①A corporation (excluding a public corporation; hereinafter the same applies in this paragraph) is liable to pay corporation tax on its expenditure for undisclosed purposes, and where a corporation has made an expenditure for undisclosed purposes on or after April 1, 1994, the amount of corporation tax on income for each business year imposed on that corporation is, notwithstanding the provisions of Article 66, paragraphs (1) through (3) and paragraph (6), Article 69, paragraph (19) (including as applied mutatis mutandis pursuant to paragraph (23) or paragraph (24) of that Article), and Article 143, paragraphs (1) and (2) of the Corporation Tax Act, the provisions of Article 42-4, paragraph (8), item (vi), (b) and item (vii) (including as applied mutatis mutandis pursuant to Article 42-4-2, paragraph (2) or Article 42-5, paragraph (3), item (ii)), Article 42-14, paragraphs (1) and (4), Article 62-3, paragraphs (1) and (9), Article 63, paragraph (1), Article 67-2, paragraph (1), and Article 68, paragraph (1), and other provisions of laws and regulations concerning corporation tax, the amount obtained by adding the amount calculated by multiplying the amount of that expenditure for undisclosed purposes by the rate of 40 percent to the amount of corporation tax calculated pursuant to those provisions.

②The term "expenditure for undisclosed purposes" as used in the preceding paragraph means an expenditure of money made by a corporation (including the delivery of assets other than money for the purpose of a gift, the provision of benefits, or any other similar purpose; hereinafter the same applies in this Article) for which the corporation, without reasonable grounds, has not entered the name or title and the address or location of the recipient and the reason for the expenditure (hereinafter referred to as the "name, etc. of the recipient" in this Article) in its books and documents (excluding one that is clearly made as payment of consideration for the acquisition of assets or any other transaction (limited to one for which the money or the assets other than money pertaining to the expenditure are found to be reasonable as consideration for that transaction)).

③Even where the expenditures of money made by a corporation include one for which the name, etc. of the recipient has not been entered in the books and documents of the corporation, the district director may, when the district director finds that the failure to make that entry is not for the purpose of concealing the name, etc. of the recipient, exclude that expenditure of money from the expenditure for undisclosed purposes prescribed in paragraph (1).

④The provisions of paragraph (1) do not apply to an expenditure of money by a corporation listed in each of the following items that pertains to a business other than the business specified in that item:

⑤The time for determining whether a corporation has entered the name, etc. of the recipient of an expenditure of money in its books and documents and other necessary matters concerning the application of the provisions of paragraph (1) are specified by Cabinet Order.

⑥With regard to the application of the provisions of Article 67 of the Corporation Tax Act in the case where the provisions of paragraph (1) apply, the phrase "paragraphs (1), (2), and (6) of the preceding Article, and Article 69, paragraph (19) (Foreign Tax Credit) (including as applied mutatis mutandis pursuant to paragraph (23) of that Article; the same applies in paragraph (3))" in paragraph (1) of that Article is deemed to be replaced with "Article 62, paragraph (1) of the Act on Special Measures Concerning Taxation (Special Provisions on Taxation Where There Is Expenditure for Undisclosed Purposes)", the phrase "these" is deemed to be replaced with "that paragraph", and the phrase "paragraphs (1), (2), and (6) of the preceding Article, and Article 69, paragraph (19)" in paragraph (3) of that Article is deemed to be replaced with "Article 62, paragraph (1) of the Act on Special Measures Concerning Taxation".

⑦With regard to the application of the provisions of Part II, Chapter I (excluding Section 2) and Part III, Chapter II (excluding Section 2) of the Corporation Tax Act in the case where the provisions of paragraph (1) apply, the following provisions apply:

⑧Beyond what is provided for in the preceding two paragraphs, necessary matters concerning the application of the provisions of the Corporation Tax Act and other laws and regulations concerning corporation tax with regard to returns or refunds of corporation tax, and of the provisions of the Local Corporation Tax Act and other laws and regulations concerning local corporation tax with regard to returns or refunds of local corporation tax, in the case where the provisions of paragraph (1) apply, are specified by Cabinet Order.

⑨The provisions of paragraph (1) do not preclude, in the case where those provisions apply to an expenditure of money made by a corporation, the asking of questions, the inspection, or the request for presentation or submission under the provisions of Article 74-2 of the Act on General Rules for National Taxes (limited to the part pertaining to paragraph (1), item (ii)) with regard to the name, etc. of the recipient.