Business Set up in Japan

Transcription

1 Business Set up in Japan 12 March 2013 Jimmy Ng Special Investment Advisor Types of Operations in Japan

2 1. Representative office 2. Branch Office 3. Limited liability partnership (LLP) 4. Subsidiary Company KabushikiKaisha (jointstock corporation) GodoKaisha (limited it liability company (LLC)) [Types of Operations] Rep Office Branch LLP KK Legal Status Foreign Entity Corporation Corporation Registration Required Required Required Business Activity Allowed Allowed Allowed Share Capital 2 yen or more 1 yen or more Credibility Bank Account Individual Bank Account < < < Corporate Account Corporate Account Corporate Account Law suits Could reach HQ Could reach HQ Do not reach HQ in principle Do not reach HQ in principle Representative Director Branch Representative Not legally stipulated At least 1 Time required for 1d day Approx. 1 month Approx. 2 3 months Approx. 1 3 months establishment Registration Cost 400, , 000 JPY 400, , 000 JPY 600, , 000 JPY Legal Registration Fees 90, JPY Min 60, 000 JPY Min 150, 000 JPY Income subject to corporate tax Domestic source income Global income Accounting Aggregation with income in Completed by accounting of Japanese partnership home country required Taxation of repatriated funds No taxation of repatriated funds after payment of corporate tax Taxation at source of dividends, interest and royalties

3 Rep Office Branch Subsidiary (KK) LLP Not a legal entity Not subject to Japanese income taxes and no filing of income tax returns Loss can be off set from the HQ s income. Provide advice Common expenses on market entry accrued in HQ can be allocated to a branch office as long as the charges are at arm s length. Remittance of profit to HQ is not subject to Japanese withholding income tax. Easier to open bank accounts / rent offices When parent company files tax returns in home country, no profit/loss from KK will be added to the parent company s turnover No foreign tax credit will be applied to the parent company. All liabilities are contained within the KK, and the parent company is not affected. Not necessary to have board meetings Responsibility of membership is limited Profit can be distributed according to voluntarily determined rate Net loss can be deducted from individual members taxable income NOT allowed to engage in any commercial transactions Activities are restricted to storing; purchasing goods; collecting and supplying information for HQ; advertising; market research. Internal charges (internal interest or royalties) are not allowed to be levied to the branch Not as good as a KK in terms of recruitment and consumer image More difficult to open bank accounts and to rent offices When HQ file tax returns in home country, a profit /loss from branch will be added to the HQ s turnover. A subsidiary s loss cannot be off set from the parent company s income. Remittance of profit is treated as dividend, and is subject to Japanese withholding income tax. Directors bonuses are not deductible expenses under Japanese corporate tax law. Cannot be a publicity traded entity Not allowed to be converted to KK All membership must participate in the business Not easy to obtain bank financing Starting Business operation in Japan

4 [Initial Cost Estimation (in Tokyo)] Shortterm housing and temporary office (3month rent, temporary office & housing) KK Branch 5,380 16,130 (6,670 ~ 20,000) Obtaining visas 2,420 (3,000) 1,885 (2,340) Company establishment and tax notices 62,265 (77,200) Hiring local personnel (one local manager with 10 million Yen annual compensation) (include 5 million Yen, S$66, Paid in Capital) 5,910 (7,330) 32,250 (40,000) (30% commission fees to the recruitment agent) Setting up a permanent office 38,000 (47,125) Setting up permanent housing (for foreign national) TOTAL 151, ,835 (187,340 ~ 200,675) 10,760 (13,345) 94, ,950 (116,810 ~ 130,140) All figures shown in $US; $US1.00=JPY93 (S$1.00 = JPY75)

5 [Comparison in other business regions] As of August 2010 JETRO: Your gateway to Japan

6 [Introduction] JETRO, or the Japan External Trade Organization, is a governmentrelated organization that works to promote mutual trade and investment between Japan and the rest of the world. Originally established in 1958 to promote Japanese exports abroad, JETRO's core focus in the 21st century has shifted toward promoting foreign direct investment t into Japan and helping small to medium size Japanese firms maximize their global export potential. The JETRO representative office in Singapore today actively encourages foreign companies to invest and do business in Japan while supporting the efforts of Japanese small and mediumsized enterprises (SMEs) in the region. [JETRO Global Network] Overseas Offices: 73 (55 countries) Domestic Offices: 36 With more than 70 overseas offices in over 50 countries, JETRO provides companies around the world with a direct link to business in Japan. And the 36 JETRO offices (HQ in Tokyo & Osaka) located throughout Japan make it easy for foreign firms to get timely and accurate information about specific regions, markets and prefectural incentive programs.

7 [How does JETRO help] Invest Japan Business Support Center(IBSC) [How does JETRO help] Invest Japan Business Support Center(IBSC) Consulting Services Market advice Laws and regulations National and local government incentives Cost simulation Incorporation procedures Employment and labor issues Examples of consultation Market and industry information Information on relevant legal l systems Cost estimates Taxation, labor and legal issues Obtaining residence status and visas Information on incentives from national and local governments e Establishing an office Finding human resources Finding an office location Support for Participation in Japan Trade Fairs Networking with potential business partners

8 Invest Japan Business Support Center(IBSC) Facilities Free temporary office spaces Wellstocked library Multipurpose hall & conference rooms Temporary office space offered free of charge Tenancy Eligibility: Foreign company considering to start a business in Japan Tenancy period: Up to 50 business days in principle (The period can be extended as required, but a tenancy fee will be charged.) Tenancy fee: Free (Deposit and communication fee are required.) Equipment: Desks,chairs,telephones,fax machines and broadband connections Common facilities: Conference rooms, multipurpose hall, business library

9 [Window to Japan Local Authorities & Government s Incentive Schemes ] Incentives for Promoting Asian Site Location Asia Business Location Bill The Japanese government will take support measures for certified global companies, including tax breaks and patent fee exemption, in order to motivate global companies to locate their R&D facilities or regional headquarters in Japan. The Competent Authorities Ministry of Economy, Trade and Industry Subsidy Program for Projects Promoting Asian Site Location in Japan Establishment of R&D facilities OR Regional Headquarters in Japan by Global Companies Eligible Costs: Survey design costs, Facility costs, Equipment costs, Facility rental fee Subsidy Rates/Maximum Amount: The Competent Authorities Ministry of Economy, Trade and Industry up to 1/2 for SMEs up to 1/3 for nonsmes up to 2/3 for disaster afflicted areas Incentives regarding Special Zones Comprehensive Special Zones The Competent Authorities Special regulatory measures, tax reduction, etc. are available for companies with business plans in designated 7 zones. *Hokkaido, Ibaraki, Tokyo, Kanagawa, Aichi/Gifu, Kyoto/Osaka/Hyogo, Fukuoka has been selected Special Zones for Reconstruction Special regulatory measures, tax reduction, etc. are available for companies with business plans in disaster afflicted areas. *Disater afflicted areas are stipulated in the Act on Special Provisions of Article 3 of the Public Finance Act Regional Revitalization Bureau, Cabinet Secretariat The Competent Authorities Ministry of Economy, Trade and Industry Immigration Treatment Incentive Pointsbased preferential immigration treatment for highly skilled foreign professionals Under the pointsbased system, foreign professionals who earn 70 points or more will be recognized as "highly skilled foreign professionals" and will be given preferential immigration treatment. The Competent Authorities Immigration Bureau, Ministry of Justice Other Government Subsidies The Innovation Center Establishment Assistance Program Subsidy for Industry Reconstruction in Ibaraki, Tochigi and Miyagi The Innovation Center Establishment Assistance Program Projects Promoting Domestic Location of Innovative, Lowcarbon TechnologyIntensive Industries Subsidy Program for Domestic Site Location Subsidy for Industry Reconstruction in Fukushima Prefectural and Municipal Incentives

10 [Recent Success Story from Singapore Supported by JETRO] n JETRO s support: Factory search Information o o provision o on setting up Introduced to subsidy for the establishment of new business facilities in the prefecture Introduced staffing agencies April 28, 2011 Selected as one of the companies eligible for the Japanese Fiscal Year 2010 Subsidy Program for Projects Promoting Asian Site Location in Japan More than 350 Singaporean companies utilized JETRO s support & services. We can help you start a business in Japan CONTACT US!! Tel: , spr@jetro.go.jp