The deemed dividend is not a dividend or distribution of surplus funds under the Corporate Law, but in reality it is a profit considered to be a profit dividend. With respect to the amount of the portion of the portion of the money or other economic interests that the corporation obtained as consideration for shares etc. exceeds the capital of the other party in the portion corresponding to the shares resulting from the delivery Is regarded as a dividend for retained earnings rather than a dividend based on capital surplus for corporate tax. Therefore, the Income Tax Law or the Corporate Tax Law will be treated in the same way as dividends, and the principle of non-taxable income will be applied when tax treatment is done. For example, such a deemed dividend may be generated when a corporation sells its own shares or investment to a corporation that issued shares etc. by M & A or the like. And deemed dividends are not applied to those received from all corporations.

Only when selling to a corporation that issued shares in connection with M & A

Regarding the above-mentioned dividends received from public interest corporations, the deemed dividend rule does not apply, and the provision of the deemed dividend is not applied similarly for dividends received from associations without personality. The case where the provision of deemed dividend is applied is limited only when the corporation sells the sale of shares to the corporation that issued the shares due to certain reasons. It is often caused by reasons related to M & A. One possible reason for such a case is the sale of shares through a merger. However, even in such a case, not all dividends are considered applicable to merger. In case of qualified merger, provision of deemed dividend will not apply. Because qualifying mergers do not issue money. In addition to the merger, as a certain cause for which a deemed dividend will occur, there may be cases where the sale of shares is carried out due to split type split. In this case as well, in case of qualified split type split as in case of merger, no deemed dividend will occur.