[Taxation] Issuance of Explanatory Decree No. 09800237380

An explanation of Article 4 of the Estate and Gift Tax has been issued. The case where a donor has taken the following steps to transfer property that should have been subject to gift tax, such donor shall be taxed in accordance with paragraph 2, Article 4 of the Estate and Gift Tax based on the principle of substance over form： Where the donor has transferred land reserved for public use to his or her children, being land that such transfer of which shall be exempt from gift tax, and the children subsequently donate the land to the local government in exchange for transferable development right, the donor then arranges for the construction company owned by himself or herself to jointly build houses with his or her children utilizing the transferable development right and distributes the profits derived from the sale of the house to his or her children to fulfill the purpose of transferring taxable property. The arrangements made before 31 August 2009 will be taxed but not subject to penalty. The arrangements made after 1 September 2009 will be taxed and penalized.