Article 182-2

①Where non-deductible consumption tax amounts, etc. pertaining to assets arise in a year in which a Resident carries on business that gives rise to real property income, business income, timber income, or miscellaneous income (hereinafter in this Article referred to as "business income, etc.") (limited to a year in which the ratio calculated as specified by Ministry of Finance Order as a ratio equivalent to the taxable sales ratio prescribed in Article 30, paragraph (2) (Deduction of Consumption Tax on Purchases) of the Consumption Tax Act (Act No. 108 of 1988) is 80 percent or more), the sum of the non-deductible consumption tax amounts, etc. pertaining to the assets that have arisen is included in necessary expenses in the calculation of the amount of real property income, amount of business income, amount of timber income, or amount of miscellaneous income (hereinafter in this Article referred to as the "amount of business income, etc.") for that year.

②Where the non-deductible consumption tax amounts, etc. pertaining to assets that arose in a year in which a Resident carries on business that gives rise to business income, etc. (excluding a year prescribed in the preceding paragraph) fall under any of the following cases, the sum of the non-deductible consumption tax amounts, etc. pertaining to the assets falling under that case is included in necessary expenses in the calculation of the amount of business income, etc. for that year:

③The amount to be included in necessary expenses in the calculation of the amount of business income, etc. for that year with regard to the sum of the non-deductible consumption tax amounts, etc. pertaining to assets that arose in a year in which a Resident carries on business that gives rise to business income, etc. (excluding the amount included in necessary expenses under the provisions of the preceding two paragraphs; hereinafter in this paragraph and the following paragraph referred to as "deferred consumption tax, etc.") is the amount equivalent to one-half of the amount calculated by dividing that deferred consumption tax, etc. by 60 and multiplying the result by the number of months in the period in that year during which that business was carried on.

④The amount to be included in necessary expenses in the calculation of the amount of business income, etc. for that year with regard to the deferred consumption tax, etc. that arose in each of the year preceding that year and earlier years in which a Resident carried on business that gives rise to business income, etc. is the amount calculated by dividing that deferred consumption tax, etc. by 60 and multiplying the result by the number of months in the period in that year during which that business was carried on (where the amount so calculated exceeds the portion of that deferred consumption tax, etc. other than the amount already included in necessary expenses in the calculation of the amount of business income, etc. under the provisions of the preceding paragraph and this paragraph, that portion).

⑤The non-deductible consumption tax amounts, etc. pertaining to assets referred to in paragraphs (1) through (3) means, where a Resident is subject to the application of Article 30, paragraph (1) of the Consumption Tax Act for the taxable period prescribed in Article 19, paragraph (1) (Taxable Period) of that Act and treats the amount equivalent to the amount of consumption tax to be imposed on the taxable transfers, etc. of assets prescribed in Article 2, paragraph (1), item (ix) (Definitions) of that Act made during that taxable period and the amount of local consumption tax to be imposed with that amount of consumption tax as the tax base, and the amount of tax on taxable purchases, etc. prescribed in Article 30, paragraph (2) of that Act and the amount equivalent to the local consumption tax pertaining to that amount of tax on taxable purchases, etc., separately from the consideration for the transactions pertaining to them, the sum, pertaining to the respective assets, of the amount that cannot be deducted under paragraph (1) of that Article and the amount equivalent to the local consumption tax pertaining to that amount that cannot be deducted, out of the sum of that amount of tax on taxable purchases, etc. and the amount equivalent to the local consumption tax pertaining to that amount of tax on taxable purchases, etc.

⑥The amount equivalent to the local consumption tax pertaining to the amount of tax on taxable purchases, etc. referred to in the preceding paragraph and the amount equivalent to the local consumption tax pertaining to the amount that cannot be deducted mean, respectively, the amount equivalent to the amount of tax on taxable purchases, etc. prescribed in Article 30, paragraph (2) of the Consumption Tax Act or the amount equivalent to the amount that cannot be deducted under Article 30, paragraph (1) of that Act, in the case calculated in accordance with the provisions of laws and regulations concerning consumption tax on the assumption that the local consumption tax is consumption tax at a rate of 2.2 percent (1.76 percent where the taxable purchase prescribed in Article 2, paragraph (1), item (xii) of that Act pertaining to that amount of tax on taxable purchases, etc. pertains to a taxable transfer, etc. of assets subject to the reduced rate prescribed in item (ix)-2 of that paragraph received from another person, and where the taxable goods prescribed in item (xi) of that paragraph pertaining to that amount of tax on taxable purchases, etc. fall under taxable goods subject to the reduced rate prescribed in item (xi)-2 of that paragraph).

⑦The number of months referred to in paragraphs (3) and (4) is calculated according to the calendar, and where a fraction of less than one month arises, it is treated as one month.

⑧In addition to what is provided for in the preceding three paragraphs, matters necessary for the application of the provisions of paragraphs (1) through (4) are specified by Ministry of Finance Order.

⑨A Resident who has an amount included in necessary expenses in that year with regard to the sum of the non-deductible consumption tax amounts, etc. pertaining to assets prescribed in paragraphs (1) through (3) or the deferred consumption tax, etc. prescribed in paragraph (3) or paragraph (4) must attach to the Tax Return for that year a detailed statement on the calculation of the amounts included in necessary expenses under these provisions.