JAPAN Law and Practice Contributed by: Hiroaki Takahashi, Kaoru Sato, Kenji Miyagawa and Koji Kawamura, Anderson Mori & Tomotsune
A transferee of a true sale that has not been perfected is not entitled to claim that it is the holder of the claim or receivable against the obligor if the perfection requirements against the obligor are not met and/or against third per - sons if the perfection requirements against third persons are not met. In other words, the obligor may refuse to make payment of the claim on the ground that the transferee has not perfected against the obligor; if the same claim or receiv - able is purchased from the transferor by a third person, that person could be found to be the true holder of the claim or receivable. 6.4 Construction of Bankruptcy-Remote Transactions The most standard means of constructing a bankruptcy-remote transaction is to use SPCs or trusts, as stated previously; practically, there are no other means for a bankruptcy-remote transaction in a material sense. 6.5 Bankruptcy-Remote SPE See 6.1 Insolvency Laws (Bankruptcy-remote - ness of an SPC). In securitisation transactions involving real estate, transfers from originators to SPEs are subject to real estate acquisition tax (which is levied on the transferee) and real estate registra - tion tax (which is levied on the applicants of the registration upon registration of title transfers). Where a TMK is the transferee, and if certain conditions are met, the rate of real estate regis - tration tax for the transfer of ownership will be discounted to 1.3% (from 2%) and the tax base of the real estate acquisition tax will be reduced 7. Tax Laws and Issues 7.1 Transfer Taxes
to 40% of the purchase price of the relevant real estate. In view of such tax benefits, SPEs are frequently established in the form of TMKs in real estate securitisation transactions. 7.2 Taxes on Profit The net profits of SPEs are generally subject to corporate tax. Accordingly, the net profits of GKs and KKs that are used as SPEs will be subject to corporate tax unless they are extracted by TK investors through the so-called GK-TK structure, under which profits distributed to TK investors are deemed expenses that are deductible from a GK’s taxable income. Similarly, “pay-through” TMKs are also entitled to certain tax exemptions. Specifically, TMK profits and the like that are distributed to pre - ferred shareholders will be deemed expenses for tax purposes and are deductible from a TMK’s taxable income if certain requirements under the Act on Special Measures Concerning Taxation (ASMCA) are met. Under a trust structure, the trust itself is merely a “conduit” and is therefore not subject to cor - porate tax. Beneficiaries of the trust, however, would be deemed to hold the underlying trust assets for tax purposes, except where the trust does not constitute an exceptional trust under any of the following categories:
• a group investment trust; • a retirement pension trust; • a specified charitable trust; or • a corporation taxable trust. 7.3 Withholding Taxes
If the transferor is a domestic corporation, capital gain on the transfer of loan receivables is subject
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