Income Tax Law
Law No. 24 of March 29th of 1940 (15th Year of Syōwa)
Contents
Chapter 1—General Provisions
Chapter 2—Classified Income Tax
Chapter 3—Composite Income Tax
Chapter 4—Declaration, Application, Investigation and Decision
Chapter 5—Income Investigation Committee
Chapter 6—Examination, Petition and Administrative Litigation
Chapter 7—Collection
Chapter 8—Miscellaneous Provisions
Chapter 9—Penal Provisions
Chapter I — General Provisions
Article 1.
An individual domiciled or resident for more than one year within the area where the present law is in force shall be liable to pay income tax in accordance with the provisions of the present law.
Article 2.
If an individual not coming within the purview of the provisions of the preceding article falls under any of the following numbers, he shall be liable to pay income tax but only in respect of his incomes:
1. If he owns assets or enterprises within the territory where the present law is in force; 2. If he receives payment of interest on public loans, corporation debentures or deposits, or of profits by the joint-operation-trust, within the area where the present law is in force; 3. If he receives a share of profits or interest, or a distribution of surplus funds, from a juristic person with head office or principal place of business within the area where the present law is in force; 4. If he receives payment of salary, wages, annual allowance, compensation for expenses (limited to that which is paid in monthly or yearly sums, same context following), annuity (excluding the postal annuity, same context following), pension, bonus or retiring allowance or grants of the nature of those which have been referred to, within the area where the present law is in force.
Article 3.
A juristic person, if falling under any of the following numbers, shall be liable to pay income tax only in respect of its incomes:
1. If it receives payment of interest on public loans, corporation debentures or deposits, or of profits by the joint-operation-trust, within the area where the present law is in force; 2. If it receives a share of profits or interest, or a distribution of surplus funds, from a juristic person with head office or principal place of business within the area where the present law is in force.
Article 4.
No income tax shall be imposed on Hokkaido,1 the prefectures, municipalities, towns, villages and other public bodies as designated by Ordinance; the same shall apply to shrines and the juristic persons established in accordance with the provisions of Article 34 of the Civil Code.
Article 5.
An individual who is engaged in the manufacture, mining or gathering of staple products as designated by Ordinance, will be exempted from income tax in respect of the incomes accruing from his enterprise for the initial year of its operation and the three years that follow, as prescribed by Ordinance.
Article 6.
With regard to incomes accruing from trust property, the beneficiary receiving the incomes as profits from such act of trust is to be deemed the person who owns the said trust property, and income tax is to be imposed on him as such; but this shall not apply in respect of the joint-operation-trust profits paid within the area where the present law is in force.
With regard to the application of the provisions of the preceding paragraph, the truster or his successor shall be deemed the beneficiary when no beneficiary is specified or when no beneficiary has come into existence as yet.
No income tax shall be imposed in respect of incomes accruing from property held in trust for the purpose of public benefit.
Article 7.
"Joint-operation-trust" within the meaning of the present law is the monetary trust which has been accepted by trust companies and which, while being the trust property of numerous trusters who do not act collectively, is put to joint operation.
1 As an administrative entity.
Article 8.
The following amounts of money are deemed as shares of profits obtained from juristic persons and as such the present law shall apply to them:
1. When an amount of money the payment whereof is received on account of the redemption of shares, or an amount of money which is received by way of the refunding of one's own share on account of withdrawal from partnership or as a result of a reduction of capital investment, exceeds the paid-up amount of the shares concerned or the amount of the investments concerned, the excess amount; 2. When an amount of money which a shareholder or partner receives as a distribution of the remaining property in case of the dissolution of a juristic person, exceeds the paid-up amount of the shares concerned or the amount of the investments concerned, the excess amount; 3. When the paid-up amount of shares or the total amount of investments and the money which is acquired, in the case of the merger of juristic persons, by a shareholder or partner of the juristic person having ceased to exist as a result of the merger from the juristic person continuing to be in existence after the merger or established through the merger, exceeds the paid-up amount of the shares originally held, or the amount of the investments originally made, of the shareholder or partner, the excess amount.
Article 9.
The income tax shall be divided into two categories; that is, the classified income tax and the composite income tax.