Company incorporation in Japan

Japan is a leading economy in Asia, with advanced infrastructure, a highly educated workforce, and strong international trade relations. It offers foreign businesses numerous opportunities, especially in technology, manufacturing, and services.

Most Common Business Forms for Foreign Companies

The most common business structure for foreign companies in Japan is the Kabushiki Kaisha (KK), which is similar to a joint-stock corporation or a private limited company in other countries.

• Offers limited liability protection to shareholders, meaning personal assets are protected from business debts.
• Requires a minimum capital of ¥1, but in practice, companies usually start with a higher amount to cover operational costs.
• Requires at least one director and one shareholder. Directors can be foreign nationals, but at least one must be a resident of Japan.

An alternative option is the Godo Kaisha (GK), which is similar to a limited liability company (LLC). It is a simpler and more flexible structure, suitable for smaller businesses.

Setting Up a Company in Japan

Incorporating a Kabushiki Kaisha (KK) in Japan involves several steps:

1. Choosing a company name and ensuring it complies with Japanese naming regulations.
2. Preparing the Articles of Incorporation, which must be notarized by a public notary in Japan.
3. Opening a Japanese bank account and depositing the initial capital.
4. Registering the company with the Legal Affairs Bureau (Houmukyoku). This involves submitting the Articles of Incorporation, the proof of capital deposit, and a variety of other documents.
5. Obtaining a company seal (hanko), which is required for official documents and contracts in Japan.

Foreign nationals can act as directors, but it is necessary to have a Japanese representative director who is a resident of Japan. This person must handle legal matters on behalf of the company.

Taxation and Withholding Taxes

Corporations in Japan are subject to national and local taxes. The corporate tax rate is typically 23.2% for most companies, with additional local taxes adding around 10%.

Regarding dividends:

• Dividends paid to foreign shareholders are subject to a 20% withholding tax, which may be reduced under tax treaties.
• Japan has an extensive network of double taxation treaties that can help reduce the withholding tax burden for foreign investors.

Service Providers for Company Incorporation

• Japan Company Incorporation
• Japan Incorporation
• Procopio
• Hall Tax
• NRI (Nomura Research Institute)

These service providers offer assistance with company registration, tax compliance, legal advice, and other critical steps to ensure a smooth incorporation process in Japan.