Tax Exemption Scheme (J-BIEM)

Outline of the Tax Exemption Scheme for Nonresident Individuals, etc.

Following the amendment of Article 5-2 of the Act on Special Measures Concerning Taxation, nonresident individuals and foreign corporations are now eligible for tax exemption on interest accruing from book-entry transfer JLGBs paid on or after January 1st, 2008, provided certain conditions are met. Until the amendment, interest on Japanese JLGBs received by nonresident individuals, etc., was basically subject to 15% withholding income tax.

Conditions

Payment of interest must be made via the Japan Securities Depository Center, Inc.
Nonresident individuals, etc., must hold the bonds through qualified foreign intermediaries or specified book-entry transfer institutions, etc.
An Application Form for Withholding Tax Exemption must be submitted.

Simplification, etc., of tax exemption procedures for nonresident individuals, etc.

From June 2010, measures were taken to simplify tax exemption procedures concerning interest on book-entry transfer JLGBｓ received by nonresident individuals, etc., and to expand the scope of eligibility for tax exemption. These measures included the following:
(1)Simplification of procedures, such as changing tax exemption procedures from every issuer (numerous) to every book-entry transfer institution, and abolishing individual records of beneficial owners under certain conditions;
(2)Expansion of the scope of qualified foreign securities investment trusts, and exemption of tax on profit from redemption.
Among others, interest on Japan Finance Organization for Municipalities bonds is now also eligible for tax exemption.The above efforts to simplify and expand tax exemption measures are designed to attract foreign investors, and this is expected to significantly assist the revitalization of JLGB markets.

For details, please refer to the following website.

Overview of Tax Exemption Scheme for Nonresident Individuals and Foreign Corporations
Procedures of Tax exemption scheme concerning interests, etc.

Instructions for nonresidents and foreign corporations

List of Necessary Procedures for Nonresident Individuals, etc., to be Eligible for Tax Exemption

1. Documents needed for each event and method of submission

Event	What	When	To whom	Remarks
On first purchase	Application Form for Withholding Tax Exemption (PDF) → see Form Completion Guide Documents to verify applicant’s identity	When the applicant first intends to be exempt from taxation	Qualified foreign intermediary or specified book-entry transfer institution, etc.	Not necessary when submitting special case documents Documents to verify applicant’s identity must be presented
When changing name or address	Application Form for Amendment (PDF) → see Form Completion Guide Documents to verify applicant’s identity	At least one day preceding the date of the first interest payment after the change has been effected
When receiving interest payments	Statement of the Holding Period (PDF) → see Form Completion Guide	At least one day preceding the interest payment date		Need not normally be prepared when a tax-exempt category account has been established
When making additional purchases	No procedures required
When transferring	No procedures required

2. Flow of documents

GRAPH

ENLARGE

Click on the image to open an enlarged version

GRAPH

Instructions for QFI and QAMI

List of Procedures Necessary to Acquire the Status of a Qualified Foreign Intermediary or Qualified Account Management Institution

1. Documents needed for each event and method of submission

Event	What	To whom	Remarks
When acquiring the status of a qualified foreign intermediary	Application Form for Qualified Foreign Intermediary(PDF) Attached documents → see Form Completion Guide	Specified book-entry transfer institutions, etc.	Concerning qualified foreign intermediaries
When acquiring the status of a qualified account management institution	Application Form for Qualified Account Management Institution (PDF) Attached documents → see Form Completion Guide	The Japan Securities Depository Center, Inc.	Concerning qualified account management institutions

Before applying for QFI, it is necessary to acquire the status of foreign indirect account management institution (FIAMI) in the book-entry transfer system managed by Japan Securities Depository Center Inc. .
For procedures necessary to acquire the status of a foreign indirect account management institution (FIAMI), please consult the Japan Securities Depository Center, Inc.

2. Flow of documents

GRAPH

ENLARGE

Click on the image to open an enlarged version

GRAPH

Detailed Information on Tax Exemption Procedures

Requirements for tax exemption, etc.

Types of securities	Book-entry transfer Japan Local Government Bonds
Item subject to tax exemption	The interest portion of the book-entry transfer JLGBs (Note 1) that corresponds to the holding period (Note 2)
Eligible investors (Note 3)	Nonresidents individuals and foreign corporations (Note 4)
Holding method	Holding in transfer account at a specified book-entry transfer institution, etc. (Note 5) or qualified foreign intermediary

(Note 1)
The difference compared to profit from redemption (i.e. the amount received as a result of redemption (including retirement by purchase) and acquisition cost) is also exempt from tax.

(Note 2)
The amount of the interest portion of the book-entry transfer JLGBs, which corresponds to the period it is held, shall be calculated as below:

When the first day of the holding period of a book-entry transfer JLGBs by a nonresident individual or a foreign corporation falls on a day prior to the first day of the calculation period for interest accrual on the book-entry transfer JLGBs:
The amount of interest corresponding to the interest calculation period
When the first day of the holding period of a book-entry transfer JLGBs by a nonresident individual or a foreign corporation falls either on the first day or on a day after the first day of the calculation period for interest accrual on the book-entry transfer JLGBs:
The amount derived by multiplying the amount of interest corresponding to the interest calculation period by the number of days holding the book-entry transfer JLGB, divided by the number of days of the interest calculation period

* Interest calculation period for book-entry transfer JLGBs is 6 months.
* When nonresident individuals or foreign corporations meet the following conditions with respect to book-entry transfer JLGBs (excluding those being recorded/described information relating to book-entry transfer in the tax-exempt category) they have acquired during the interest calculation period, they may add the holding period of the previous holders to their holding period:

If the book-entry transfer JLGB was held in a transfer account by one of the following investors immediately prior to the acquisition: nonresident individual or foreign corporation eligible for tax exemption; public corporation; trustee of public trusts; financial institution or financial instruments business operator, etc., that is exempt from the withholding tax on the interest received; or domestic corporation;
If the nonresident individual or foreign corporation continues to hold the book-entry transfer LGB in the book-entry transfer account after the acquisition thereof;
If the specified book-entry transfer institution, etc., or qualified foreign intermediary, who records/describes information relating to the book-entry transfer JLGB for the nonresident individual or foreign corporation, was notified of the holding period of the previous holder by the specified book-entry transfer institution, etc., or qualified foreign intermediary who had recorded/described information relating to the book-entry transfer JLGB for the previous holder, in writing or by means of information communications technology.

(Note 3)
Nonresident individuals or foreign corporations that are trustees of foreign investment trusts are only eligible for tax exemption when said foreign investment trusts are securities investment trusts or publicly offered bond investment trusts, and when they fulfill the requirements (1) or (2) below (i.e. qualified foreign securities investment trusts).

The following conditions:
- That the offering of beneficial securities pertaining to the establishment of the foreign investment trust is conducted by public offer outside Japan, and that this fact is stated in the prospectus of the foreign investment trust or any other document similar thereto.
- That, if the offering of beneficial securities pertaining to the establishment of the foreign investment trust is also conducted inside Japan, the following conditions are met:
  - That the offering of beneficial securities inside Japan is conducted by public offer.
  - That the distribution of profit from beneficial securities offered publicly as in 1) above was made through a person in charge of handling payments in Japan.
  - That it is stated in the prospectus of the foreign investment trust, or any other document similar thereto, that the public offering and distribution of profit will be conducted in accordance with 1) and 2) above.
That all of the beneficial securities of the foreign investment trust have been acquired as trust assets of other qualified foreign securities investment trusts, and that this fact is stated in the prospectus of the foreign investment trust or any other document similar thereto.

(Note 4)
Interest on book-entry transfer JLGBs paid to nonresident individuals or foreign corporations having permanent establishments in Japan is not eligible for tax exemption if it is attributable to the business conducted by that person in Japan, etc.

(Note 5)
Specified book-entry transfer institutions, etc., are Japanese financial institutions, financial instrument business operators, and other subcustodians that act as account management institutions for JLGBs.

Procedures for nonresident individuals and foreign corporations

Documents to submit
To be eligible for tax exemption for interest on book-entry transfer JLGBs, the following documents must be submitted.

Documents	Filing timing	Remarks
Application Form for Withholding Tax Exemption	When the applicant first intends to be exempt from taxation	・An identification document must be shown upon submission. ・There are cases where the Application Form for Withholding Tax Exemption need not be submitted if a specified book-entry transfer institution, etc., has already submitted special case documents.
Application Form for Amendment	If there is a change in the name or address of the applicant after submitting the Application Form for Withholding Tax Exemption, at least one day preceding the date of the first interest payment after the change has been effected
Statement of the Holding Period	At least one day preceding the interest payment date of the book-entry transfer JLGB	When a specified book-entry transfer institution, etc., or qualified foreign intermediary has submitted documents stating the holding period, etc., prepared on the basis of detailed calculations of withholding income tax or the book for each investor, the Statement of the Holding Period need not be submitted.

Where to submit
- Application Form for Withholding Tax Exemption and Application Form for Amendment must be submitted to the district director of taxes with jurisdiction over the location of the head office or main office of the specified book-entry transfer institution, etc., via: ・ a specified book-entry transfer institution, etc., when an account has been established with said specified book-entry transfer institution, etc., and ・ a qualified foreign intermediary and an upper-positioned specified book-entry transfer institution, etc., when an account has been established with said qualified foreign intermediary, respectively.
- The Statement of the Holding Period must be submitted to the district director of taxes with jurisdiction over the place for tax payment of the issuer, via: ・ a specified book-entry transfer institution, etc., the Japan Securities Depository Center, Inc. and the issuer, when an account has been established with said specified book-entry transfer institution, etc., and ・ a qualified foreign intermediary and an upper-positioned specified book-entry transfer institution, etc., the Japan Securities Depository Center, Inc. and the issuer, when an account has been established with said qualified foreign intermediary, respectively.

Roles of qualified foreign intermediaries

In connection with the tax procedures for interest on book-entry transfer JLGBs, QFIs are required to submit the Application Form for Withholding Tax Exemption, Application Form for Amendment, and Statement of the Holding Period received from nonresident individuals or foreign corporations to a specified book-entry transfer institution, etc., acting as the upper-positioned participants of the QFIs, and QFIs are also required to fulfill the following roles:

Verification of the Application Form for Withholding Tax Exemption or the Application Form for Amendment
QFIs are required to verify with the identification documents, the name and address, which are described in the Application Form for Withholding Tax Exemption or the Application Form for Amendment received from nonresident individuals and foreign corporations.
*When the submitting entities are trustees of qualified foreign securities investment trusts, the name and address of the trustees as well as the name of the qualified foreign securities investment trust is required.
Preparation of the book for each investor
When information relating to book-entry transfer of JLGBs are recorded/described for nonresident individuals or foreign corporations who have submitted the Application Form for Withholding Tax Exemption or an Application Form for Amendment has been submitted, QFIs must record/describe the following information in individual records of beneficial owner (in the case of qualified foreign securities investment trusts, for each trustee and for each qualified foreign securities investment trust) every time, and must keep the record for five years following the year in which the closing date of the record falls:
- Name and address of nonresident individuals or foreign corporations who have submitted the Application Form for Withholding Tax Exemption; * In addition to these, when the submitting entities are trustees of qualified foreign securities investment trusts, the name of the qualified foreign securities investment trust is required;
- Issue/Description of the book-entry transfer JLGBs and redemption amount for each issue/description;
- Date in accordance with the classification mentioned below:
  - (When book-entry transfer JLGB is acquired) the date when the information relating to the book-entry transfer are recorded/described for such acquisition;
  - (When book-entry transfer JLGB is transferred) the date when the information relating to the book-entry transfer are recorded/described for such transfer;
  - (When redemption for book-entry transfer JLGB is made) the date when the information relating to the book-entry transfer are recorded/described for such redemption;
  - (When the person who submitted the Application Form for Withholding Tax Exemption changes its name or address after the submission) the date when the information relating to the book-entry transfer are recorded/described for such change;
- Interest payment date for each issue/description of book-entry transfer JLGBs and the amount thereof;
- When the holding period of a book-entry transfer LGB can be aggregated, the name of the specified book-entry transfer institution, etc., or QFI who recorded/described information relating to the book-entry transfer for the previous holder and the first date of the holding period of the previous holder;
- In the case of a nonresident individual with residence in Japan, any address or location outside Japan;
- In the case of a foreign corporation operating a Japanese branch or plant, etc., the address of head office or main office outside Japan; and
- Other relevant information
Notice of information recorded/described in individual records of beneficial owner
QFIs are required to notify to the specified book-entry transfer institution, etc. acting as the upper-positioned participant of the QFI of the information recorded/described in individual records of beneficial owner on a periodic basis in writing or by means of information communications technologies.
However, notification is not required for those being recorded/described information relating to book-entry transfer in tax-exempt category accounts.
Verification of the Statement of the Holding Period
QFIs are required to verify the information described in the Statement of the Holding Period submitted by nonresident individuals or foreign corporations, with the information recorded/described in individual records of beneficial owner.
Preparation of substitute documents for the Statement of the Holding Period
- When interest is received on book-entry transfer JLGBs that are recorded/described information relating to book-entry transfer in tax-exempt category accounts, a document stating the following matters ("particulars of calculation of withholding income tax") may be prepared and submitted to the issuer via an upper-positioned specified book-entry transfer institution, etc., and the Japan Securities Depository Center, Inc. When these processes are concluded by the day before interest is received, the Statement of the Holding Period of the nonresident individual or foreign corporation need not be submitted.
  - The name and address of the specified overseas business office, etc., of the qualified foreign intermediary
  - For book-entry transfer JLGBs that are recorded/described information relating to book-entry transfer in tax-exempt categories, the issue, the date of interest payment for each issue, the amount of interest, and other relevant matters
  - For book-entry transfer JLGBs that are recorded/described information relating to book-entry transfer in taxable categories, the issue, the date of interest payment for each issue, the amount of interest exempt from tax, the amount of taxed interest for each issue, the amount of withholding income tax, and other relevant matters
    * Particulars of calculation of withholding income tax may be replaced by principal and interest payment request data prepared and filed by the Japan Securities Depository Center, Inc.
- When preparing and filing copies of documents to verify the applicant's identity presented by a nonresident individual or foreign corporation upon submission of the Application Form for Withholding Tax Exemption, documents stating the holding period, etc., based on individual records of beneficial owner may also be prepared and submitted to the district director of taxes with jurisdiction over the place for tax payment of the issuer, via an upper-positioned specified book-entry transfer institutions, etc., the Japan Securities Depository Center, Inc., and the issuer. When these processes are concluded by the day before the nonresident individual or foreign corporation receives interest, the Statement of the Holding Period of the nonresident individual or foreign corporation need not be submitted.
Notification of information pertaining to particulars of calculation of withholding income tax
When nonresident individuals or foreign corporations that have established tax-exempt category accounts submit particulars of calculation of withholding income tax concerning interest received in connection with book-entry transfer JLGBs that are recorded/described information relating to book-entry transfer to the issuer, they must notify the following matters for each individual (or, in the case of a qualified foreign securities investment trust, for each individual trustee and for said qualified foreign securities investment trust separately) to a qualified account management institution by the 10th day of the month after that in which the payment finalization date falls, in writing or by means of information communications technologies:
- The name and address of the specified overseas business office, etc., of the qualified foreign intermediary;
- The name and address, etc., of the person who has established a tax-exempt category account;
  * In addition to these, when said person is the trustee of a qualified foreign securities investment trust, the name of the qualified foreign securities investment trust
- For book-entry transfer JLGBs that are recorded/described information relating to book-entry transfer in tax-exempt categories, the issue, the amount of redemption proceeds for each issue, the date of interest payment for each issue and the amount of interest;
- For book-entry transfer JLGBs that are recorded/described information relating to book-entry transfer in taxable categories, the issue, the amount of redemption proceeds for each issue, the date of interest payment for each issue, the amount of interest exempt from tax, the amount of taxed interest for each issue, and the amount of withholding income tax;
- Other relevant matters
Procedures when establishing tax-exempt category accounts For specific details concerning the notification of information to qualified account management institutions, entries in the book for each investor, and other matters pertaining to the establishment of tax-exempt category accounts, see Establishing Tax-Exempt Category Accounts.

Roles of specified book-entry transfer institutions, etc.

In connection with the tax procedures for interest on book-entry transfer JLGBs, specified book-entry transfer institutions, etc., are required to submit the Application Form for Withholding Tax Exemption and Application Form for Amendment received from nonresident individuals or foreign corporations to the district director of taxes with jurisdiction over the location of the head office or main office of said specified book-entry transfer institutions, etc., and to submit documents stating the holding period, etc., prepared on the basis of the Statement of the Holding Period, particulars of calculation of withholding income tax or individual records of beneficial owner to the Japan Securities Depository Center, Inc., and specified book-entry transfer institutions, etc., are also required to fulfill the following roles:

Verification, etc., of Application Form for Withholding Tax Exemption or Application Form for Amendment, preparation, etc., of the book for each investor, verification of the Statement of the Holding Period, and preparation, etc., of substitute documents for the Statement of the Holding Period
When an account is established with a specified book-entry transfer institution, etc., these processes must be carried out by the specified book-entry transfer institution, etc. For details, see Roles of qualified foreign intermediaries.
Preparation, etc., of individual records of beneficial owner upon notification from a qualified foreign intermediary
Each time notification is received from a qualified foreign intermediary concerning matters for entry in individual records of beneficial owner, the matters notified must be entered or recorded in individual records of beneficial owner (or, in the case of a qualified foreign securities investment trust, for each individual trustee and for said qualified foreign securities investment trust separately), and must be filed for 5 years after the year in which the date of such entry or record falls.
However, preparation, etc., is not required for those being recorded/described information relating to book-entry transfer in tax-exempt category accounts.
Preparation, etc., of special case documents When information relating to book-entry transfer for book-entry transfer JLGBs are first recorded/described in a transfer account that has received verification pertaining to book-entry transfer JGBs, the specified book-entry transfer institution, etc., that verified the identity of the applicant when making these verifications, or the specified book-entry transfer institution, etc., that is an upper-positioned institution of the qualified foreign intermediary, may submit documents stating the name or other details of the nonresident individual or foreign corporation ("special case documents") to the district director of taxes with jurisdiction over the location of the head office or main office of the specified book-entry transfer institution, etc. In this case, the Application Form for Withholding Tax Exemption of said nonresident individual or foreign corporation need not be submitted.
When making such submission, the nonresident individual or foreign corporation must be notified to that effect as soon as possible thereafter.
Verification when documents stating the holding period, etc., prepared on the basis of the Statement of the Holding Period or individual records of beneficial owner have been submitted by a qualified foreign intermediary
When documents stating the holding period, etc., prepared on the basis of the Statement of the Holding Period or individual records of beneficial owner have been submitted by a qualified foreign intermediary, the matters stated therein must be verified by referring to individual records of beneficial owner.
Submission of payment records
Specified book-entry transfer institutions, etc., that have submitted particulars of calculation of withholding income tax must, as a rule, submit payment records concerning the payment of interest to the district director of taxes with jurisdiction over the location of the head office or main office of the specified book-entry transfer institution, etc., by January 31st of the year after that in which the interest payment date falls (or, in cases meeting certain conditions, the end of the month after that in which the payment date falls). Provided the approval of the district director of taxes has been obtained, payment records may be submitted using optical discs, magnetic tape or magnetic discs.
Procedures when establishing tax-exempt category accounts
When establishing tax-exempt category accounts in a specified book-entry transfer institution, etc., said specified book-entry transfer institution, etc., must enter or record and file certain matters in the book for each investor. For specific details, see Establishing Tax-Exempt Category Accounts.
Roles when acting as a qualified account management institution
When a specified book-entry transfer institution, etc., is also a qualified account management institution, it must fulfil the following roles.
- Verification of information pertaining to particulars of calculation of withholding income tax
  When a qualified foreign intermediary submits particulars of calculation of withholding income tax to the issuer via an upper-positioned specified book-entry transfer institution, etc., and the Japan Securities Depository Center, Inc., and notification of certain matters has been received from a qualified foreign intermediary, the matters notified must be verified.
- Verification, etc., of information pertaining to the establishment of tax-exempt category accounts
  For specific details concerning the verification of information received from qualified foreign intermediaries pertaining to the establishment of tax-exempt category accounts and the notification of information to qualified foreign intermediaries, see Establishing Tax-Exempt Category Accounts.

Others

Documents to Verify the Applicant's Identity

Common to nonresidents (individuals) and foreign corporations
Documents published or issued by government offices, or other documents similar thereto

These documents are limited to those created no more than six months before the date of presentation.
If the applicant is the trustee of a qualified foreign securities investment trust, the prospectus of the entrusted qualified foreign securities investment trust or any other document similar thereto must be attached, in addition to these documents.
Documents must include details of the name, etc. (or, in the case of the trustee of a qualified foreign securities investment trust, the trustee's name, etc., and the name of each entrusted qualified foreign securities investment trust) and address, etc., of the nonresident individual or foreign corporation.
When a nonresident individual or foreign corporation with no permanent establishment in Japan has entered an entrustment agreement concerning transfer entries or records for book-entry transfer LGBs with an individual having an address in Japan, a domestic corporation, the branch of a foreign bank, or a financial instruments business operator that is a foreign corporation engaged in Type I financial instruments business, a copy of the name, etc., and overseas address, etc. of the nonresident individual or foreign corporation as stated on the power of attorney or contract pertaining to said entrustment agreement may be used as a document to verify the applicant's identity.

Qualified Foreign Intermediaries

What is a qualified foreign intermediary?

A qualified foreign intermediary (QFI) is a foreign indirect account management institution or foreign further indirect account management institution which is also a global custodian or other overseas financial institution, etc., that has obtained approval from the Commissioner of the National Tax Agency as satisfying certain requirements (such as that it has its head office or main office in a signatory country to a tax convention or similar that includes provisions for the exchange of information).
Since the system of tax exemption for interest on book-entry transfer LGBs is only applicable when LGBs are owned in a transfer account established through a specified book-entry transfer institution, etc., or a qualified foreign intermediary, it is not applicable when LGBs are owned in an account established through an overseas financial institution, etc., that is not a qualified foreign intermediary.
How to become a qualified foreign intermediary

For an overseas financial institution, etc., to obtain approval as a qualified foreign intermediary, it must submit an approval application form to the Commissioner of the National Tax Agency through the Japan Securities Depository Center, Inc.
The following documents must be attached to the approval application form. However, since the application forms for approval published by the Japan Local Government Bond Association include all of these, the following documents do not need to be attached when using the same.
- A document from the Japan Securities Depository Center, Inc., certifying that the applicant is a foreign account management institution.
- A document pledging to promptly submit documents required by the district director of taxes to check that tax exemption measures are being properly implemented.
- A document pledging to verify the identity of the applicant when submitting an Application Form for Withholding Tax Exemption.
- Other relevant documents.

Qualified Account Management Institutions

What is a qualified account management institution?

A qualified account management institution is a specified account management institution or specified indirect account management institution which is also a subcustodian or other Japanese financial institution, etc., that has obtained the approval of the Commissioner of the National Tax Agency.
How to become a qualified account management institution

For a Japanese financial institution, etc., to obtain approval as a qualified account management institution, it must submit an approval application form to the Commissioner of the National Tax Agency through the Japan Securities Depository Center, Inc., with an attached document from the Japan Securities Depository Center, Inc., certifying that it is a specified account management institution or specified indirect account management institution.

Establishing Tax-Exempt Category Accounts

What is a tax-exempt category account?

A tax-exempt category account is an account that has been divided into a tax-exempt category*1 and a taxable category*2.
*1 A tax-exempt category is one in which no transfer entries or records are made with regard to book-entry transfer JLGBs other than those specified in (1) and (2) below.
- Book-entry transfer JLGBs held continuously by nonresident individuals or foreign corporations from the first day of the interest calculation period.
- Book-entry transfer JLGBs acquired by nonresident individuals or foreign corporations during the interest calculation period, which meet the following requirements (if the specified book-entry transfer institution, etc., or qualified foreign intermediary, who records/describes information relating to the book-entry transfer for the nonresident individual or foreign corporation, is the same as the specified book-entry transfer institution, etc., or qualified foreign intermediary, who had recorded/described information relating to the book-entry transfer for the previous holder, condition 1).
  - If the book-entry transfer JLGB was held in a transfer account by one of the following investors from the first day of the calculation period until immediately prior to the acquisition: nonresident individual or foreign corporation eligible for tax exemption; public corporation; trustee of public trusts; financial institution or financial instruments business operator, etc., that is exempt from the withholding tax on the interest received; or domestic corporation.
    * Depending on the category of the previous holder, applicability shall be limited to the following.
    ・(Financial institutions and financial instruments business operators, etc., that are exempt from the withholding tax on the interest received) Book-entry transfer JLGBs having been recorded/described information relating to the book-entry transfer
    ・(Other nonresident individuals or foreign corporations) Book-entry transfer JLGBs having been recorded/described information relating to the book-entry transfer for interest was exempt from tax
    ・(Trustees of charitable trusts, etc.) Those belonging to the trust assets of the charitable trust, etc.
  - If the specified book-entry transfer institution, etc., or qualified foreign intermediary, who records/describes information relating to the book-entry transfer for the nonresident individual or foreign corporation, was notified of the matters certifying that said book-entry transfer JLGBs meet condition 1) above by the specified book-entry transfer institution, etc., or qualified foreign intermediary who had recorded/described information relating to the book-entry transfer for the previous holder, in writing or by means of information communications technology
  *2 A taxable category is a category other than tax-exempt categories.
What is the procedure for establishing a tax-exempt category account?
- When establishing a tax-exempt category account with a qualified foreign intermediary
  - Notification of information from qualified foreign intermediaries to qualified account management institutions
    When a qualified foreign intermediary wishes to establish a tax-exempt category account for book-entry transfer LGBs held by a nonresident individual or foreign corporation, it must notify a qualified account management institution of the following matters, in writing or using a method based on information communications technology.
    ・The name and address, etc., of the person for whom the tax-exempt category account is to be established.
    * If the person for whom the account is to be established is the trustee of a qualified foreign securities investment trust, the name of the qualified foreign securities investment trust, in addition to the above.
    ・The name and address of the specified overseas business office, etc., of the qualified foreign intermediary that will establish the tax-exempt category account.
  - Verification of information by qualified account management institutions
    On receiving notification in accordance with 1) above, the qualified account management institution must verify that the matters notified are the same as those stated on copies of the Application Form for Withholding Tax Exemption, etc.
    * When a qualified account management institution has received the Application Form for Withholding Tax Exemption, the Application Form for Amendment, or particulars of the calculation of withholding income tax, it must make and file copies of these.
  - Notification of information from qualified account management institutions to qualified foreign intermediaries
    When a qualified account management institution has verified matters in accordance with 2) above, it must notify the qualified foreign intermediary to that effect, as well as entering the date of the notification, the content of the notification, and other relevant matters on copies of the Application Form for Withholding Tax Exemption, etc.
    A tax-exempt category account may not be established until a qualified foreign intermediary has received notification from a qualified account management institution.
  - Special cases when tax-exempt category accounts have been established for book-entry transfer JGBs or specified book-entry transfer corporate bonds, etc.
    When a qualified foreign intermediary has established a tax-exempt category account for book-entry transfer JGBs or specified book-entry transfer corporate bonds, etc., the verification in 2) above and the notification in 3) above shall not be necessary when it intends to establish a tax-exempt category account for book-entry transfer JLGBs.
  - Entries, etc., by qualified foreign intermediaries in individual record of beneficial owner
    A qualified foreign intermediary with which a nonresident individual or foreign corporation has opened an account must, each time a tax-exempt category account is established for a person who has submitted an Application Form for Withholding Tax Exemption, enter or record the following matters in individual record of beneficial owner (or, in the case of a qualified foreign securities investment trust, for each investor trustee and for said qualified foreign securities investment trust separately), in addition to the matters for entry prescribed in "3. Roles of qualified foreign intermediaries (2) Preparation, etc., of individual record of beneficial owner 1)-8)", and must file the same for 5 years after the year in which the date of closure of the record falls.
    ・The date on which the tax-exempt category account was established.
    ・Of the matters for entry in the book for each investor, those in 2), 3) (except (iv)) and 4), divided into tax-exempt categories and taxable categories.
- When establishing a tax-exempt category account in a specified book-entry transfer institution, etc.
  When a tax-exempt category account is established in a specified book-entry transfer institution, etc., said specified book-entry transfer institution, etc., must enter or record and file certain matters in the book for each investor. See (1) 5) above for further details.