Business in Japan

admin September 9, 2014 0

Japan is the World’s third largest economy with a GDP of $5.255 Trillion in 2011 as per IMT report, a population of 127 million people approximately. Japan also boasts of being the world’s 4th largest exporter and importer. The Japanese market has proved to be the worlds most profitable for many companies including designer brands like LouisVuitton, Prada and Christian Dior in many recent reports. The Japanese market accounts for two thirds share of the global profits of these companies. These designer brands companies have invested huge capital in the country and also opened up a large number of sprawling stores in Tokyo as well as other parts of Japan.

Business Opportunities that could be explored in Japan:

What would you need to start a business in Japan?

Good news is that, starting a business in Japan is neither very difficult, nor is it very expensive. The costs involved in running a business in Japan has reduced immensely due to the price deflation of the precious years resulting from domestic recession that had brought prices and salaries escalating down.

Japan is best known as a country that leads in scientific research, technology as well as biomedical research. It is the world’s 2nd largest automobile manufacturing country. The electronics goods industry of the country is the largest and Japan is one of the leading countries to file for innovative global patents according to statistics posted by the World Intellectual Property Organization. The manufacturing industries in Japan revolve around high tech precision goods such as robotics, hybrid cars and optical equipments.

The service sector industries like retailing, transportation, telecommunications, real estate, banking and insurance; accounts for more than half of the total economic output of Japan. The country enjoys high technological advancements in fields like consumer electronics, biochemistry, optical fibres, semiconductor manufacturing, optical media etc. These sectors therefore have more than average production annually.


As per an economic survey conducted by the OECD, Japan enjoys one of the lowest tax rates in the developed world, which after deductions leaves the major percentage of the population free from personal income taxes. VAT rates amount to only 5%, while corporate tax rates are high.

As per the Ease of Doing Business Index 2012, Japan ranks 20th amongst 183 countries. The Japanese market is large and very rich with a GDP per capita of about $42820 in 2010, and is a good place to explore business opportunities of various kinds. The market conditions present in Japan together with the existing tax structure in the country makes it a favorable place for domestic and foreign companies to invest and rub shoulders in the competitive arena.

What would you need to start a business in Japan?

What would you need to start a business in Japan?

There are a number of legal procedures that should be followed by a person wishing to start a business in Japan. The important things to be taken into consideration while setting up business in Japan is to look at the following:

•           Incorporation of the business

•           Visas and status of the resident wishing to start the business

•           A thorough idea of the existing tax structure in Japan, especially corporate taxes.

•           The laws pertaining to human resource management.

•           The existing system of Trademark and Design Protection in Japan.

To give complete information of the entire procedure and legal implications of the laws and procedures related to setting up of business in Japan is beyond the scope of this article. However, the procedure for the incorporation of the company is given here.


Below is a list of the procedures and costs involved along with approximate time taken for incorporating a new industrial or commercial firm of staff strength 50 and a startup capital of 10 times the per capita gross national income of the country.

1.         Make a Company Seal: Article 20 of the Commercial Registration Act makes it legally binding to make a company seal. Thus, for all newbie businessmen in Japan acquiring this seal is a must. This takes about 3days and costs either 10000 yen or 20000 yens depending on whether the seal is machine carved or hand carved, the hand carved seal obviously being more expensive.

2.         Certificate of seal registration: The company seal is to be now registered by the entrepreneur or the company representative in the ward office and a Certificate of Seal registration is obtained. This certificate must be submitted at the Legal Affairs Bureau at the Ministry of Justice. The time taken for this is1day and it costs more or less 400 yen for each certificate.

3.         Registration at the Legal Affairs Bureau at the Ministry of Justice: The entrepreneur now has to submit a duly filled out application form for the application of registration. This application form should be supported with proper documents including the Articles of Incorporation and the Certificate of Seal registration. The documents are received and approved and then the company applies for issuance of a Company Registration Certificate. This can be done on behalf of the company by a judicial scrivener or online too. This could take anywhere between 1 to weeks. The costs incurred for this is 0.7 % of the capital amount or 60000 yen, whichever is higher.

4.         Filing of the Certificate of Incorporation and opening a payroll office: Apply for approval of blue tax returns at District Tax                  Office. The Notification for Company Incorporation must be filed within 2 months of the date of incorporation of firm. The                    notification for opening of payroll office should be filed within a month of opening the payroll office. The application for                        approval of blue tax returns is to be filed either within 3 months of incorporation or one day prior to the end of the first fiscal              year, whichever is earlier.

5.         The notification of Commencement of business should then be filed at the Tax Office of the municipal or prefectural                                   government.

6.         The labor insurance notification and employment rules necessary are then filed at Labor Standards Inspector Office.

7.         The entrepreneur should then file the application for health Insurance and Public welfare Pension at Japan Pension Service.

8.         The last step is to file the company application for employment insurance at the Public Employment Security Office.

There is no charge involved and roughly takes about one day or less for each of the steps 4 to 8above. The entire process of registering a firm or a company takes roughly 40 working days.

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