Treaties, Laws and Speeches

CHAPTER III

Article 28. Composite income tax shall be imposed in respect of gross incomes of individuals, provided, however, that in the case of an individual who does not come within the purview of the provisions of Article 1, the said income tax shall be imposed only in respect of incomes accruing from assets or businesses within the area where the present law is in force.

Article 29. No composite income tax shall be imposed in respect of incomes falling within the purview of the following numbers :

1. Incomes as referred to in Numbers 1 to 5 and Number 7 of Paragraph 1 of Article 11 ; 2. Temporary incomes other than those which have accrued from continual activity for the purpose of profit-making, as in the case of incomes referred to in Number 9 of Paragraph 1 of Article 30 ; 3. Single-sum pensions and retiring allowances as well as allowances of the nature of those which have been referred to.

Article 30. Gross incomes of individuals shall be calculated in accordance with the provisions of the following numbers :

1. In the case of incomes from the loaning of immovables, of rights relating to immovables or of ships, the amount of gross incomes during the preceding year minus necessary expenses ; 2. In cases of interest on public bonds, corporation debentures, deposits in banks, and deposits as provided for in Paragraph 2 of Article 21 as well as profits by the joint-operation-trust as designated by Ordinance, payment of which is received within the area where the present law is in force, the amount of income (in respect of interest on uninscribed public bonds and corporation debentures, the amount of payments received) during the preceding year minus 40 per cent of the amount ; 3. In cases of interest on public bonds, corporation debentures and deposits as well as profits by the joint-operation-trust other than those which are referred to in the preceding number, the amount of income (in respect of interest on uninscribed public bonds and corporation debentures, the amount of payments received) during the preceding year ; 4. In the case of interest on non-business loans, the amount of income during the preceding year minus the interest on debts incurred in

order to obtain the principal ; 5. In the case of dividends of profit or interest or distribution of surplus funds received from a juristic person, the amount of income (in respect of uninscribed shares, the amount of payments received) from March 1 of the preceding year up to the end of Febuary of the year concerned minus the interest on debts incurred in order to obtain the principal ; 6. In the case of incomes from forests, the amount of gross incomes during the preceding year minus necessary expenses ; 7. In the case of salaries, wages, annual allowances, compensation for expenses, annuities, pensions and bonuses or allowances of the nature of those which have been referred to, the amount of income during the preceding year ; 8. In the case of incomes accruing from fishery enterprises, an amount which has been calculated on the basis of the average of the amount of gross incomes minus necessary expenses for each of the preceding three years, as prescribed by Ordinance ; 9. In the case of incomes other than those which are referred to in the foregoing numbers, the amount of gross incomes during the preceding year minus necessary expenses.

Income tax and excess profit tax shall not be included in the calculation of the necessary expenses as referred to in Numbers 1, 6, 8 and 9 of the preceding paragraph.

The amount of excess profit tax on profits accruing from business shall be deducted from the amount of gross incomes for the year where the said excess profit tax shall be imposed.

The provisions of Paragraph 4 of Article 12 shall apply with necessary modifications in respect of excess profit tax as referred to in the preceding paragraph.

With regard to incomes as referred to in Numbers 1 to 6 of Paragraph 1, incomes of the predecessor shall be deemed as the incomes of the successor ; while with regard to incomes as referred to in Numbers 8 and 9, the assets or businesses which have been inherited shall be deemed as continuing to be in the possession of the successor, and the incomes concerned shall be calculated as such.

The provisions of Article 13 shall apply with necessary modifications in respect of the calculation of gross incomes of individuals.

Article 31. When the amount of gross incomes which has been calculated in accordance with the provisions of the preceding article does not exceed 10,000 yen, a deduction of one-tenth shall be made in respect of that portion of income which comes within the purview of Number 7 of Paragraph 1 of the said article.

Incomes of the head of the house and those of its members living with him shall be added together, and the provisions of the preceding paragraph shall apply in respect of the total ; the same shall hold good in respect of incomes of two or more members of a house who live together but apart from the head of the house.

Article 32. If the amount of gross income does not exceed 5,000 yen, no composite income tax shall be imposed ; the same shall hold good if the amount of gross income is less than 5,000 yen on account of a deduction made in virtue of the provisions of the preceding article.

Dividends of profit and incomes from forests and other incomes, as provided for in Article 8, shall be set apart from one another and the provisions of the preceding paragraph shall apply in respect of each division of incomes.

The provisions of Paragraph 2 of the preceding article shall apply with necessary modifications in respect of the preceding two paragraphs.

Article 33. Composite income tax shall be imposed by dividing the amount of gross income into the following grades and by applying the varying tax rates successively thereto ; provided, however, that dividends of profit and incomes from forests, as provided for in Article 8, shall each be set apart from other incomes and the amount of tax thereon shall be five times as much as the amount which has been calculated by applying a tax rate of 5 per cent to that portion of the amount representing one-fifth of the incomes concerned in case the said portion exceeds 1,000 yen but does not exceed 5,000 yen or by applying the tax rates as provided in the present paragraph in case the said portion exceeds 5,000 yen :

In the case of the preceding paragraph, the amount of gross incomes of the head of the house and those of its members living with him shall be added together and the amount of tax in respect of each of them shall be determined by dividing the amount which has been calculated by applying tax rates to the total in proportion to each amount of gross income ; the same shall hold good also in respect of the amount of gross income of the members of a house who live together but apart from the head of the house.

When there is a portion of gross income which is received from a juristic person as dividends of profit or interest or distribution of surplus funds and which has been deemed as Class A incomes from dividends and

interest and as such subjected to the imposition of classified income tax, the total of an amount which has been calculated by applying the provisions of the preceding two paragraphs to the amount of gross income and an amount corresponding to 1 per cent of the amount of income as the said dividends of profit or interest or said distribution of surplus funds (in respect to dividends on uninscribed shares, the amount of payments received) from March 1 of the preceding year up to the end of February of the year concerned shall be the amount of composite income tax on the gross income.

When there is a portion of distribution of surplus funds, as provided for in the preceding paragraph, which is obtained from a juristic person, as designated by Ordinance, such as a cooperative, an industrial or a commercial association, the rate of 1 per cent as provided for in the preceding paragraph shall be replaced by 0.5 per cent in respect of the amount of income of that portion.