Country Profile

Official name: Japan (Local formal name: Nihon Koku)
Capital city:  Tokyo
Population:  126.8 million inhabitants (in 2017)
Official language: The official Japanese-language name is Nippon-koku or Nihon-koku

Religion: Religion in Japan. Shinto and Buddhism are Japan’s two major religions.

Climate:  Varies from subtropical to temperate.

Time Zone: 9 hours ahead of UTC (UTC+09:00)

Telephone:  +81

Currency: The Yen (JPY) is the official currency in Japan

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Why Start a Business in Japan?

If you are starting your next business in Japan there will be a lot of struggles and because of this it is really important for you to be hyper-specific and clear about who your product is for.

 

The report from “World Economic Forum” reveals that in terms of global competitiveness, Japan is ranked 6th in the world. It is the 2nd highest ranked among Asian countries.

 

Speaking of the sectors in Japan, corporate sector has continued to push the technology envelope in fields such as robotics, medical devices, clean energy, satellite communications and spacecraft, water processing and other high tech industries.

Types of Companies

There’s four types of corporation in Japan. Weigh the advantages and disadvantages by looking through the comparison table.
Corporation Types Kabushiki-Kais ha (K.K.) Limited Liability Company (Godo-Keisha) Limited Partnership Company (Goshi-Keisha) General Partnership Company (Gomei-Kaisha)
Why people choose Most chosen, so more people choose Chosen for reason of its easiness and inexpensiveness Rarely chosen for reason of investors have unlimited liability
Minimum capital 1 yen or more 1 yen or more No regulations No regulations
Number of investor 1 or more 1 or more 2 or more 2 or more
Liability of investor Limited to amount of investment money Unlimited Limited and unlimited member for investing participants

Besides, you don’t have to live in Japan to open your business in Japan. There are three ways to do it.
Representative office

The establishment of representative offices doesn’t require registration, but they cannot open bank accounts by the name.

Branch office

Having branch in Japan requires registration.

Subsidiary company

The procedures and conditions of establishing a subsidiary company is as same as establishing a Japanese company.

If you can find a Japanese company to establish Joint Venture, that could also be an alternative.

Taxation in JAPAN

Taxation

Taxation in Japan is based primarily upon a national income tax and a residential tax based upon one’s area of residence. There are and excise taxes at the national level, an and a vehicle tax at the prefectural level and a property tax at the municipal level.

There are;

  • Japan Inhabitant Tax (In addition to the rates of income tax for individuals and corporations, an “inhabitant tax” significantly increases the rate of effective tax that applies to the income of the business.
  • Personal Income Tax (It is exempt from consumption tax).
  • Enterprise Tax (Imposed on the enterprises that are managed in Japan).
  • Excise Taxes
  • Surtaxes (The surtax is assessed on an individual’s national income tax).
  • Local Income Tax (Generally, in Japan, the local inhabitant’s tax is imposed at a flat rate of 10%. Japanese local governments (prefectural and municipal governments) levy local inhabitant’s tax on a taxpayer’s prior year income).
  • Non-residents (A non-resident taxpayer’s Japan-source compensation (employment income) is subject to a flat 20.42% national income tax on gross compensation with no deductions available).
  • Consupmtion Tax (Similar to VAT. Imposed on most sales and services provided in Japan and on imports. Consumption tax is 8%).
VAT Registration

VAT rate is 8% in Japan.

 

VAT is the consumption tax throughout Japan, levied on almost everything sold in the country.

 

In practice, Japan VAT has a bit more complexity. You don’t necessarily need to add tax to every sale. It can depend on the amount of sales you make in the country.

Employment of foreigners

Skilled workers who wants to come to Japan will be eligible for a new type of visa that can be renewed indefinitely. And thus confers permanent residency.

The new framework will be created for workers with “skills requiring a certain degree of knowledge or experience.”

 

Workers who pass skills and language tests, as well as technical interns who remain in training for at least three years, will be eligible for the first level of the new status. This will let them stay in the country for five years, though they cannot be accompanied by family members.

 

Those who exhibit greater proficiency by passing more advanced exams can qualify for the second level, letting them bring spouses and children. The ministry envisions this status initially lasting five years, with no limit on the number of extensions.