Article 137-3Tax Payment Grace Period Where the Special Provisions on Capital Gains and Similar Income If Assets Are Transferred to a Nonresident by Gift or Similar Means Apply

①With regard to the part of the income tax for the year that includes the date of a gift (excluding a gift that takes effect upon the death of the donor; the same applies hereinafter in this paragraph) that is payable pursuant to the provisions of Subsection 3 (Payment) by a person to whom the provisions of Article 60-3, paragraph (1) (Special Provisions on Capital Gains and Similar Income If Assets Are Transferred to a Nonresident by Gift or Similar Means) have been applied with regard to Securities and similar interests as prescribed in that paragraph, or contracts for unsettled margin transactions or similar transactions as prescribed in paragraph (2) of that Article or unsettled derivatives transactions as prescribed in paragraph (3) of that Article (hereinafter referred to as "covered assets" in this Article), that were transferred to a Nonresident by the gift (including that person's heir), the income tax equivalent to the income tax deferred on a gift (meaning the amount obtained by deducting the amount set forth in item (ii) from the amount set forth in item (i); the same applies hereinafter in this paragraph and paragraph (4)) for those covered assets (limited to those that continue to be held, or have not been settled, until the Filing Deadline for the income tax for that year; hereinafter referred to as "applicable gifted assets" in this paragraph, paragraph (6), and paragraph (7)) is granted a tax payment grace period, notwithstanding the provisions of that Subsection, from the date of the gift until the day on which four months have elapsed from the day after the gift reference expiry date (meaning the day on which five years have elapsed from the date of the gift or the date on which a case of the donee's return to Japan or similar case (meaning a case set forth in Article 60-3, paragraph (6), item (i) or item (iii) or any other case specified by Cabinet Order; the same applies in paragraph (3), item (i)) arises, whichever comes first; the same applies in paragraph (6)), but only if the person to whom those provisions have been applied has provided collateral equivalent to the income tax deferred on a gift by the Filing Deadline for the income tax for that year, pursuant to Cabinet Order.

②With regard to the part of the income tax for the year that includes the date of commencement of the succession that is payable pursuant to the provisions of Article 129 (Payment upon Filing in the Event of the Taxpayer's Death) by all of the heirs of a person to whom the provisions of Article 60-3, paragraphs (1) through (3) have been applied with regard to covered assets transferred to a Nonresident by inheritance or bequest (including a gift that takes effect upon the death of the donor; the same applies hereinafter in this paragraph) (such a person is referred to as a "decedent whose estate is taxed as a sale" in paragraph (4)), the income tax equivalent to the income tax deferred on inheritance (meaning the amount obtained by deducting the amount set forth in item (ii) from the amount set forth in item (i); the same applies hereinafter in this paragraph and paragraph (4)) for those covered assets (limited to those that continue to be held, or have not been settled, until the Filing Deadline for the income tax for that year (or, if a return filed after the deadline is filed under Article 151-5, paragraph (1) (Special Provisions on Returns Filed after the Deadline and Similar Matters upon Division of the Estate or Similar Event), the deadline for filing prescribed in that paragraph; the same applies hereinafter in this paragraph and paragraph (7)); hereinafter referred to as "applicable inherited assets" in this paragraph, paragraph (6), and paragraph (7)) is granted a tax payment grace period, notwithstanding the provisions of Article 129, from the date of commencement of the succession until the day on which four months have elapsed from the day after the inheritance reference expiry date (meaning the day on which five years have elapsed from the date of commencement of the succession or the date on which a case of the heir's return to Japan or similar case (meaning a case set forth in Article 60-3, paragraph (6), item (i) or item (iii) or any other case specified by Cabinet Order; the same applies in item (i) of the following paragraph) arises, whichever comes first; the same applies in paragraph (6)), but only if the heirs have provided collateral equivalent to the income tax deferred on inheritance pursuant to Cabinet Order, and all of the Nonresidents who acquired the covered assets by the inheritance or bequest have given notification of a tax agent under Article 117, paragraph (2) (Tax Agent) of the Act on General Rules for National Taxes pursuant to Cabinet Order by the Filing Deadline for the income tax for that year.

③If a person set forth in one of the following items submits to the competent district director for the locality in which the person pays taxes, by the day or deadline specified in the relevant item, a paper-based notification giving a statement that the person seeks an extension of the time limit of the tax payment grace period under the preceding two paragraphs and other information prescribed by Ministry of Finance Order, the term "five years" in those provisions is deemed to be replaced with "10 years":

④Paragraph (1) or paragraph (2) (including when applied pursuant to the preceding paragraph; the same applies hereinafter in this Article) applies only if the Tax Return filed by the person seeking to have paragraph (1) applied, or the Tax Return of the decedent whose estate is taxed as a sale filed by the heir seeking to have paragraph (2) applied, states that the person or heir seeks to have those provisions applied, and is accompanied by a document giving details of the transfer or settlement of covered assets deemed to have been carried out pursuant to the provisions of Article 60-3, paragraphs (1) through (3), details concerning the calculation of the income tax deferred on a gift or the income tax deferred on inheritance (hereinafter referred to as the "income tax subject to deferral" in this Article), and other information prescribed by Ministry of Finance Order.

⑤Even if the Tax Return referred to in the preceding paragraph is not filed, or a Tax Return is filed without the statement or document referred to in that paragraph, the district director may apply paragraph (1) or paragraph (2) if the district director finds that there were unavoidable circumstances for the failure to file the return or to include the statement or document, but only if a document giving that statement and the document prescribed by Ministry of Finance Order referred to in that paragraph are submitted.

⑥If, by the gift reference expiry date or the inheritance reference expiry date for the tax payment grace period under paragraph (1) or paragraph (2), the Nonresident who received the gift referred to in paragraph (1), or the Nonresident who is an heir to whom paragraph (2) has been applied, transfers or settles applicable gifted assets or applicable inherited assets received by gift, inheritance, or bequest, or transfers them by gift, or any other event specified by Cabinet Order occurs, then, notwithstanding those provisions, with regard to the income tax equivalent to the amount calculated pursuant to Cabinet Order as the part of the income tax subject to deferral for the applicable gifted assets or applicable inherited assets for which the event occurred that corresponds to those assets, the time limit of the tax payment grace period under those provisions is the day on which four months have elapsed from the date on which the event occurred.

⑦A person to whom paragraph (1) applies or an heir to whom paragraph (2) applies (hereinafter referred to as a "person using the deferral" in this Article) must submit to the competent district director for the locality in which the person pays taxes, pursuant to Cabinet Order, a paper-based notification (hereinafter referred to as a "notification of continued application" in the following paragraph through paragraph (12)) giving a statement that the person seeks to continue to have paragraph (1) or paragraph (2) applied to the applicable gifted assets or applicable inherited assets that the person holds or for which the person has concluded contracts as of December 31 of each year in the period from the Filing Deadline for the income tax for the year that includes the date of the gift or the date of commencement of the succession to which those provisions are applied until the day on which the time limit of the tax payment grace period under paragraph (1), paragraph (2), the preceding paragraph, paragraph (9) (including as applied mutatis mutandis pursuant to paragraph (10); the same applies hereinafter in this Article), or paragraph (11) is fixed for the whole of the income tax equivalent to the income tax subject to deferral, and other information prescribed by Ministry of Finance Order, by March 15 of the year following the year that includes that December 31 (hereinafter referred to as the "submission deadline" in the following paragraph, paragraph (9), and paragraph (12)).

⑧Even if a notification of continued application is not submitted by the submission deadline, if the district director referred to in the preceding paragraph finds that there were unavoidable circumstances for its not having been submitted by the submission deadline, the notification of continued application is deemed to have been submitted by the submission deadline, but only if it is submitted.

⑨If a notification of continued application is not submitted to the competent district director for the locality in which the taxpayer pays taxes by the submission deadline, then, notwithstanding paragraph (1) or paragraph (2), with regard to the income tax equivalent to the income tax subject to deferral as of the submission deadline (excluding, if paragraph (6) has already been applied, the amount to which that paragraph was applied), the time limit of the tax payment grace period under those provisions is the day on which four months have elapsed from the submission deadline (or, if the person using the deferral who is liable for that income tax dies during the period from the submission deadline to the day on which those four months elapse, the day on which six months have elapsed from the day on which the heir of the person using the deferral learns of the commencement of the succession due to the death of the person using the deferral).

⑩If a person to whom paragraph (1) is being applied intends to make a departure from Japan as prescribed in Article 60-2, paragraph (1) (Special Provisions on Capital Gains and Similar Income upon Departure from Japan), the person must give notification of a tax agent under Article 117, paragraph (2) of the Act on General Rules for National Taxes by the time of the departure from Japan. In such a case, the preceding two paragraphs apply mutatis mutandis if notification of the tax agent has not been given by the time of the departure from Japan.

⑫The prescription of the national government's right to collect the income tax equivalent to the income tax subject to deferral, and the tax levied as interest and tax on delinquency on that income tax, is not completed during the period from the time the notification of continued application is submitted until the submission deadline for that notification, and begins to run anew from the day after that submission deadline, except where Article 73, paragraph (4) (Suspension of Completion and Renewal of Prescription) of the Act on General Rules for National Taxes, as applied with the replacement of terms pursuant to item (iv) of the following paragraph, applies.

⑬The provisions of this Act, the Act on General Rules for National Taxes, and the National Tax Collection Act apply as follows if the person referred to in paragraph (1) or the heir referred to in paragraph (2) seeks to have those provisions applied, or if a tax payment grace period has been granted under those provisions:

⑭A person using the deferral who falls under any of the cases set forth in the following items must pay a tax levied as interest in an amount equivalent to that arrived at when the amount equivalent to the income tax prescribed in the relevant item is multiplied by an annual rate of 7.3%, based on the number of days in the period from the day after the payment due date under Subsection 3 or Article 151-5, paragraph (1) for that income tax (or, for the income tax corresponding to the part up to the amount of income tax payable as a result of filing an Amended Return under Article 151-6, paragraph (1) (excluding the amount of income tax to which this paragraph has already been applied), the payment due date under paragraph (1) of that Article; hereinafter referred to as the "payment deadline" in this paragraph) up to the time limit of the tax payment grace period specified in the relevant item, along with the income tax prescribed in the relevant item. In such a case, if there are two or more payment deadlines for that income tax, the amount of the tax levied as interest is to be calculated on the basis that the time limit of the tax payment grace period has arrived successively, starting with the income tax for the most recent of those payment deadlines.

⑮If the person using the deferral dies by the time limit of the tax payment grace period to which paragraph (1) or paragraph (2) applies, the obligation to pay the income tax subject to deferral for that person using the deferral is succeeded to by the heir of that person using the deferral. In such a case, necessary matters are specified by Cabinet Order.

⑯Beyond what is provided for in paragraph (4) through the preceding paragraph, necessary matters concerning the application of paragraphs (1) and (2) are specified by Cabinet Order.