Japan's highly developed economy, robust legal system, and mature market make it an attractive destination for entrepreneurs looking to expand overseas operations. This article provides a detailed overview of company registration procedures and key financial considerations for foreign investors.
Advantages of Registering a Company in Japan
Establishing a Japanese company enhances corporate image, builds brand recognition, and facilitates market penetration. Japan's stable economic environment, advanced infrastructure, and strict legal framework provide solid foundations for business development. Companies enjoy naming flexibility and virtually unrestricted business scope. Registration can commence with capital as low as ¥1. Notably, operating a Japanese company qualifies entrepreneurs for the Business Manager Visa, enabling long-term residence.
Company Formation for Non-Residents
Japan's increasingly open policies have simplified company establishment for foreigners. Common scenarios include:
- Foreign residents in Japan : Establishing a corporation (Kabushiki Kaisha or Godo Kaisha)
- Overseas residents : Forming a Japanese legal entity
- Foreign corporations : Opening subsidiaries, branches, or representative offices
While branches require local representatives and translated documentation, representative offices are limited to non-commercial activities like market research and cannot conduct business operations.
Kabushiki Kaisha vs. Godo Kaisha: Key Differences
Both Kabushiki Kaisha (KK, stock company) and Godo Kaisha (GK, limited liability company) offer limited liability with unrestricted business scope. The primary distinction lies in governance: KKs permit separation of ownership and management, while GKs require owners to serve as managers.
KK Registration Process
- Preparation : Determine company name, registered address, business scope, shareholders, representatives, and capital
- Documentation : Prepare shareholder/director seals and signature certificates
- Capital verification : Notarize capital proof at a Japanese notary office and deposit funds
- Registration : Submit application to the Legal Affairs Bureau (approx. ¥240,000 in fees)
- Post-registration : File tax, social insurance, and foreign investment reports
Foreign shareholders and directors face no residency or nationality requirements. While minimum capital can be ¥1, ¥5 million is recommended to cover operational costs and visa requirements.
Required Documentation
- Director/shareholder signature and seal certificates
- Passport and ID copies
- Office lease agreement
- Bank statement showing capital deposit
- Articles of Incorporation (prepared by professionals)
Important Considerations
Non-residents face more complex procedures than local applicants. Japan prohibits purchasing shelf companies, requiring new incorporation (typically 1-2 months). Annual tax filings are mandatory, and company establishment doesn't guarantee visa approval.
Establishment Requirements
- Minimum one shareholder and one director
- At least one Japan-resident director (any nationality)
- No mandatory company secretary
- 100% foreign ownership permitted
- Registered Japanese office address (virtual offices acceptable)
- Minimum ¥1 capital requirement
Taxation Framework
Japanese companies face:
- Consumption tax : Applicable if capital exceeds ¥10 million or sales surpass ¥10 million
- Corporate tax : Progressive rates from 15% to 33.58%
- Income tax : For employees and visa holders
From October 2023, Amazon Japan requires sellers to display JCT registration numbers on invoices for tax deduction purposes.
Frequently Asked Questions
Can foreigners establish companies in Japan?
Yes, without restrictions.
Is hiring employees mandatory?
No.
What is a Kabushiki Kaisha?
A stock company with high social recognition, commonly used in Japan.
Can foreign companies open Japanese branches?
Yes, with identical name/scope as the parent company and no capital requirement.
Can registered companies import goods?
Yes, through specialized customs clearance services.