The tax base of corporation tax imposed on a foreign corporation for income for each business year is to be the amount of income categorized as domestic source income specified in each of the following items for the category of foreign corporation listed in the relevant item:

①The amount of income pertaining to domestic source income listed in item (i), (a) of the preceding Article for each business year of a foreign corporation (hereinafter referred to as "income attributable to a permanent establishment" in this Subsection) is to be the amount obtained by deducting the amount of deductible expenses for the business year pertaining to the business carried on through the permanent establishment of the foreign corporation from the amount of gross profit for the business year pertaining to that business.

②The amount to be included in gross profit or deductible expenses for the business year when calculating the amount of income pertaining to income attributable to a permanent establishment for each business year of a foreign corporation is, except as otherwise provided, the amount that would be the amount of gross profit or the amount of deductible expenses if calculated, with regard to the business carried on through the permanent establishment of the foreign corporation, in accordance with the provisions of Subsections 2 through 9 of Section 1 of Chapter I of the preceding Part (Calculation of the Amount of Income for Each Business Year of a domestic corporation) (excluding Article 23-2 (Exclusion of Dividends Received from Foreign Subsidiaries from Gross Profits), Articles 25-2 through 27 (Gain on Gifts Received, etc.), Article 33, paragraph (5) (Valuation Loss on Assets), Article 37, paragraph (2) (Exclusion of Contributions or Donations from Deductible Expenses), Article 39-2 (Exclusion of Foreign Withholding Tax, etc. on Dividends Received from Foreign Subsidiaries from Deductible Expenses), Article 41 (Exclusion of Foreign Taxes Credited Against the Corporation Tax from Deductible Expenses), Article 41-2 (Exclusion of the Amount Equivalent to Foreign Tax Adjusted at the Time of Distribution from Deductible Expenses), Article 46 (Inclusion in Deductible Expenses of the Depreciated Amount of Fixed Assets Acquired by a Non-investment Partnership with Allotment Monies), Article 57, paragraph (2) (Carryover of Losses) (limited to the part pertaining to the determination of residual assets), Article 60-2 (Dividends Made on the Basis of the Volume of Business with Cooperatives Incurred by Cooperatives), Article 61-2, paragraph (17) (Inclusion of Capital Gains or Losses on Securities in Gross Profits or Deductible Expenses) and Division 5 of Subsection 5 (Profit or Loss on Transactions between Corporations with a Full Controlling Interest)) and Subsection 12 (Details of Calculation of the Amount of Income for Each Business Year).

③In the case of calculating the amount of income pertaining to income attributable to a permanent establishment for each business year of a foreign corporation in accordance with the provisions of Article 22 (General Rules for Calculation of the Amount of Income for Each Business Year) pursuant to the provisions of the preceding paragraph, the following apply:

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

①In the case where a foreign corporation receives a refund of the following amount or the amount to be refunded is to be appropriated for the unpaid national tax or local tax, the amount to be refunded or to be appropriated is excluded from the amount of gross profit, when calculating the amount of income pertaining to income attributable to a permanent establishment of the foreign corporation for each business year:

②In the case where the amount of a foreign country's corporate tax (meaning the foreign country's corporate tax prescribed in Article 69, paragraph (1) (Foreign Tax Credit); hereinafter the same applies in this paragraph) that a foreign corporation has come to pay has been reduced in each business year of the foreign corporation starting within seven years after the first day of the business year in which the provisions of Article 144-2, paragraphs (1) through (3) (Foreign Tax Credit for Foreign Corporations) were applied with regard to the amount of the foreign country's corporate tax (hereinafter referred to as the "applicable business year" in this paragraph) (including, in the case where the foreign corporation has received the transfer of the whole or a part of the business pertaining to a permanent establishment of another foreign corporation that is an acquired corporation, etc. prescribed in paragraph (6) of that Article as a result of a qualified merger, etc. prescribed in that paragraph, the case where, out of the amount of the foreign country's corporate tax that the acquired corporation, etc. has come to pay, the amount of the foreign country's corporate tax that it has come to pay due to income pertaining to the business transferred to the foreign corporation has been reduced in each business year of the foreign corporation starting within seven years after the first day of the applicable business year of the acquired corporation, etc. pertaining to that amount of the foreign country's corporate tax), the amount specified by Cabinet Order as the portion of the reduced amount by which the creditable amount of the foreign country's corporate tax prescribed in paragraph (1) of that Article has been reduced (excluding the amount specified by Cabinet Order as the amount to be included in gross profit) is excluded from gross profit, when calculating the amount of income pertaining to income attributable to a permanent establishment of the foreign corporation for each business year.

③In the case where a foreign corporation receives a refund of any amount that is excluded from deductible expenses when calculating the amount of income pertaining to income attributable to a permanent establishment for each business year in the case of calculation in accordance with the provisions of Article 55, paragraph (5) pursuant to the provisions of paragraph (2) of the preceding Article, the amount to be refunded is excluded from gross profit, when calculating the amount of income pertaining to income attributable to a permanent establishment of the foreign corporation for each business year.

In the case where a foreign corporation having a permanent establishment has received the application of the provisions of Article 144-13 with regard to the net operating loss caused by a disaster prescribed in Article 144-13, paragraph (11) (Refund Based on Carryback of Losses) that arose during the interim period prescribed in that paragraph (hereinafter referred to as the "net operating loss caused by a disaster" in this Article), the amount equivalent to the net operating loss caused by a disaster that formed the basis for the calculation of the amount to be refunded through the filing of an interim return based on provisional accounts prescribed in that paragraph is included in gross profit, when calculating the amount of income pertaining to income attributable to a permanent establishment for the business year containing the interim period.

①In the case where the amount of investment assets (meaning those specified by Ministry of Finance Order as assets under management in the case where money or other assets received as insurance premiums are managed in preparation for the performance of future debts under insurance contracts; hereinafter the same applies in this paragraph and paragraph (5)) pertaining to the permanent establishment for each business year of a foreign corporation (limited to a foreign insurance company, etc. prescribed in Article 2, paragraph (7) (Definitions) of the Insurance Business Act; hereinafter the same applies in this paragraph) is less than the amount calculated, as specified by Cabinet Order, as the amount that should be attributed to the permanent establishment out of the amount of investment assets of the foreign corporation, the amount calculated, as specified by Cabinet Order, as the amount of proceeds pertaining to the amount equivalent to the shortfall is included in gross profit, as the amount of proceeds pertaining to the business carried on through the permanent establishment of the foreign corporation, when calculating the amount of income pertaining to income attributable to a permanent establishment of the foreign corporation for the business year.

②The provisions of the preceding paragraph do not apply in the case falling under any of the following:

③The provisions of the preceding paragraph apply only in the case where documents stating that the case falls under any of the cases listed in the items of that paragraph and documents concerning the calculation thereof are retained.

④Even in the case where the documents set forth in the preceding paragraph have not been retained, the district director may, when finding that there are unavoidable circumstances for the failure to retain them, apply the provisions of paragraph (2) only in the case where those documents are submitted.

⑤The time of the calculation of the amount of investment assets and other necessary matters concerning the application of the provisions of paragraphs (1) and (2) are specified by Cabinet Order.

①In the case where the amount of equity capital pertaining to the permanent establishment for each business year of a foreign corporation (meaning the amount calculated, as specified by Cabinet Order, as the amount of net assets pertaining to the permanent establishment) is less than the amount calculated, as specified by Cabinet Order, as the amount that should be attributed to the permanent establishment out of the amount equivalent to the capital of the foreign corporation, the amount calculated, as specified by Cabinet Order, as the portion corresponding to the shortfall, out of the amount specified by Cabinet Order as the amount of interest on liabilities (including anything specified by Cabinet Order as being equivalent thereto) pertaining to the business carried on through the permanent establishment of the foreign corporation for the business year, is excluded from deductible expenses, when calculating the amount of income pertaining to income attributable to a permanent establishment of the foreign corporation for the business year.

②The calculation of the amount equivalent to the capital that should be attributed to a permanent establishment in the case where the amount equivalent to the capital of the foreign corporation is extremely low, and other necessary matters concerning the application of the provisions of the preceding paragraph, are specified by Cabinet Order.