Article 23-2Exclusion of Dividends Received from Foreign Subsidiaries from Gross Profits
第二十三条の二（外国子会社から受ける配当等の益金不算入）
In the case where there is the amount listed in paragraph (1), item (i) of the preceding Article that a domestic corporation receives from a foreign subsidiary (meaning a foreign corporation that satisfies the requirements specified by Cabinet Order, such as the requirement that the number or amount of its shares or capital contributions held by the domestic corporation is equivalent to 25 percent or more of the total number or total amount of its issued shares or capital contributions (excluding the shares that it holds in itself and the capital contributions made thereby); the same applies hereinafter in this Article) (hereinafter referred to as the "amount of dividend of surplus, etc." in this Article), the amount obtained by deducting from the amount of dividend of surplus, etc. the amount calculated as specified by Cabinet Order as the amount equivalent to the amount of expenses pertaining to the amount of dividend of surplus, etc. is excluded from gross profits, when calculating the amount of income of the domestic corporation for each business year.
The provisions of the preceding paragraph do not apply to the following amounts of dividend of surplus, etc.:
the amount of dividend of surplus, etc. that a domestic corporation receives from a foreign subsidiary, in the case where all or part of the amount of dividend of surplus, etc. falls under the amount of dividend of surplus, etc. that is to be included in deductible expenses, when calculating the amount of income of the foreign subsidiary, under the laws and regulations of the country or region where the head office or principal office of the foreign subsidiary is located;
in the case where a domestic corporation has acquired (including acquisition by succession through a qualified merger or Qualified Company Split by Split-Off) shares or capital contributions that are the principal of the amount of dividend of surplus, etc. that it receives from a foreign subsidiary (limited to an amount deemed to be the amount of dividend of surplus, etc. that the domestic corporation receives pursuant to the provisions of paragraph (1) of the following Article (limited to the part pertaining to item (v)); hereinafter the same applies in this item), for which the grounds listed in item (v) of that paragraph that give rise to the amount of dividend of surplus, etc. are scheduled to arise, the amount of dividend of surplus, etc. pertaining to the shares or capital contributions so acquired (limited to the amount specified by Cabinet Order as arising from the scheduled grounds).
In the case where the amount of dividend of surplus, etc. that a domestic corporation receives from a foreign subsidiary is an amount part of which has been included in deductible expenses, when calculating the amount of income of the foreign subsidiary, notwithstanding the provisions of the preceding paragraph (limited to the part pertaining to item (i)), the amount specified by Cabinet Order as the amount of the portion of the amount of dividend of surplus, etc. received that has been included in deductible expenses (referred to as the "amount of dividends received corresponding to deductible expenses" in the following paragraph and paragraph (7)) may be treated as the amount of dividend of surplus, etc. listed in that item.
In the case where the provisions of the preceding paragraph have been applied to the amount of dividend of surplus, etc. that a domestic corporation received from a foreign subsidiary, if the amount of dividends received corresponding to deductible expenses is increased in each business year after the business year containing the date on which the corporation received the amount of dividend of surplus, etc., the amount of dividend of surplus, etc. listed in paragraph (2), item (i) is, notwithstanding the provisions of that paragraph (limited to the part pertaining to that item) and the preceding paragraph, to be the amount specified by Cabinet Order as the amount of dividends received corresponding to deductible expenses after the increase.
The provisions of paragraph (1) apply only in the case where a Final Return, amended return, or written request for Reassessment comes with the attachment of documents stating the amount of dividend of surplus, etc. that is to be excluded from gross profits and a detailed statement concerning the calculation thereof, and the documents specified by Ministry of Finance Order are retained. In this case, the amount to be excluded from gross profits pursuant to the provisions of that paragraph does not exceed such recorded amount.
Even in the case where the documents specified by Ministry of Finance Order prescribed in the preceding paragraph have not been retained for all or part of the amount to be excluded from gross profits pursuant to the provisions of paragraph (1), the district director may apply the provisions of paragraph (1) to the amount for which the documents were not retained, when they find any unavoidable circumstances for the failure to retain the documents.
The provisions of paragraph (3) apply only in the case where the Final Return, amended return, or written request for Reassessment for the business year containing the date on which the amount of dividend of surplus, etc. referred to in that paragraph is received comes with the attachment of documents stating that the application of the provisions of that paragraph is sought, and stating the amount of dividends received corresponding to deductible expenses and a detailed statement concerning the calculation thereof, and the documents specified by Ministry of Finance Order, such as documents that clarify the amount of dividend of surplus, etc. included in deductible expenses when calculating the amount of income of the foreign subsidiary, are retained.
Necessary matters concerning the application of the provisions of paragraph (1) and the provisions of paragraphs (1) through (4) in the case where shares of or capital contributions to a foreign corporation have been transferred as a result of a qualified merger, qualified company split, qualified capital contribution in kind, or qualified in-kind distribution are specified by Cabinet Order.