Act on Special Measures Concerning Taxation

Where a corporation has, as a result of a merger (limited to a merger that does not fall under the category of qualified merger) of a domestic corporation to which the corporation issued old shares (meaning shares (including capital contributions; hereinafter the same applies in this Article) that were held by the corporation), been provided with shares of any one foreign corporation out of the foreign corporations which have a relationship with the merging corporation specified by Cabinet Order as a relationship whereby the foreign corporation directly or indirectly holds the whole of the issued shares of or capital contributions to the merging corporation (excluding the shares held by the merging corporation; referred to in paragraph (3) as "issued shares, etc."), if the shares of the foreign corporation are shares of a specified foreign corporation with less tax burden, etc. (meaning a specified foreign corporation with less tax burden, etc. prescribed in paragraph (5), item (i) of the preceding Article; hereinafter the same applies in this Article), the provisions of Article 61-2, paragraph (2) of the Corporation Tax Act (including the case where it is applied mutatis mutandis to the calculation made pursuant to the provisions of Article 142, paragraph (2) of that Act) and paragraph (17) of that Article do not apply.

Where a corporation has, as a result of a specified company split by split-off implemented by a domestic corporation to which the corporation issued owned shares (meaning shares held by the corporation) (such specified company split by split-off means a company split by split-off (meaning a split prescribed in paragraph (2), item (i) of the preceding Article, which does not fall under the category of qualified company split by split-off) whereby no assets other than shares of any one corporation (limited to one that falls under the category of specified foreign corporation with less tax burden, etc.; referred to as a "specified foreign parent corporation" in this paragraph) out of the parent corporations, prescribed in Article 61-2, paragraph (4) of the Corporation Tax Act, of the succeeding corporation in a company split have been provided as assets as a consideration for a split prescribed in Article 2, item (xii)-9, (a) of that Act), been provided with shares of a specified foreign parent corporation of the succeeding corporation in a company split, with regard to the application of the provisions of Article 61-2, paragraph (4) of that Act (including the case where it is applied mutatis mutandis to the calculation made pursuant to the provisions of Article 142, paragraph (2) of that Act) and paragraph (17) of that Article, the phrase "limited to those" in Article 61-2, paragraph (4) of that Act is deemed to be replaced with "limited to those, and excluding those that fall under a specified company split by split-off prescribed in Article 68-3, paragraph (2) (Special Provisions on Taxation of the Shareholders in the Event of a Specified Merger) of the Act on Special Measures Concerning Taxation", the phrase "and paragraph (8)" in paragraph (17) of that Article with ", paragraph (8)", the phrase "share distribution without delivery of money, etc." with "share distribution without delivery of money, etc. and a specified company split by split-off prescribed in Article 68-3, paragraph (2) of the Act on Special Measures Concerning Taxation", and the phrase "item (ii) of paragraph (1) of that Article" with "Article 24, paragraph (1), item (ii)".

Where a corporation has, as a result of a share exchange (limited to a share exchange that does not fall under the category of qualified share exchange, etc. prescribed in Article 2, item (xii)-17 of the Corporation Tax Act) implemented by a domestic corporation to which the corporation issued old shares (meaning shares that were held by the corporation), been provided with shares of any one foreign corporation out of the foreign corporations which have a relationship with the wholly owning parent corporation resulting from a share exchange specified by Cabinet Order as a relationship whereby the foreign corporation directly or indirectly holds the whole of the issued shares, etc. of the wholly owning parent corporation resulting from a share exchange, if the shares of the foreign corporation are shares of a specified foreign corporation with less tax burden, etc., the provisions of Article 61-2, paragraph (9) of that Act (including the case where it is applied mutatis mutandis to the calculation made pursuant to the provisions of Article 142, paragraph (2) of that Act) and Article 61-11, paragraph (1) of that Act do not apply to the transfer of those old shares.

The acquisition cost for shares in the case where the provisions of the preceding three paragraphs apply, and other necessary matters concerning the application of the provisions of laws and regulations on corporation tax are specified by Cabinet Order.

Any amount specified by Cabinet Order as the amount of distribution of profit from a specified-purpose trust listed in Article 2, item (xxix)-2, (e) of the Corporation Tax Act (hereinafter referred to in this Article as a "specified-purpose trust") (such amount of distribution of profit referred to in this paragraph and paragraph (4) as "amount of distribution of profit"), which pertains to the business year of the Trust Corporation (meaning a Trust Corporation prescribed in Article 4-3 of the Act (limited to a Trust Corporation that is deemed to be a domestic corporation pursuant to the provisions of Article 4-3, item (i) of the Act as applied mutatis mutandis pursuant to Article 2-2, paragraph (3) and therefore be subject to the provisions of this Act); hereinafter the same applies up to paragraph (3)) for the specified-purpose trust, is included in the amount of deductible expenses in the calculation of the amount of [the Trust Corporation's] income for the business year, if the specified-purpose trust satisfies the requirements listed in item (i) and the business year satisfies the requirements listed in item (ii); provided, however, that where the amount of distribution of profit exceeds the amount specified by Cabinet Order as the amount of [the Trust Corporation's] income for the business year, the amount to be included in the amount of deductible expenses is limited to such amount specified by Cabinet Order:

all of the following requirements:

notification has been made with respect to the special purpose trust pursuant to the provisions of Article 225, paragraph (1) of the Act on Securitization of Assets;

the special purpose trust conforms to any of the following conditions:

the public offering of bond-type beneficial interests (meaning bond-type beneficial interests prescribed in Article 230, paragraph (1), item (ii) of the Act on the Securitization of Assets; hereinafter the same applies in this item and in (b) of the following item) by its issuer (meaning the issuer prescribed in Article 2, paragraph (5) of the Financial Instruments and Exchange Act; hereinafter the same applies in this item) is a solicitation of offers to acquire prescribed in Article 2, paragraph (3) of the Financial Instruments and Exchange Act (limited to one that falls under the case listed in item (i) of that paragraph), and the total issue price of those bond-type beneficial interests is 100,000,000 yen or more;

the bond-type beneficial interests have been underwritten only by institutional investors (meaning financial instruments business operators prescribed in Article 2, paragraph (9) of the Financial Instruments and Exchange Act (limited to persons engaged in, out of the type I financial instruments business prescribed in Article 28, paragraph (1) of that Act, that which 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 other persons specified by Order of the Ministry of Finance; hereinafter the same applies in this item) through the public offering of bond-type beneficial interests conducted by its issuer;

the beneficial interests have been underwritten by 50 or more persons through the public offering of beneficial interests (excluding bond-type beneficial interests; hereinafter the same applies in this item) conducted by its issuer;

the beneficial interests have been underwritten only by institutional investors through the public offering of beneficial interests conducted by its issuer.

the public offering of beneficial rights of the special purpose trust conducted by the issuer falls under the category of public offering of beneficial rights specified by Cabinet Order as one conducted mainly in Japan; and

Any other requirement specified by Cabinet Order.

all of the following requirements:

at the end of the business year, the Trust Corporation is not one that falls under the category of family corporations prescribed in Article 2, item (x) of the Corporation Tax Act that are specified by Cabinet Order (excluding a Trust Corporation for a specified-purpose trust that falls under (b), (1) or (2) of the preceding item);

the amount of distribution of profit pertaining to the business year exceeds 90 percent of the amount specified by Cabinet Order as the amount of distributable profit for the business year (or, if the Trust Corporation is a Trust Corporation for a specified-purpose trust that has issued beneficiary certificates (meaning beneficiary certificates prescribed in Article 2, paragraph (15) of the Act on the Securitization of Assets) pertaining to bond-type beneficial interests, the amount obtained by deducting the amount specified by Cabinet Order from that amount);

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 Trust Corporation for a specified-purpose trust, the phrase "that which falls under" in Article 62-3, paragraph (3) is deemed to be replaced with "that which falls under, and a transfer conducted by the Trust Corporation prescribed in Article 68-3-2, paragraph (1) for a specified-purpose trust prescribed in that paragraph that is conducted in a business year that satisfies the requirements listed in item (ii) of that paragraph (excluding (b))", the phrase "a foreign corporation (excluding one that falls under the category of 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" with "the Corporation Tax Act", the phrase "a foreign corporation (excluding one that falls under the category of 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 with "a foreign corporation", the phrase "a foreign corporation (excluding one that falls under the category of 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) with "a foreign corporation", the phrase "that Act" with "the Corporation Tax Act", and the phrase "a foreign corporation (excluding one that falls under the category of 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 with "a foreign corporation".

With regard to the application of the provisions of Article 23 of the Corporation Tax Act to the amount of distribution of profit from a specified-purpose trust received by a corporation, the phrase "amounts (for the amount listed in item (i)" in paragraph (1) of that Article is deemed to be replaced with "amounts (excluding the amount of distribution of profit prescribed in Article 68-3-2, paragraph (1) (Special Provisions on Taxation of the Trust Corporation of a Special Purpose Trusts) of the Act on Special Measures Concerning Taxation from a specified-purpose trust listed in Article 2, item (xxix)-2, (e) (Definitions), and, for the amount listed in item (i)".

The provisions of paragraph (1) apply only where the Trust Corporation for a specified-purpose trust has filed a tax return prescribed in Article 2, item (xxxi) of the Corporation Tax Act (referred to in the following paragraph as a "tax return") for the business year for which the Trust Corporation seeks the application of the provisions of the paragraph, with an application made therein to seek the inclusion in deductible expenses of the amount to be included in the amount of deductible expenses pursuant to the provisions of paragraph (1) and a written statement attached thereto regarding the calculation of the amount to be included in the amount of deductible expenses, and preserved the documents that certify that the requirements listed in items (i), (b) and (c) of the paragraph are satisfied.

Even where the Trust Corporation for a specified-purpose trust has filed a tax return without the application or written statement set forth in the preceding paragraph attached thereto or failed to preserve the documents on the calculation set forth in the paragraph, the district director may, when they find any unavoidable reason for the Trust Corporation's failure to make a necessary application, attach a necessary written statement or preserve the necessary documents on the calculation, apply the provisions of paragraph (1).

Beyond what is specified in the preceding two paragraphs, the application of the provisions of paragraphs (1) through (4), and other necessary matters concerning the application of the provisions of laws and regulations concerning corporation tax on income for the relevant business year of a Trust Corporation prescribed in Article 4-3 of the Corporation Tax Act from a specified-purpose trust and of the beneficiaries of the specified-purpose trust are specified by Cabinet Order.