For Japanese residents, Japanese corporations, non-residents with a permanent establishment in Japan and foreign corporations then, while Japanese withholding tax does not apply, any gain on the sale of an interest in a TK Contract is treated as giving rise to capital gain for Japanese tax purposes.
Assuming that the sale of the TK Investors position is treated as the sale of a rights arising to the TK Investor under the TK Contract (as would normally be the case, with the contrasting position being that the transfer was treated as the sale of a share of the underlying assets making up the TK Business) then for an individual Japan resident the gain (proceeds less acquisition cost) is treated as a capital gain that is included in comprehensive income subject to taxation at marginal Japanese tax rates. For a Japanese corporation the gain is subject to corporation tax.
For foreign corporations or non Japanese residents without a permanent establishment in Japan then capital gain on sale of the interest in the TK Contract is, somewhat suprisingly, not treated as giving rise to Japan source income and hence neither Japanese income tax (through withholding or reporting) nor Japanese corporation tax apply in these circumstances.
Gains on surrender (kaiyaku/解約) of interests in TK Contracts
There are no formal regulations addressing gain in the surrender or cancellation of interests in TK Contracts. For individuals gains arising are generally assumed to be taxable as miscellaneous income and for corporations subject to corporation tax.