"The general outline" is that the tax qualified foreign partners in an Investment LPS (Toshi-jigyo-Yugen-Sekinin Kumiai or Foreign LPS) are not considered as possessing Item 1 PE.

The issue is whether the following question is still after relevant post-tax reform; "If an investment management adviser entered into an asset management contract with a Japan based GP of a Japanese or Foreign LPS on behalf of a Tax Qualified Foreign LP, would the Investment management adviser in Japan be deemed as "Item 3 PE" or "Independent PE" for the tax qualified Foreign LP?"

Under "the general outline", the 25%/5% formula itself has changed when the 25%/5% rule will apply to a tax qualified foreign LP which invests in a Japanese company through Japanese or foreign LPS when the tax qualified investor and its related persons dispose of 5% or more of total issued shares of Japanese company.

Co-existence of the Partnership Taxation System（Full Inclusion System）and the Territorial System

1. Letter of Enquiry from the Japan Securities Investment Advisory Association to the NTA ( April 24th, 2002) : "The treatment of investments in securities in Japan made by a non-resident or foreign company through an Investment Adviser in Japan in terms of current Income Tax law, Corporate Tax Law and applicable Tax treaties".
2. Establishment of new principle of "Partnership PE" which is one type of Item 1 PE (after 2005 Revisions).
3. Exclusion of Independent Agents from the Scope of Agent PE (after 2007 Revisions, cf. Letter of Enquiry from the FSA to NTA (June 27, 2007)
4. Review of application Form 19 under Tax Treaty: "Relief from Japanese Income Tax on Dividends" (the need to pay attention to which business office location is specified in case of non-resident individual or foreign companies).

1. 2007 Tokyo District Court Judgment A judgment where a Civil Law "NK" was deemed substantially to be a Commercial Law "TK"　and Investment Business Income was categorized as Miscellaneous Income.
2. The above judgment focused on the principle of "Substance over Form" over "No taxation without representation", an exception to standard tax practice in Japan.

1. If Common Business Nature occurs several issues need to be considered in terms of how Partnership Distribution Income is classified.
   (Investment Income?→Business Income?→Re-application of investment income?)
2. Application of Fund to Fund 25%/5% rule.
3. Application of 25%/5% rule in case of Simultaneous Operation (where multiple affiliate NKs exist within one packaged NK)
4. Treaty Shopping
5. Review of Limitations on Benefits Article of Tax Treaty (A. Qualified Persons, B. Active Business Test, C. Approval by a competent authority)

1. Income Categorization under the Japan-Netherlands Tax Treaty (Miscellaneous Income)
2. Investment Income nature in an atypical TK Partnership (where there is no joint business nature)
3. Under Dutch Tax Law the Japanese operator of the TK is deemed as the GP of the LPS and the Japanese TK is deemed as LP.
4. Under Dutch Tax Law where the Dutch LPs possess an interest in the LPS the location of the business activity is deemed as PE.
5. Under the Japan-Netherlands Tax Treaty, distribution income from the TK is considered as"Miscellaneous Income" in Japan and "Business Income" in the Netherlands.
6. Where the vehicle is an NK (as opposed to a TK), the Business Income article will be applied to Partnership PE .

1. Recovery Structure on Disposition of Bad Debt Loans (SPC method/TK method)
2. PE of Bad Debt Loan related business and Functionally Separated Businesses (TP Approach)
3. Taxation on Investment Holding Income will be applied to Derivative Income where there is no PE
4. Treaty Shopping

1. The occurrence of negative goodwill (deferred liabilities account) mechanism in the case of an MBO structure.
2. The 2006 non-tax qualified Business Transfer in specific cases where certain conditions are met (Corporate Tax Law 62-8)
3. Three separate definitions of Goodwill exist in Japanese Corporate and Inheritance Tax Law
4. Two separate definitions of retirement allowance exist in Japanese Corporate Tax Law.
5. Two separate definitions of Contingency Liabilities exist in Japanese Corporate tax Law
6. The relationship between deferred asset or liabilities account, discrepancies and Net Operating Loss
7. Limitation on pre-acquisition loss after change of ownership (Corporate Tax Law 61)
8. A comparison of valuation ethics with financial and tax based valuation methods at a broad level.
9. A comparison of valuation ethics with financial and tax based valuation methods at micro level 1
10. A comparison of valuation ethics with financial and tax based valuation methods at a micro level 2.

1. non-tax qualified Business Transfer in specific cases where certain conditions are met
2. negative goodwill (deferred asset or liabilities account)
3. Differences between the Discounted Cash Flow valuation approach and Tax theory valuation method.

The fundamentals of what strategies are required to deal with an upcoming Tax Audit are presented in a seminar format. Any points from the morning session that need to be repeated will be explained with additional examples.

1. Fund Manager (Item 3 PE) Taxation and Partnership PE which is included within Item 1 PE.
2. The tax court case where it was ruled that Tax can be levied when a Pass through nature exists without any common business nature.
3. Ripplewood Holdings Taxation (25%/5% rule) (No PE/A Foreign Corporation's Specified Transferrable Income is taxable)
4. Analysis of 2007 Tokyo High Court judgment on Gaidant Japan.
5. Income Taxation Issue concerning Cross border Bad Debt Loan Business