date of the capital contribution in kind, residents (meaning residents prescribed in Article 2, paragraph (1), item (i)-2; hereinafter the same applies in this item), domestic corporations and specially-related nonresidents (meaning nonresidents prescribed in Article 2, paragraph (1), item (i)-2 with a special relationship specified by Cabinet Order to residents or domestic corporations) hold shares that account for more than 50 percent of the total number or total amount of the issued shares, etc. of the foreign corporation, and which falls under the category of specified foreign corporation with less tax burden; and

specified foreign parent corporation, etc.: A foreign corporation which has a relationship with a domestic corporation whereby the foreign corporation directly or indirectly holds shares that account for 80 percent or more of the total number or total amount of the issued shares, etc. of the domestic corporation, or any other relationship specified by Cabinet Order, and which falls under the category of specified foreign corporation with less tax burden.

Beyond what is specified in the preceding paragraphs, the necessary matters concerning the application of the provisions of the Corporation Tax Act and any other laws and regulations in the case where a specified intra-group merger prescribed in paragraph (1), specified intra-group company split prescribed in paragraph (2), specified intra-group share exchange prescribed in paragraph (3) or specified capital contribution in kind prescribed in paragraph (4) has been implemented, are specified by Cabinet Order.