Article 11-7Secondary Tax Liability of Persons in a Special Relationship Who Have Taken Over a Business

Where a taxpayer or special collection agent has transferred a business to an individual or controlled company that has a special relationship with the taxpayer or special collection agent, such as a relative with whom the taxpayer or special collection agent shares a livelihood, and that is specified by Cabinet Order (a controlled company means a company that falls under the company prescribed in Article 67, paragraph (2) of the Corporation Tax Act where that taxpayer is selected as the shareholder or member forming the basis of the determination, and includes a corporation similar thereto), and the transferee carries on the same or a similar business, if it is found that, even after delinquent tax collection procedures have been carried out in respect of the local government levies of the taxpayer or special collection agent relating to that business, the amount to be collected is still insufficient, the transferee bears secondary tax liability for the local government levies in arrears, up to the limit of the value of the transferred property. However, this does not apply where the transfer was made one year or more before the statutory payment due date of the local government levies in arrears.