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Company Incorporation in Japan

Japan has the third largest economy in the world and it has one of the oldest operating economies. It is also the home of many internally renowned companies such as Toyota, Sony, Mitsubishi and Honda. Many companies that are successful in Japan are now among the top in the world. 

Japan is thriving with many opportunities for both local and foreign companies. Its technological and infrastructural development has earned Japan its place in the global market. Foreign businesses are also provided with incentives from the government for them to establish their business.

Japan is the eight largest seaport in the world. Some cities such as Tokyo and Yokohama are major trading hubs and international financial centres. Therefore the commercial shipping industry in Japan is also huge. There are also free trade zones in Japan, these free trade zones are Tokyo, Nagasaki and Niigata. Infrastructural and modernised facilities are offered to businesses. These reasons make Japan a favourable place for business owners and investors to incorporate their company in.

Here are some reasons why you should incorporate a business in Japan:

Gateway to the Asian Market

Japan provides a huge audience of 127 million people and it has a stable business market that is open to foreign trade and investments. It is also much easier to establish a presence in Japan than it is in some other countries such as China. Industries that are highly competitive globally include healthcare, environment, IT and automotives. With Japan already having such a strong economic presence, it will be much easier for businesses to rise to the top of these industries if they were to set up a business in Japan. This could lead to an easy expansion into the Asian business market.

Highly skilled workforce

With Japan having over 600 universities, it is no surprise that its working-age population with advanced education is 79.9%. According to the Organisation for Economic Co-operation and Development (OECD), Japan is ranked the country with the second highest percentage of adult education a5 50.5%. 

Attractive incentives for foreign businesses

Many measures are being taken to attract foreign investors and foreign businesses to set up their company in Japan. Here are some steps taken:

  • Five Promises for Attracting Foreign Businesses to Japan
    • Remove language barriers at local retailers and restaurants
    • Installation of free public Wi-Fi around cities
    • Regional airports receive business jets with short advance notices
    • Enrich the educational environment for children from overseas
    • Strengthen consultation services for foreign businesses
  • Foreign Direct Investment (FDI) Attraction Methods
    • Simplifying regulations for foreign companies
    • Improving the living environment for foreigners
    • Reduce the period of residence required for Highly Skilled Professionals to apply for permanent residency

Ease of setting up a company

It is possible to set up a company in Japan in 14 days or less. Distribution of goods and services are also extremely easy due to Japan’s modernised and highly developed infrastructure of roads, railways, airports, harbours and warehouses. With over 20 ports and 5 international airports, Japan’s importing and exp[orting processes are usually extremely efficient and well organised.

Tax rates

Income

Tax Rate

Tax rate small and medium-sized enterprises

(up to 4million yen)

25.84%

Tax rate small and medium-sized enterprises

(up to 4million yen to 8million yen)

27.55%

Tax rate small and medium-sized enterprises

(over 8million yen)

33.58%

Enterprises other than small and medium-sized enterprises

29.74%

 

Despite Japan having a stable domestic market, there is still a demand for foreign products and services. With the rise of the Internet and the lack of physical geographical boundaries means that Japanese customers are more accessible.

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