JAPAN Law and Practice Contributed by: Eriko Ozawa, Satoru Hasumoto, Takahiro Sato and Fuyuki Uchitsu, Mori Hamada & Matsumoto
2.9 Condemnation, Expropriation or Compulsory Purchase The Land Expropriation Law provides the require - ments and procedure for the expropriation of privately owned real estate by governmental bodies. Owners of expropriated assets are gen - erally entitled to reasonable compensation. The two major elements of the whole process are a confirmation that the project necessitating the expropriation serves the public interest, and the determination of the amount of compensation. 2.10 Taxes Applicable to a Transaction Asset Deal The outright transfer of real property (asset deal) is subject to real estate acquisition tax ( fudosan shutoku zei ), registration and licence tax ( toroku menkyo zei ), consumption tax ( shohi-zei ) and stamp duty. Depending on the type of real property and the timing of the transactions, and subject to some exceptions, the tax rates are as follows: • registration and licence tax – 1.5% to 2% of the Taxable Base of the property, which is the property value recorded in the tax rolls for purposes of fixed assets tax; • real estate acquisition tax – 3% to 4% of the Taxable Base; • consumption tax – 10% of the purchase price of the building; and • stamp duty – up to JPY600,000 (or up to JPY480,000 under the current special tax treatment). Corporation tax is also imposed on net income if the seller is a corporation. Share Deal In a share deal, corporate sellers are subject to corporation tax but not consumption tax, real estate acquisition tax or registration and licence
• the laws regarding regulations and public policy are the City Planning Law, the Con - struction Standards Law, the Soil Contamina - tion Countermeasures Law, the Real Estate Transaction Business Law, and local govern - ment ordinances; • the laws related to trusts and TBI transactions are the Trust Law, the Trust Business Law, and the Financial Instruments and Exchange Law; and • the Foreign Exchange and Foreign Trade Law relates to foreign investments. 2.7 Soil Pollution or Environmental Contamination The buyer may be responsible for soil pollution or the environmental contamination of a prop - erty. If the soil contamination is likely to harm human health, the land will be designated as an area requiring action ( yo sochi kuiki ) under the Soil Contamination Countermeasures Law, and the landowner is required to take the nec - essary measures to remedy the contamination; such measures depend on the class of hazard - ous substances found on the land, and on the state and degree of contamination. In practice, the removal of contaminated soil is the prevailing remedial method. 2.8 Permitted Uses of Real Estate Under Zoning or Planning Law The City Planning Law is the main source of zon - ing regulations. An “explanation sheet of impor - tant matters” prepared by a broker or the seller would address the zoning restrictions applicable to the subject property under the City Planning Law. A buyer may also consult with relevant governmental bodies to ascertain the applicable local or specific zoning or planning regulations.
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