(Hōzin-Zei Hō)
Law No. 25 of March 29th of the 15th Year of Syōwa (1940)
Article 1. Juristic persons having a head office or principal place of business in the area where the present law is in force, and juristic persons owning property or enterprises in the area where the present law is in force shall be liable to pay juristic person tax in accordance with the provisions of the present law.
Article 2. The juristic person tax shall be levied on the total income and capital of juristic persons having a head office or principal place of business in the area where the present law is in force, and only in respect of income accruing from the property or enterprises and the capital related thereto in the area where the present law is in force in the case of juristic persons not having a head office or principal place of business in the area where the present law is in force.
Article 3. The juristic person tax shall be imposed in accordance with the provisions of the preceding article on income and capital as follows :
1. Income obtained during each business year ; 2. Liquidation income ; 3. Capital as at the end of each business year.
Article 4. The calculation of income for each business year of juristic persons having a head office or principal place of business in the area where the present law is in force shall be made by deducting gross losses from gross profits during each business year ; but in the case of mutual insurance companies or bourses on membership basis, such calculation shall be made on the basis of the surpluses for each business year.
In the calculation of income referred to in the preceding paragraph the amount which has been or is to be paid by a juristic person in each business year as juristic person tax or excess profit tax shall not be included in the loss account.
In the calculation of income referred to in paragraph 1, losses sustained during business years which began within three years preceding the date of the beginning of the current business year of juristic persons, and as prescribed by Ordinance, shall be included in the loss account.
The provisions of the preceding two paragraphs apply with necessary modifications to the calculation of surplus funds of mutual insurance companies or bourses on membership basis.
The provisions of the preceding four paragraphs apply with necessary modifications to the calculation of income accruing from assets or enterprises during each business year of juristic persons not having a head office or principal place of business in the area where the present law is in force.
Article 5. The provisions of Articles 6 and 7 of the Income Tax Law apply with necessary modifications to the imposition of juristic person tax.
In the calculation of income acquired during each business year by trust companies, the receipts and disbursements in respect of the joint-operation-trust shall be deducted from gross profits and gross losses respectively.
Article 6. In the case of the dissolution of a juristic person where the value of the surplus assets exceeds the paid-up amount of the shares or the total amount of the contributions and reserves at the time of the dissolution, such excess amount shall be the liquidation income of the juristic person.
In the case of the merger of juristic persons where the paid-up amount of the shares or the aggregate amount of the contributions and money which is acquired by the shareholders or partners of the extinguished juristic person from the juristic person continuing to be in existence exceeds the paid-up amount of the shares or the total amount of the contributions and reserves at the time of merger of the juristic person extinguished by the merger, such excess amount shall be deemed as the liquidation income of the juristic person extinguished by the merger.
Article 7. The capital in each business year of juristic persons having a head office or principal place of business in the area where the present law is in force shall be determined by multiplying the monthly average
of the remainder of the paid-up amount of shares, the amount of contributions, the amount of funds, or the amount of collections and reserves as at the end of each month of each business year after deducting the amount of losses brought forward at the end of each month, by the number of months included in the business year concerned, and dividing the result by twelve.
The capital of juristic persons not having a head office or principal place of business in the area where the present law is in force in each business year shall be determined by the applying with necessary modifications the provisions of the preceding paragraph and as prescribed by Ordinance in respect of their assets or enterprises in the area where the present law is in force.
Article 8. When a juristic person has been dissolved or extinguished by merger in the course of a business year, the period of time from the beginning of such business year untill the dissolution or merger shall be reckoned as one business year.
Article 9. "Reserves" within the meaning of the present law include any amounts held back as reserves or under any other name out of the income of a juristic person during each business year.
The amount payable as juristic person tax and excess profit tax shall not be included in the amounts held back as referred to in the preceding paragraph.
Article 10. A juristic person continuing to be in existence after merger or a juristic person formed by merger shall be liable to pay juristic person tax in respect of the income and capital of the juristic person extinguished by the merger.
Article 11. No juristic person tax shall be imposed on Hokkaido1 and prefectures, cities, towns, villages and other public bodies as designated by Ordinance, shrines, and juristic persons formed in accordance with the provisions of Article 34 of the Civil Code.
1 As an administrative entity.
Article 12. A juristic person engaged in the manufacture, mining or gathering of staple products designated by Ordinance shall be exempted from juristic person tax in respect of income accruing from such business during the initial year of operation and the three years that follow.
Article 13. In the calculation of annual income of juristic persons in accordance with the provisions of Article 4, an amount representing 70 per cent of the amount of the interest on national bonds received for the period of holding, should any be held by such juristic person, shall be deducted, as prescribed by Ordinance, from the income of such juristic person. But if interest on such national bonds is subject to the special tax on foreign currency securities or special tax on dividends or profit or interest, the said deduction shall be an amount representing 70 per cent of the remainder of the interest received during the period of holding the national bonds after deducting the amount of either of the said special taxes imposed on such interest.
The provisions of the preceding paragraph apply with necessary modifications to the calculation of liquidation income of juristic persons.
Article 14. The amount of excess profit tax for any business year of juristic persons shall be deducted from the income of the business year concerned.
The amount of excess profit tax deductable from the income of a juristic person having income subject to juristic person tax and other income shall be calculated as prescribed by Ordinance.
Article 15. When income obtained by a juristic person in the course of liquidation or by merger is of the nature that juristic person tax shall not be imposed in accordance with the provisions of the present law or other laws, the amount of such income shall be deducted from income of the juristic person in liquidation.
Article 16. The rates of juristic person tax shall be as follows :—
1. On income of each business year :
In the case of juristic persons having a head office or principal place of business in the area where the present law is in force,
18 per cent of the amount of the income.
In the case of juristic persons not having a head office or principal place of business in the area where the present law is in force,
28 per cent of the amount of the income.
2. On liquidation income :
18 per cent of the amount of the income.
3. On the capital in each business year, 0.15 per cent of the capital.
The amount which has been paid by a juristic person in each business year as classified income tax on dividends of profit of interest in accordance with the provisions of Article 10 of the Income Tax Law shall be deducted as prescribed by Ordinance from the amount of juristic person tax payable by such juristic person in the business year concerned.
The amount of classified income tax on dividends of profits or interest as provided in Article 10 of the Income Tax Law deductable as referred to in the preceding paragraph shall not be included in the loss account in the calculation of the income of juristic persons.
The preceding two paragraphs shall apply with necessary modifications to the juristic person tax on liquidation income.
If the amount of juristic person tax on capital in each business year calculated in accordance with the provisions of paragraph 1 is less than 10 yen per annum, the amount of juristic person tax shall be determined as 10 yen per annum.
In the case of a juristic person not having any amount of income subject to juristic person tax as a result of calculation in accordance with the provisions of Article 4, no juristic person tax shall be imposed on capital in the business year concerned of such juristic person. When the amount of juristic person tax on capital in each business year, calculated in accordance with the provisions of paragraphs 1 and 5, exceeds the remainder of income during the business year concerned after deducting the amount of juristic person tax on such income payable in the business year concerned, no juristic person tax shall be imposed on capital for each business year in which there is such excess amount. (To be concluded)