Expand Business in Japan

Global Upside helps businesses expand into Japan by providing talent acquisition, human resources, accounting, payroll, tax, incorporation, and professional employer organization (PEO)/employer of record (EOR) services. Our comprehensive offerings create an end-to-end solution that helps you establish your business and optimize your operations, all while maintaining compliance with Japanese laws and regulations.

The hiring and incorporation processes in Japan are often complex, time-consuming, and involve numerous legal and compliance challenges. Global Upside simplifies these processes and lifts the compliance burden from your business. Our teams have the experience and expertise required to help you establish a legal entity in Japan. We also offer PEO/EOR solutions to companies interested in hiring employees quickly, without setting up a legal entity in the country.

Capital City

Tokyo

Currency

Japanese Yen (JPY)

Language

Japanese

Government

Parliamentary Constitutional Monarchy

Country Overview

Japan is located in the Northern Hemisphere, west of the Pacific Ocean, and is a nation with diverse geography and cultural heritage. Japan is a commercial center with several high-tech and specialized hubs, such as the electronic and automotive industries. The electric bullet trains that connect the islands represent technological advancement and progress.

Legal Entity Setup

Options for setting up a legal entity in Japan include:

Registered Branch

A registered branch is the most commonly used setup by overseas corporations that are interested in expanding their business in Japan without forming a subsidiary. The company must appoint at least one delegate in Japan.

Kabushiki-Kaisha (KK)

A Kabushiki-Kaisha (KK) is a legal entity setup that closely resembles a C-corporation. The obligations of the stockholders in a KK are limited and it is a well-established arrangement irrespective of the presence of a board of directors.

Godo-Kaisha (GK)

A Godo-Kaisha (GK) is a legal entity setup that closely resembles an LLC. This form of setup allows for greater freedom in terms of management decisions and corporate legislation.

Human Resources

In Japan, it is the employer’s responsibility to ensure that a worker completely understands the working conditions outlined in a labor contract. Such labor contracts might be either verbal or written.

The statutory national holidays are as follows:

  • January 1 – New Year’s Day
  • January 11 – Coming of Age Day
  • February 11 – National Foundation Day
  • February 23 – Emperor’s Birthday
  • March 20 – Spring Equinox
  • April 29 – Shōwa Day
  • May 3 – Constitution Memorial Day
  • May 4 – Greenery Day
  • May 5 – Children’s Day
  • July 22 – Sea Day
  • July 23 – Sports Day
  • August 8 – Mountain Day
  • August 9 – Day off for Mountain Day
  • September 20 – Respect for the Aged Day
  • September 23 – Autumn Equinox
  • November 3 – Culture Day
  • November 23 – Labor Thanksgiving Day

Payroll

The payroll frequency is monthly.

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Accounting

Japanese Generally Accepted Accounting Principles (GAAP) apply in Japan. Organizations must prepare financial statements annually.

Tax & Compliance

Corporate Tax

The tax rate in Japan is 23.2%.

Value Added Tax (VAT)

The VAT rate is 10% for most goods and services. 

For certain items, the VAT rate is 8% and even 0% in certain circumstances (e.g., export transactions).

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Data Privacy

The Act of Protection of Personal Information (APPI) regulates the purposes for which an employer uses an employee’s personal information. It is pivotal that all practical steps to govern the security of employee personal data be taken care of by the corporation.

Anti-Bribery & Anti-Corruption Law

Bribery of public officials (komuin) is regulated under Articles 197 and 198 of the Japanese Criminal Code. Penalties (for individuals and legal entities) include imprisonment for up to 3 years, a monetary fine of JPY 2.5 million, and cancellation of business license. 

The Penal Code does not identify bribery of private sector officials as a crime, though the presence of the Companies Act does punish both parties involved. The penalty for individuals includes imprisonment for up to 5 years and a monetary fine of JPY 500,000. 

There is no penalty for business and legal entities.