①In each year from 2017 onward, if, because the amount that a resident has treated as the amount of consideration for an internal dealing prescribed in Article 95, paragraph (4), item (i) of the Income Tax Act (hereinafter referred to as an "internal dealing" in this Article) between the resident's business establishment, etc. prescribed in that item and a foreign office or similar establishment prescribed in that item (hereinafter referred to as a "foreign office or similar establishment" in this Article) differs from the arm's length price, the amount of revenue to be received pertaining to that internal dealing becomes excessive, or the amount of losses, etc. (meaning the amount specified by Cabinet Order as an amount equivalent to the amount to be included in necessary expenses prescribed in Article 37 or 38 of that Act pertaining to that internal dealing or as an amount equivalent to the acquisition cost of an asset) becomes too small, in the calculation of the resident's amount of foreign-source income prescribed in Article 95, paragraph (1) of that Act for each year, that internal dealing is to be treated as having been conducted at the arm's length price for the purpose of calculating the resident's amount of foreign-source income prescribed in that paragraph for that year.

②The arm's length price prescribed in the preceding paragraph means the amount calculated, for the amount that should be treated as the amount of consideration for an internal dealing, by a method equivalent to the methods prescribed in Article 40-3-3, paragraph (2).

③A resident who has internal dealings in a year must prepare or obtain, by the due date for filing a tax return for income tax for that year, the documents specified by Order of the Ministry of Finance as documents found to be necessary for calculating the arm's length price prescribed in paragraph (1) pertaining to those internal dealings (including, if an electronic or magnetic record (meaning a record made in an electronic form, a magnetic form or any other form that cannot be perceived by the human senses, which is used in information processing by computer; hereinafter the same applies in this Article) has been prepared in lieu of preparing those documents, that electronic or magnetic record), and must preserve them as provided by Order of the Ministry of Finance.

④If the internal dealings of a resident with a single foreign office or similar establishment in the year preceding a given year (or, if the resident came to have that single foreign office or similar establishment in that given year, the internal dealings with that single foreign office or similar establishment in that given year) fall under all of the following items, or in the case specified by Cabinet Order as the case where there were no internal dealings with that single foreign office or similar establishment in the preceding year, the provisions of the preceding paragraph do not apply to the documents found to be necessary for calculating the arm's length price prescribed in paragraph (1) pertaining to the resident's internal dealings with that single foreign office or similar establishment in that given year:

⑤If a relevant official of the National Tax Agency, or a relevant official of the tax office or the Regional Taxation Bureau having jurisdiction over a resident's place for tax payment, has requested the resident to present or submit the documents specified by Order of the Ministry of Finance prescribed in paragraph (3) pertaining to an internal transaction subject to contemporaneous documentation (meaning an internal dealing other than an internal dealing to which the provisions of the preceding paragraph apply; hereinafter the same applies in this paragraph) (including, if electronic or magnetic records have been prepared or preserved in lieu of preparing or preserving those documents, those electronic or magnetic records; hereinafter the same applies in this paragraph) or copies thereof, and they have not been presented or submitted by the date designated by the official, within a period not exceeding 45 days from the date of the request, in consideration of the number of days normally required to prepare for the presentation or submission of the requested documents or copies thereof, or has requested the resident to present or submit the documents specified by Order of the Ministry of Finance as documents found to be important for calculating the arm's length price prescribed in paragraph (1) (including an amount deemed to be that arm's length price pursuant to the main clause of Article 40-3-3, paragraph (5) as applied mutatis mutandis pursuant to paragraph (13)) pertaining to an internal transaction subject to contemporaneous documentation (including, if electronic or magnetic records have been prepared or preserved in lieu of preparing or preserving those documents, those electronic or magnetic records; hereinafter the same applies in this paragraph) or copies thereof, and they have not been presented or submitted by the date designated by the official, within a period not exceeding 60 days from the date of the request, in consideration of the number of days normally required to prepare for the presentation or submission of the requested documents or copies thereof, the official may, when it is necessary for calculating the arm's length price prescribed in paragraph (1) pertaining to the resident's internal transaction subject to contemporaneous documentation, and to the extent found to be necessary, ask questions of a person engaged in a business of the same type as the resident's business pertaining to that internal transaction subject to contemporaneous documentation, inspect the books and documents relating to that business (including, if electronic or magnetic records have been prepared or preserved in lieu of preparing or preserving them, those electronic or magnetic records; hereinafter the same applies in this Article), or request the presentation or submission of those books and documents (including copies thereof).

⑥If a relevant official of the National Tax Agency, or a relevant official of the tax office or the Regional Taxation Bureau having jurisdiction over a resident's place for tax payment, has requested the resident to present or submit the documents specified by Order of the Ministry of Finance as documents found to be important for calculating the arm's length price prescribed in paragraph (1) (including an amount deemed to be that arm's length price pursuant to the main clause of Article 40-3-3, paragraph (5) as applied mutatis mutandis pursuant to paragraph (13)) pertaining to an internal transaction exempt from contemporaneous documentation (meaning an internal dealing to which the provisions of paragraph (4) apply; hereinafter the same applies in this paragraph) (including, if electronic or magnetic records have been prepared or preserved in lieu of preparing or preserving those documents, those electronic or magnetic records; hereinafter the same applies in this paragraph) or copies thereof, and they have not been presented or submitted by the date designated by the official, within a period not exceeding 60 days from the date of the request, in consideration of the number of days normally required to prepare for the presentation or submission of the requested documents or copies thereof, the official may, when it is necessary for calculating the arm's length price prescribed in paragraph (1) pertaining to the resident's internal transaction exempt from contemporaneous documentation, and to the extent found to be necessary, ask questions of a person engaged in a business of the same type as the resident's business pertaining to that internal transaction exempt from contemporaneous documentation, inspect the books and documents relating to that business, or request the presentation or submission of those books and documents (including copies thereof).

⑦A relevant official of the National Tax Agency, or a relevant official of the tax office or the Regional Taxation Bureau having jurisdiction over a resident's place for tax payment, may, when it is necessary for calculating the arm's length price prescribed in paragraph (1) pertaining to the resident's internal dealings, retain the books and documents (including copies thereof) submitted pursuant to the provisions of the preceding two paragraphs.

⑧The authority of the relevant officials under the provisions of the preceding three paragraphs must not be construed as being granted for the purpose of criminal investigation.

⑨When a relevant official of the National Tax Agency, a Regional Taxation Bureau or a tax office asks questions, conducts an inspection or requests presentation or submission under the provisions of paragraph (5) or (6), the official must carry a certificate showing the official's identity and must present it if so requested by a person concerned.

⑩In a case that falls under any of the following items, the person who committed the violation is punished by a fine of 300,000 yen or less:

⑪When the representative of a corporation (including an association or foundation without juridical personality (meaning an association or foundation without juridical personality as prescribed in Article 2, item (viii) of the Corporation Tax Act; hereinafter the same applies in this paragraph and the following paragraph); hereinafter the same applies in this paragraph) (such representative includes the administrator of an association or foundation without juridical personality), or an agent, employee, or other worker of a corporation or individual has committed the violation set forth in the preceding paragraph with regard to the business of the corporation or individual, not only the offender is punished but also the corporation or individual is subject to the punishment prescribed in the paragraph.

⑫If the provisions of the preceding paragraph apply to an association or foundation without juridical personality, its representative or administrator represents the association or foundation without juridical personality with regard to its procedural acts, and the provisions of the laws concerning criminal proceedings in which a corporation is the defendant or the suspect apply mutatis mutandis.

⑭Procedures concerning the retention of the books and documents (including copies thereof) referred to in paragraphs (5) and (6) and other necessary matters concerning the application of the provisions of paragraphs (1) through (4), paragraph (7) and the preceding paragraph are specified by Cabinet Order.