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.
Set in the northwest Pacific Ocean, Japan is an island nation in East Asia with a population of 126.2 million. Japan is culturally rich and famous for its animation, art and craft, cuisine, music, and many other industries. Major export industries here include consumer electronics, automobiles, computers, metals like iron, steel, copper, and semiconductors.
- Japan ranks as the 3rd largest economy in the world by nominal GDP
- Japan ranks as the 2nd largest economy in Asia
- Japan has a low rate of unemployment (approximately 3%)
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.
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.
A godo-kaisha (GK) that closely resembles an LLC. This form of setup permits extra flexibility concerning management choices and corporate laws. Since there are fewer formal corporate laws that must be maintained, the requirement set-up costs are usually lower.
It takes a minimum of 4 weeks to set up a legal establishment in Japan.
The three most impactful labor laws in Japan are:
- Trade Union Law (TUL)
- Labor Relations Adjustment Law (LRAL)
- Labor Standards Law (LSL)
Workers who are covered by the Japanese Employment Act can be divided into the below-mentioned categories:
- Regular or non-fixed term employees
- Fixed-term employees (employment term 3 years or less)
- Part-time employees (working hours are less than those of regular staff)
- Temporary employees (governed under the Temporary Staffing Services Law and are employed by the temporary staffing firms)
With reference to the labor law of Japan, the following information needs to be included in all employment contracts:
- Duration of the employment agreement
- Job description and location
- Working hours, breaks, and overtime and shift changes
- Salary calculation and bonus
- Termination and notice period
Accounting Standards in Japan are established by the Accounting Standards Board of Japan (ASBJ) and are designated as Japanese GAAP by the Financial Services Agency of Japan.
The tax rate in Japan is 23.2%. This rate is applicable to companies with business share capital that exceeds JPY 100 million.
Value Added Tax (VAT)
The VAT rate, also known as Consumption Tax in Japan, is 10%. A reduced rate of 8% is applied to food, drinks, and tabloid subscriptions.
The Act of Protection of Personal Information (APPI) regulates the purposes for which an employer uses personal information of the employee. 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
There are two significant anti-bribery laws in Japan:
- Act No. 47 of 1993 of the Unfair Competition Prevention Act (UCPA)
- Act No. 45 of 1907 of the Japanese Penal Code
Corruption and bribery of Japanese public officers are governed by the Penal Code.
1. Bribery of Public Officials:
- For Individuals:
- i) Imprisonment for up to 3 years
- ii) A fine of JPY 2.5 million
- i) Cancellation of business license
- ii) Monetary fine
The Penal Code does not identify bribery of private sector officials as a crime, though the presence of the Companies Act does punish both of the parties involved.
2. Bribery of Private Officials
- For Individuals:
- i) Imprisonment of up to 5 years
- ii) A fine of JPY 500,000