Article 135Special Provisions on Refund of Corporation Tax upon Reassessment after Excessive Return Based on Fictitious Accounting

①In the case where the amount of income for each business year entered in a Final Return filed by a domestic corporation exceeds the amount of income that should be the tax base for the business year and the excess amount includes any amount based on accounting conducted by disguising facts, when the district director has made a reassessment with regard to corporation tax on income for the business year (excluding the case where any of the facts listed in the items of paragraph (3) or the items of paragraph (4) has arisen with regard to the domestic corporation during the period from the last day of the business year to the day preceding the date of the reassessment, and the case where any such fact has arisen with regard to the acquiring corporation in a qualified merger in which the domestic corporation is the acquired corporation during the period from the date of the qualified merger to the day preceding the date of the reassessment), the portion of the amount paid as corporation tax on income for the business year that is specified by Cabinet Order which decreases as a result of the reassessment and pertains to the amount so disguised in the accounting (hereinafter referred to as the "corporation tax paid on fictitious accounting" in this Article) is not refunded, except for the amount of a refund under the provisions of the following paragraph, paragraph (3) or paragraph (7) in the case where those provisions apply.

②In the case referred to in the preceding paragraph, when there is any amount of corporation tax on income for each business year that commenced within one year before the first day of the business year containing the date of the reassessment set forth in the preceding paragraph of the domestic corporation set forth in that paragraph (or, in the case where the domestic corporation has been dissolved as a result of a qualified merger by the day preceding the date of the reassessment set forth in that paragraph, the acquiring corporation in the qualified merger; hereinafter the same applies in this paragraph) (excluding the amount of penalty tax) which has been determined as of the day preceding the date of the reassessment (hereinafter referred to as the "amount of determined corporation tax" in this paragraph), the district director refunds to the domestic corporation the portion of the corporation tax paid on fictitious accounting pertaining to the reassessment up to the amount of determined corporation tax (excluding any portion that has already been used as the basis for the calculation of an amount to be refunded under the provisions of this paragraph).

③In the case where, with regard to a domestic corporation to which the provisions of paragraph (1) have been applied (or, in the case where the domestic corporation has been dissolved as a result of a qualified merger, the acquiring corporation in the qualified merger; hereinafter referred to as an "applicable corporation" in this Article), the due date for filing a return under Article 74, paragraph (1) (Final Returns) for the business year containing the day on which five years have elapsed from the first day of the business year containing the date of the reassessment set forth in that paragraph (or, in the case where the reassessment was made with regard to corporation tax on income for each business year of an acquired corporation in the qualified merger before the date of the qualified merger, the first day of the business year of the acquired corporation containing the date of the reassessment) (or, in the case where any of the facts listed in the following items has arisen with regard to the applicable corporation during the period from the date of the reassessment to the last day of the business year containing the day on which those five years have elapsed, the due date specified in the relevant item; hereinafter referred to as the "final due date for filing" in this paragraph and paragraph (8)) has arrived (or, in the case where no return pertaining to the final due date for filing has been filed by the final due date for filing, in the case where a return filed after the due date pertaining to that return has been filed or a determination has been made with regard to corporation tax for the business year pertaining to that return), the district director refunds to the applicable corporation the corporation tax paid on fictitious accounting pertaining to the reassessment (excluding the amount that has already become refundable pursuant to the provisions of the preceding paragraph, this paragraph or paragraph (7) and the amount deducted pursuant to the provisions of Article 70 (Corporation Tax Credit Due to a reassessment after Fictitious Accounting)).

④In the case where any of the following facts has arisen with regard to an applicable corporation, the applicable corporation may, within one year on or after the day on which the fact arose, make a claim to the competent district director with jurisdiction over the place for tax payment for a refund of the corporation tax paid on fictitious accounting pertaining to the application (excluding the amount that has already become refundable pursuant to the provisions of the preceding two paragraphs or paragraph (7) and the amount deducted pursuant to the provisions of Article 70; the same applies in paragraphs (6) and (7)):

⑤In the case where there has been a reassessment that decreases the amount of income for each business year of a domestic corporation, which accompanies a reassessment made with regard to corporation tax on income for a business year of the domestic corporation that ended before the first day of the relevant business year (including a reassessment made with regard to corporation tax on income for a business year of an acquired corporation in a qualified merger in which the domestic corporation is the acquiring corporation that ended before the date of the qualified merger; hereinafter referred to as the "original Reassessment" in this paragraph) (hereinafter referred to as a "consequential Reassessment" in this paragraph), when the portion of the amount of income that decreases as a result of the consequential reassessment includes any amount pertaining to an amount disguised in the accounting by disguising facts in the business year pertaining to the original reassessment, the provisions of the preceding paragraphs apply by deeming that amount to be an amount based on accounting disguised by the domestic corporation in the relevant business year.

⑥An applicable corporation that intends to make a claim for a refund under the provisions of paragraph (4) must submit a refund claim form stating the corporation tax paid on fictitious accounting for which it seeks the refund, the basis of the calculation thereof, and any other matters as specified by Ministry of Finance Order, to the competent district director with jurisdiction over the place for tax payment.

⑦When a refund claim form set forth in the preceding paragraph has been submitted, the district director examines the facts pertaining to the claim and other necessary matters and, based on the examination, refunds the corporation tax paid on fictitious accounting to the applicable corporation that made the claim, or notifies it in writing that there are no grounds for filing a claim.

⑧In the case of calculating the amount of interest on a refund with regard to a refund under the provisions of paragraph (2), paragraph (3) or the preceding paragraph, the period set forth in Article 58, paragraph (1) (Interest on Refund) of the Act on General Rules for National Taxes, which is the basis of the calculation, is to be the period from the day on which one month has elapsed from the day following the date of the reassessment set forth in paragraph (1) (for a refund under the provisions of paragraph (3), the day following the final due date for filing set forth in that paragraph (or, in the case where a return filed after the due date set forth in that paragraph has been filed, the date of its filing, and in the case where a determination set forth in that paragraph has been made, the date of the determination), and for a refund under the provisions of the preceding paragraph, the day on which three months have elapsed from the day following the day on which the claim for a refund under the provisions of paragraph (4) was made) up to the day on which payment of the refund is decided or the day on which the refund is appropriated (in the case where appropriation has become possible before the date of appropriation, up to the day on which it becomes possible).

⑨In the case referred to in paragraph (1), when the amount listed in Article 74, paragraph (1), item (v) has increased as a result of the reassessment set forth in that paragraph, the provisions of paragraph (2) of the preceding Article do not apply to the portion of the increased amount up to the corporation tax paid on fictitious accounting pertaining to the reassessment; provided, however, that this does not apply to the application of the provisions of paragraph (3) of that Article in the case where there is any delinquent tax prescribed in that paragraph.