①Income tax is not imposed on profit from redemption (meaning the margin where the amount received through the redemption (including retirement by purchase; the same applies hereinafter in this Article) of the book-entry government bonds or book-entry municipal bonds exceeds the acquisition price of the book-entry government bonds or book-entry municipal bonds) received by a nonresident with respect to book-entry government bonds prescribed in Article 5-2, paragraph (1) (excluding those that fall under discount bonds (meaning, of the public and corporate bonds listed in Article 37-10, paragraph (2), item (vii), those listed in paragraph (6), item (i), (a) through (d) of the preceding Article; hereinafter the same applies in this paragraph and the following paragraph); hereinafter referred to in this paragraph and paragraph (4) as "book-entry government bonds") or book-entry municipal bonds prescribed in Article 5-2, paragraph (1) (excluding those that fall under discount bonds; hereinafter referred to in this paragraph and paragraph (4) as "book-entry municipal bonds").

②Income tax is not imposed on profit from redemption (meaning the margin where the amount received through the redemption of the specified book-entry corporate bonds, etc. exceeds the acquisition price of the specified book-entry corporate bonds, etc.) received by a nonresident with respect to specified book-entry corporate bonds, etc. prescribed in Article 5-3, paragraph (4), item (vii) (excluding those that fall under discount bonds; hereinafter referred to in this Article as "specified book-entry corporate bonds, etc."), which is received by a person who is not a specially-related person, prescribed in Article 5-3, paragraph (2), of the issuer of the specified book-entry corporate bonds, etc.

③Income tax is not imposed on profit from redemption (meaning the margin where the amount received through the redemption of the private foreign bonds exceeds the acquisition price of the private foreign bonds) received by a nonresident with respect to private foreign bonds prescribed in Article 6, paragraph (4) that were issued on or after April 1, 1998 (hereinafter referred to in this paragraph and the following paragraph as "private foreign bonds"), which is received by a person who is not a specially-related person, prescribed in paragraph (4) of that Article, of the issuer of the private foreign bonds.

④The amount of loss arising from the redemption of book-entry government bonds, book-entry municipal bonds, specified book-entry corporate bonds, etc. (excluding those held by a specially-related person, prescribed in Article 5-3, paragraph (2), of the issuer of the specified book-entry corporate bonds, etc.) or private foreign bonds (excluding those held by a specially-related person, prescribed in Article 6, paragraph (4), of the issuer of the private foreign bonds) held by a nonresident is deemed not to exist with regard to the application of the provisions of laws and regulations concerning income tax.

⑤The provisions of the preceding paragraphs do not apply to the profit from redemption prescribed in paragraph (1), the profit from redemption prescribed in paragraph (2) or the profit from redemption prescribed in paragraph (3), or the amount of loss prescribed in the preceding paragraph, that is received by a nonresident who has a permanent establishment or that arises for a nonresident who has a permanent establishment, and that falls under the domestic source income listed in Article 164, paragraph (1), item (i), (a) of the Income Tax Act.

⑥The determination of whether a person receiving the profit from redemption prescribed in paragraph (2) of specified book-entry corporate bonds, etc. is a specially-related person prescribed in that paragraph, and other necessary matters concerning the application of the provisions of the preceding paragraphs are specified by Cabinet Order.