Japan considering reduction of corporate tax on foreign companies

Nikkei Newspaper reported, on October 21, 2010, that the Japanese government is considering a tax reduction for foreign companies. The overall tax break will be 5% reduction, but on specific sectors like high-tech and medical companies with foreign capital may receive favors of 10%-15% reduction, to attract investment from overseas.

The idea is under consideration, and I am personally pessimistic about the possibility.

Anyway, I will post another article when it is realized in the coming year.

Recruitment Business in Japan

I received several inquiries on recruitment business since the start of this year.

In Japan, you have to have the license to start a recruitment business. The license can be obtained by a company or by an individual. There are two types (these can be subdivided into four) of licenses on human resources business as below.

1) Employment placement service (job-search, headhunting)
 a) Fee-charging employment placement
 b) Free employment placement

2) Worker dispatching service (temporary staffing)
 a) General worker dispatching (Ippan Haken)
 b) Specified worker dispatching (Tokutei Haken)

The main requirements to start the fee-charging employment placement business are as follows:

- Amount of net assets

An applicant is required to have net assets of JPY 5 million x number of offices or above.

- Amount of cash or bank deposits

An applicant has to have JPY1.5 million + (JPY600,000 x (number of office -1)) or above by cash or bank deposits.

- Appointment of employment placement manager

- Office space
The office space for employment placement business should be more than 20m². But if the business is only done in the Internet and there is no need to have an interview/meeting with the potential employee, the size of office is not important.

The main requirements to start the general worker dispatching undertaking are as follows:

- Amount of net assets

An applicant's net assets must be JPY20 million x number of office or above, and such net assets should be more than one-seventh of total debt.

- Amount of cash or bank deposits

An applicant's cash or bank deposits must be JPY15 million x number of office or above.

- Appointment of responsible person acting for dispatching undertaking

- Office space

The office space for general worker dispatching undertaking should be more than 20m².

Regarding 1) b) free employment placement, I skip the explanation because commercial companies are not interested in this business (usually done by non-profit organization such as school or university).

Specified worker dispatching in the above 2) b) is worker dispatching undertaking in which the dispatched workers (limited to those who become the objects of worker dispatching carried out in the course of trade) are composed solely of regularly employed workers. There is no assets requirement for specified worker dispatching.

There are other requirements and some of them vary according to the situation of each case. Please contact us for details.

=====
Updated on Oct. 20, 2016.
Tokutei Haken license was abolished. You will no longer be able to obtain it. But currently, there is a special measure for small companies so that they can start the temporary staffing business from a small capital.

SHAKAIHOKEN-ROUMUSHI (Certified Social Insurance and Labour Consultant)

SHAKAIHOKEN-ROUMUSHI handles the consulting and paperwork on pension, labor and social insurance.

If they pass a certain examination, they can mediate a dispute between labor and management.

The typical issues one may need their assistance will be:

- notification to relevant authorities when a company hire/fire employees
- preparation of employment regulations
- seeking for government subsidies regarding hiring/keeping employees
- payroll calculation

If you look for SHAKAIHOKEN-ROUMUSHI, I encourage you to take note of:

- The experts on pension are rare. If you would like to have a consultancy service on pension, you should look for pension experts among SHAKAIHOKEN-ROUMUSHI's.
- If you are a owner of a business and ask only payroll calculation, it is all right to select SHAKAIHOKEN-ROUMUSHI only by their fees. But their true existential value is on the skill of solving labor-management dispute. This skill owes much on experience. I recommend you to hire good SHAKAIHOKEN-ROUMUSHI even if his fee is a little bit expensive.

GYOSEI-SHOSHI (Administrative Scrivener, Immigration Lawyer)

Practice areas of GYOSEI-SHOSHI focus on the business licenses and Japanese visa. For example, they will help you:

- to obtain the certificate of parking space (when you own a car in Japan, you need to have this certificate to prove that you have the parking space for the car.)
- to open a restaurant or game hall
- to start industrial-waste disposal business, scrapper, construction business or estate agency
- to obtain Japanese visas or Japanese nationality
- to draft a contract

There are a lot more business licenses they can handle.

There are so many business licenses they can handle but they are not always experts for every area. If you ask a GYOSEI-SHOSHI lawyer to get a governmental license/approval, confirm he/she is an expert for the specific business area.

SHIHO-SHOSHI (Judicial Scrivener, Solicitor)

SHIHOSHOSHI will represent you on the registration at the Legal Affairs Bureau (Houmu Kyoku) such as real estate registration, incorporation, change of company structure, renewal of directors. Their work includes the preparation of documents for court trials, and if the amount is below JPY1.4 million, they can represent you on litigation and contract negotiation.

If you are planning to set up a company or register a branch in Japan, a Shiho-Shoshi lawyer who can communicate in English (or your language) will be helpful and informative on the procedures.

Japan Federation of Shiho-Shoshi Lawyer's Associations

ZEIRISHI (Certified Public Tax Accountant)

ZEIRISHI provides accounting services for individuals, companies and other legal entities. Usually, their services include representation in tax filing, preparation of tax documents, tax advice, bookkeeping, and so on.

If you are looking for someone who assists your tax filing, ZEIRISHI is the appropriate professional.

From its origin, ZEIRISHI can be divided into four kinds.

1) People who passed the Certified Public Tax Accountant examination
2) OB/OG of tax office
3) Masters who finished the postgraduate courses on accounting subjects (they are exempted from some categories of the Certified Public Tax Accountant examination. If they finish both the accounting courses and tax courses, they are exempted from all subjects of the examination.)
4) Attorney at law or Certified Tax Accountant

Of course, ZEIRISHI categorized in 1) is the most knowledgeable on tax laws.

ZEIRISHI of above 2) type is knowledgeable on the area they experienced when they were officials at the tax office, but not on other matters.

Type 3) is likely to lack the knowledge of tax laws, but some of them are successors of big accounting firms, and their offices are with a lot of experienced staff :-)

People in above 4) category are, in a way, brilliant but may lack the expertise on tax laws. I you are going to ask for litigation/contract/IPO consulting together with accounting, it may be convenient to hire them. They can offer one-stop service for that.

Japan Federation of Certified Public Tax Accountants' Associations

KONIN KAIKEISHI (Certified Public Accountant)

The work of KONIN KAIKEISHI (Certified Public Accountant) is to audit financial statements and to advise on tax and accounting. They can register as ZEIRISHI (Certified Public Tax Accountant) as well. In this sense, KONIN KAIKEISHI can also provide accounting services including filing of tax return.

Many Japanese laws require the companies to have audit by KONIN KAIKEISHI.

Japanese Institute of Certified Public Accountant

BENGOSHI (Attorney at law)

BENGOSHI (attorney at law) is a legal practitioner in Japan, qualified to practice in almost all fields of legal services in Japan. Simply a counterpart of attorney in other parts of the world.

Although the license of BENGOSHI is almighty in legal services, their actual works frequently focus on the litigation, corporate and financial services.

If you have a big case, BENGOSHI will be the best choice.

If the legal service you need is not so big or mainly on license, registration, accounting or social insurance, other lawyers may be able to meet your requests better and at a low fee.

Japan Federation of Bar Associations

Legal profession in Japan

One of the characteristics of Japanese legal system is that there are several licenses of legal professions. It seems to be difficult for people in foreign countries to figure out which is the best lawyer for them.

I will keep moving with this topic during the next few entries, and explain the differences of each licenses and how to effectively use the lawyers in Japan.

Moreover, when I am asked to do some legal job and it is not my scope of practice, I would be glad to introduce other lawyers, free of charge. If you are unsure about proper lawyers, feel free to ask me.

Outline of Public-Interest Corporation System in Japan

I added English pages to my website on Japanese public-interest corporation system. You can check what kind of organizations exist in Japan and points to be considered when you establish a charitable/non-profit organization in Japan.

Guide to Public-Interest Corporation