Japan Types of Corporations

In general, it is possible to incorporate in Japan in any of the following ways:

 A company limited by shares (with the suffix K.K) - This form of incorporation is very popular among foreign investors. The business form is similar to that of corporations in the United States.

A limited liability company

A family company - A Japanese company is defined as a family company when 50% or more of the shares are managed by 3 shareholders or less.

AS regards the undistributed profits of a family company, tax rates are between 10% - 20%, depending on the annual income.

Partnerships - Partnerships may be of limited liability or unlimited. The partnership is defined as one separate unit for tax purposes, the profits of the partnership are charged to the partners according to their shares in the partnership.  

Registration of a Corporation in Japan 

When registering a corporation in Japan, the requirements of the reports to the National Tax Office and the local tax authorities should be kept in mind. The stages are as follows:

 Notice of incorporation - a report to the National Tax Office, including the relevant documents of incorporation ( the report must be made within two months of the date of incorporation).

Report on commencement of activity - a report to the local authorities (the report must be made within a month of the start of activities; in Tokyo, within 15 days).

Application for a blue form return - the application must be made within 3 months of the start of activities or the end of the tax year, whichever is the earlier.

It is important to point out that submission of a "blue form return" application confers special tax benefits on the applicant, as well as the right to offset tax losses for 5 years, and a special tax allowance. In order to obtain the necessary approval for the blue form, a number of conditions must be met, mainly keeping accounts according to the double entry system. li>Notification of the hire of employees - a report must be made within a month of the commencement of the activity, for purposes of reporting and payment of tax deductions from employees' salaries.