With an aim to attract foreign direct investment to the country, the Japanese government has introduced various business-friendly policies, developed infrastructures, and more. In this article, we explore the top reasons to register company in Japan. The aim of this article is to show you the merits of setting up your business in Japan.
Table of Contents
Why should I start a company in Japan?
1. Strategic location and connectivity:
Strategically located in East Asia and Northwest of the Pacific Ocean, Japan is an ideal jurisdiction to start your business in. One of the reasons for this is that it acts as a gateway to the Asian market.
With various seaports and airports, the Japanese government has developed a sound transportation network connecting the country to different jurisdictions worldwide. This allows for smooth facilitation in trading and logistics. In fact, Japan ranks within the top 50 ports worldwide in 2020, according to Lloyd’s List.
2. Infrastructure and workforce:
The Japanese government has established and maintains a well-developed infrastructure with the availability of various utilities, strong telecommunication networks, efficient transportation systems, and more.
Moreover, the government continues to upgrade and add better infrastructure to meet the needs of the businesses and attract foreign direct investment to the region and thus, stimulate the economy.
According to the Global Competitiveness Index of 2019, Japan has a ranking of 5th out of 141 countries in terms of infrastructure.
Japan has a strong and growing labour force in Japan. With over 600 universities available around Japan, the labour force is well-educated. Businesses can, thus, take advantage of the same.
Besides the above, the culture in Japan is such that the workers and employees have a strong work ethic and are extremely dedicated. This is also advantageous for businesses.
Japan has a ranking of 19th out of 141 countries in terms of skills of the current labour force, according to the Global Competitiveness Index of 2019.
3. Tax benefits and incentives:
The Japanese government provides businesses with various tax benefits and exemptions in order to attract foreign direct investment to the country.
The government provides businesses with tax incentives on Research and Development by providing tax credits and more under the 2019 Tax Reform.
The government has established a network of tax treaties with over 140 jurisdictions. This is advantageous to businesses as they are not subjected to double taxation.
4. Simple incorporation process:
The incorporation process is simple and straightforward once you know and understand the steps. Please refer to the next section for a step-by-step guide.
Additionally, you will need to meet fewer requirements prior to registration as there is no minimum paid-up share capital required
In fact, Japan has a ranking of 29th out of 189 countries in terms of ease of doing business as per the Doing Business Report of 2020 published by the World Bank.
The business setup process can be completed within a period of two weeks.
5. Government policy:
The Japanese government has introduced various policies that are beneficial to businesses in order to attract foreign investment.
The government has passed various laws to protect the Intellectual Property Rights of businesses which leads to a fair business environment. In fact, the government has signed Intellectual Property related treaties with different jurisdictions including the Paris Convention for the Protection of Industrial Property.
6. Stable political and economic environment:
The stability of the political and economic environment in Japan can be seen through its score on various indexes and rankings, which include the following:
Japan has a ranking of 19th out of 180 countries as per the Transparency International’s Corruption Perception Index of 2020.
Japan is ranked 67th out of 180 countries in terms of freedom of the press, according to the World Press Freedom Index of 2021 by the Reporters Without Borders.
Japan has a ranking of 20th out of 82 countries as per the Business Environment Rankings of 2020-2024 by the Economist Intelligence Unit.
As per the Global Competitiveness Index of 2019, Japan has a rank of 6th out of 141 countries.
Japan has a stable political and economic environment that welcomes and promotes the development of businesses.
Moreover, it also ensures that there is lower risk for the businesses whose assets remain secured.
7. Technological investment:
Japan has a strong technology-based industry that provides different and innovative products and services to businesses that can take advantage of the same.
What are the steps I need to take to register my company in Japan?
In order to register your business in Japan, you must follow these steps:
Step 1: Choosing an optimum business structure:
- There are multiple options for legal entities in Japan. Each of these business structures has different requirements that you will need to meet.
- For this reason, you will need to decide on a suitable legal entity for your business based on your business activities, requirements, long-term business goals, and more.
Step 2: Meet all the pre-registration requirements:
- You must check for the availability of your preferred business name and reserve it with the Registry Office.
- You must prepare certain documents needed for the incorporation of your business including a Power of Attorney document, Article of Incorporation, personal information of the directors and shareholders, and more.
Step 3: Register your business:
- You will then be required to register your business with the Japanese Legal Affairs Bureau.
- Once approval is granted, you will obtain the Registry Certificate, Memorandum and Articles of Association, and more.
Step 4: Register your business for tax:
- Once your business is set up, you will need to register your business for tax with the National Tax Authority to obtain the tax identification number.
Step 5: Meet all the post-registration requirements:
- You must obtain relevant business licenses with the relevant authority.
- In order to travel to and work in Japan, you need to obtain suitable visas from the authorities.
- You may be required to file for labour insurance, health insurance, employment insurance, and more.
Step 6: Open a corporate bank account:
- You will need to open a corporate bank account for your business with a reputable bank to receive a banking token and an access code.
Step 7: Staying compliant with the government policies:
- Post-registration, you will need to ensure the compliance of your business with the government policies by preparing financial statements and filing tax returns promptly.
