Act on Special Measures Concerning Taxation

In the case where a person who has acquired property by inheritance or bequest has given all or part of that property by gift, by the due date for filing the return under Article 27, paragraph (1) or Article 29, paragraph (1) of the Inheritance Tax Act relating to that inheritance or bequest (or, for property acquired due to the occurrence of a reason prescribed in Article 4, paragraph (1) or (2) of that Act after the filing of those returns, the return under Article 31, paragraph (2) of that Act relating to that acquisition), to the State or a local government, or to a corporation, from among incorporated public interest associations, incorporated public interest foundations and other corporations conducting business for public interest purposes, that is specified by Cabinet Order as one that contributes significantly to the promotion of education or science, the improvement of culture, contribution to social welfare or other enhancement of the public interest, the value of the property so given by gift is not included in the basis for calculating the taxable value for inheritance tax relating to that inheritance or bequest, except in the case where it is found that the gift would result in an unjust reduction of the burden of inheritance tax or gift tax on the person who made the gift, that person's relatives or other persons having a special relationship with those persons as prescribed in Article 64, paragraph (1) of that Act.

In the case where a corporation specified by Cabinet Order prescribed in the preceding paragraph that has received the gift referred to in that paragraph ceases to fall under the category of corporation specified by Cabinet Order prescribed in that paragraph by the day on which two years have elapsed from the date of the gift, or in the case where it does not use the property acquired by the gift for its business for public interest purposes by that day or ceases to so use it, the value of that property is, notwithstanding the provisions of that paragraph, included in the basis for calculating the taxable value for inheritance tax relating to the inheritance or bequest referred to in that paragraph.

In the case where a person who has acquired property by inheritance or bequest has expended all or part of that property, by the due date for filing the return prescribed in paragraph (1), in order to make it trust property of a public interest trust prescribed in Article 2, paragraph (1), item (i) of the Act on Public Interest Trusts (referred to as a "public interest trust" in the following paragraph), the value of the property so expended is not included in the basis for calculating the taxable value for inheritance tax relating to that inheritance or bequest, except in the case where it is found that the expenditure would result in an unjust reduction of the burden of inheritance tax or gift tax on the person who made the expenditure, that person's relatives or other persons having a special relationship with those persons as prescribed in Article 64, paragraph (1) of the Inheritance Tax Act.

In the case where a public interest trust that has accepted the property referred to in the preceding paragraph terminates (excluding termination by a merger of trusts) by the day on which two years have elapsed from the date of the acceptance, or in the case where the trustee of that public interest trust does not use that property for its public interest trust affairs (meaning public interest trust affairs prescribed in Article 7, paragraph (3), item (iv) of the Act on Public Interest Trusts) by that day or ceases to so use it, the value of that property is, notwithstanding the provisions of the preceding paragraph, included in the basis for calculating the taxable value for inheritance tax relating to the inheritance or bequest referred to in that paragraph.

The provisions of paragraph (1) or (3) do not apply unless a person seeking the application of those provisions states, in the return prescribed in paragraph (1) relating to the inheritance or bequest referred to in those provisions, that the person seeks the application of those provisions, and attaches to it a written statement of the property given by the gift referred to in that paragraph or expended by the expenditure referred to in paragraph (3) and other documents specified by Order of the Ministry of Finance.

A person who has filed a return relating to the inheritance or bequest prescribed in paragraph (1) or (3) with the application of those provisions (including that person's heirs and universal legatees) must, in the case where a reason prescribed in paragraph (2) or (4) has arisen with regard to property to which those provisions were applied, file an amended return form within four months from the day following the day on which two years have elapsed as prescribed in those provisions, and pay, within that time limit, the amount of tax payable upon the filing of that amended return form.

In the case where a person to whom the provisions of paragraph (1) or (3) have been applied is required to file a return under Article 27 or Article 29 of the Inheritance Tax Act because the value of property to which those provisions were applied has come to be included in the taxable value for inheritance tax as a result of the occurrence of a reason prescribed in paragraph (2) or (4) with regard to that property, the person must file a tax return form filed after the due date within four months from the day following the day on which two years have elapsed as prescribed in paragraph (2) or (4), and pay, within that time limit, the amount of tax payable upon the filing of that tax return form filed after the due date.

In the case where a person required to file a return pursuant to the provisions of the preceding two paragraphs has not filed that return, the district director is to make a reassessment under the provisions of Article 24 or Article 26 of the Act on General Rules for National Taxes or a determination under the provisions of Article 25 of that Act with regard to the taxable value, the amount of inheritance tax and other matters that should have been stated in that return.

The provisions of Article 69-3, paragraph (4) apply mutatis mutandis to an amended return form under the provisions of paragraph (6) and a reassessment referred to in the preceding paragraph (limited to one relating to a person required to file that return), and the provisions of paragraph (5) of that Article apply mutatis mutandis to a tax return form filed after the due date under the provisions of paragraph (7) and a reassessment (limited to one relating to a person required to file that return) or determination referred to in the preceding paragraph, respectively. In this case, the phrase "Article 69-3, paragraph (1)" in paragraph (4), item (ii) of that Article is deemed to be replaced with "Article 70, paragraph (6)", the phrase "Article 27" with "Article 27 or Article 29", and the phrase "Article 69-3, paragraph (2)" in paragraph (5), item (ii) of that Article with "Article 70, paragraph (7)".

The provisions of paragraphs (1), (2) and (5) through the preceding paragraph apply mutatis mutandis in the case where a person who has acquired property by inheritance or bequest has given all or part of that property by gift, by the due date for filing the return prescribed in paragraph (1), to a certified specified nonprofit corporation prescribed in Article 2, paragraph (3) of the Act on Promotion of Specified Non-profit Activities, in connection with a business relating to specified non-profit activities prescribed in paragraph (1) of that Article conducted by that certified specified nonprofit corporation. In this case, the phrase "the provisions of that paragraph" in paragraph (2) is deemed to be replaced with "the provisions of the preceding paragraph as applied mutatis mutandis pursuant to paragraph (10)", the phrase "paragraph (1) or (3)" in paragraph (5) with "paragraph (1) as applied mutatis mutandis pursuant to paragraph (10)", and the phrase "given by the gift referred to in that paragraph or expended by the expenditure referred to in paragraph (3)" with "given by the gift referred to in paragraph (10)".