Supplementary Provisions, Article 12Transitional Measures Concerning Deduction of Amount of Consumption Tax on Purchases

①Where a business operator (excluding a business operator exempted from the obligation to pay consumption tax pursuant to Article 9, paragraph (1), main clause of the Act) calculates the consumption tax on taxable purchases prescribed in Article 30, paragraph (1) of the Act with respect to expenses paid during the period from the application date to September 30, 1989 (excluding expenses paid in the case of acquiring or leasing assets relating to the transfers, etc. of assets set out in Article 7, paragraph (1), items (i) through (iv) of the Act (for item (iii) of that paragraph, limited to the portion pertaining to the transport of cargo) or Article 17, paragraph (2), items (i) through (iv), (vi) or (vii), or in the case of receiving the provision of services relating to those transfers, etc. of assets, and expenses paid in the case of acquiring or leasing assets relating to transfers, etc. of assets outside Japan or receiving the provision of services relating to those transfers, etc. of assets; the same applies hereinafter in this paragraph), if there is, among the accounts for which it is difficult to classify the amount of those expenses into the amount of consideration paid for taxable purchases in Japan (meaning the amount of consideration paid for taxable purchases prescribed in Article 30, paragraph (1) of the Act; the same applies hereinafter in this paragraph) and amounts other than the amount of consideration paid for those taxable purchases (for manufacturing costs and other costs equivalent thereto, the accounts constituting those costs), an account other than a specified account, then with respect to the amount of expenses belonging to that account, the business operator may calculate the consumption tax on those taxable purchases on the basis that the whole amount of those expenses falls under the amount of consideration paid for taxable purchases made in Japan.

②The specified accounts prescribed in the preceding paragraph are the accounts to which personnel expenses, insurance premiums (including mutual aid premiums and other items similar to insurance premiums), taxes and public charges, donations (including subsidies), land rent, interest paid (including bill discount charges, guarantee fees and other items similar thereto), and damages and other compensation belong, and the accounts to which the amount of consideration for the acquisition of land (including rights existing on land), securities prescribed in Appended Table 1, item (ii) of the Act and other similar things belongs.

③For the amount of expenses relating to those for which the act that gave rise to the payment of the expenses prescribed in paragraph (1) is deemed, under Article 2, paragraph (2) or (3) or Article 3, paragraph (5) of the Supplementary Provisions of the Act or Article 4, paragraph (4) of the Supplementary Provisions, to have been done before the application date, the amount is included in the amount of expenses prescribed in paragraph (1) only where the amount of expenses for a single transaction is 1,000,000 yen or less.