Japan
Key entity, tax, banking, visa, and compliance guidance for foreign founders incorporating in Japan.
Foreign Ownership Eligibility
Japan welcomes 100% foreign-owned companies
A physical visit is required at some point during the formation process.
- 100% foreign ownership allowed
- At least one representative director must reside in Japan
- Physical visit required for bank account opening
- Notarisation of Articles of Incorporation required
- Registered office address in Japan mandatory
- Business seal (inkan) required for company registration
Ownership
100% Foreign OK
Formation
Visit Required
Note
Japan requires at least one Japan-resident representative director. Without a resident, you cannot register. Many foreign founders use a nominee director service (¥300,000–600,000/year).
Tax at a glance
Japan Tax Overview
23.2% headline national CIT
Corporate income tax
PwC Japan
10%
Consumption tax
Japan NTA / PwC Japan
Generally within 2 months after fiscal year-end
Annual filing cycle
Japan fact sheet
Pros & cons
Advantages & Considerations
Key Advantages
World's 4th largest economy - ~USD 4.2 trillion GDP and 124 million consumers with high purchasing power
Rule of law, contract enforcement, and IP protection rank among the world's strongest - business relationships are reliable
Reliable infrastructure across transport, logistics, telecoms, and digital networks - one of the densest and most dependable in the world
Global technology leadership in robotics, automotive, electronics, semiconductors, and precision manufacturing
Asia-Pacific trade hub - strong trade ties with ASEAN, China, South Korea, and Australia
87 tax treaties covering 156 jurisdictions (as of June 2025) - one of the world's most extensive treaty networks
No minimum capital requirement - KK and GK can be incorporated with ¥1 since the Companies Act 2006
95% dividend exclusion on foreign subsidiary dividends (¥25% held for ¥6 months) - efficient holding structures
10-year tax loss carryforward - valuable for companies in a build-up phase
GK structure: simple, low-cost, minimal compliance burden - no AGM, no published financials, no mandatory audit
No director residency requirement since March 2015 - foreigners can manage a KK or GK from abroad
Fast-track company registration - 3 business days; online-only applications can be processed in 24 hours
JETRO support: free government-backed advisory, Invest Japan Business Support Centres in 5 major cities
Political and economic stability - predictable regulatory environment with no expropriation risk
Highly educated, productive workforce with deep expertise in engineering, manufacturing, and services
J-Startup accelerator and National Strategic Special Zones (Tokku) offer targeted support for foreign founders
Tokyo Metropolitan Government provides subsidies for qualifying foreign companies (office rent, consulting, training)
Considerations
High effective corporate tax rate - large Tokyo companies face ~31.52%; from April 2026 the new defence surtax adds ~0.93%, taking effective rates to ~32.45%+
Corporate bank account opening is one of the hardest in the world for foreign companies - takes 1-3 months, some applications are refused, and remote opening is essentially unavailable
Government forms, legal filings, and most banking documents are in Japanese only - without local support, navigating incorporation and compliance is genuinely difficult
Business Manager visa generally requires a physical, exclusive office - virtual offices are usually rejected, adding real estate costs from day one
Complex multi-layer tax system - national CIT, local inhabitants' tax, enterprise tax, and (from April 2026) a new defence tax must all be filed and paid separately
Strict labour laws make employee dismissal difficult; mandatory social insurance adds ~15% onto gross salary costs
KK formation requires a Japanese notary - an unavoidable step that adds ~¥50,000 and several weeks to the timeline
High cost of living in Tokyo - office rents, salaries, and operational costs are among the highest in Asia
Japan's ageing population and workforce shortages constrain talent availability in some sectors
Business culture emphasises hierarchy, consensus-building (nemawashi), and long relationship cycles - deal velocity is slower than in many Western markets
Structural Comparison
GK - Godo Kaisha (LLC equivalent)
Introduced by the Companies Act 2006. No notarisation required, lower minimum registration tax, no AGM obligation, and no financial statement publication requirement. Members manage the company unless a designated representative member is appointed. Any tax-transparent treatment should be verified against current NTA guidance for the relevant shareholder profile.
KK - Kabushiki Kaisha (Joint-Stock Company)
Japan's primary corporate vehicle. Requires notarisation of Articles of Incorporation (~¥50,000 fee) and a higher minimum registration tax. The KK is the only entity type eligible for stock exchange listing. A single director is sufficient for small KK; a Board of Directors and Board of Auditors are required for large companies.
Branch Office
An extension of the foreign parent - not a separate legal entity. The parent bears unlimited legal liability for all branch obligations. Requires at least one Japan-resident representative. Formation requires notarized overseas documents plus registration at the Legal Affairs Bureau. Taxed only on Japan-source income.
Representative Office
A pure liaison presence - cannot conduct commercial activities, sign contracts, or hold a bank account in its own name. No registration with the Legal Affairs Bureau is required. Staff need appropriate visa status. Agreements must be signed by the foreign head office.
Incorporation Process
The process is strictly digital. Each stage builds on the previous one.
Choose legal form
Prepare incorporation documents
Notarization for KK
Register at Legal Affairs Bureau
Complete tax and labor registrations
What you'll pay
Cost Architecture
Government Fees
Annual Ongoing
Professional Services
Paper filing of Articles incurs ¥40,000 in revenue stamps. Online e-filing via the Legal Affairs Bureau avoids this cost entirely.
Still unsure about costs?
These are estimates — your actual cost depends on your structure
Every Japan setup is different. A 15-minute call with one of our specialists will give you a personalised cost breakdown — completely free.
Fintech & Banking
Can non-residents open accounts without visiting? YES.
Banking options for non-resident founders in Japan. Remote account opening availability varies by institution.
| Institution | Type | Ease for Non-Residents | Notes |
|---|---|---|---|
| MUFG | Traditional bank | Low (Visit Required) | Often linked to resident representative and in-person KYC • Varies by institution and account type • Bank-specific • Corporate registration records, seal/signature records, tax and identity documents • Domestic transfers, cards, online banking |
| SMBC | Traditional bank | Low (Visit Required) | Often linked to resident representative and in-person KYC • Varies by institution and account type • Bank-specific • Corporate registration records, seal/signature records, tax and identity documents • Domestic transfers, cards, online banking |
| Mizuho | Traditional bank | Low (Visit Required) | Often linked to resident representative and in-person KYC • Varies by institution and account type • Bank-specific • Corporate registration records, seal/signature records, tax and identity documents • Domestic transfers, cards, online banking |
| Resona | Traditional bank | Low (Visit Required) | Often linked to resident representative and in-person KYC • Varies by institution and account type • Bank-specific • Corporate registration records, seal/signature records, tax and identity documents • Domestic transfers, cards, online banking |
| Digital providers vary by onboarding profile | Fintech | High (Remote) | Often linked to resident representative and in-person KYC • Varies by institution and account type • Bank-specific • Corporate registration records, seal/signature records, tax and identity documents • Domestic transfers, cards, online banking |
Regulatory requirements
Annual Compliance Matrix
| Requirement | Deadline | Details |
|---|---|---|
Final Corporate Tax Return | Ongoing | Covers national CIT, local inhabitants' tax (prefectural and municipal), and enterprise tax. All filed together via e-Tax. e-Filing mandatory for companies with paid-in capital > ¥10M. |
Provisional Tax Payment | Ongoing | Approximately 50% of the prior year's corporate tax liability, paid mid-year. Alternatively, companies may file an actual semi-annual return based on the first 6 months' results. |
Consumption Tax Return | Ongoing | Filed annually for most businesses (turnover ¥4.8B); quarterly for larger taxpayers. Qualified Invoice Issuer (QII) registration now required for B2B input tax credit purposes (since October 2023). |
Annual General Meeting (KK only) | Ongoing | Required for all KK entities. Financial statements must be approved at the AGM. Minutes must be recorded and retained. GK entities have no AGM requirement. |
Defence Surtax Return (from April 2026) | Ongoing | A separate return required for the new Special Corporate Tax for Defence Capabilities. Rate: 4% on CIT base less ¥5M deduction. Applies to fiscal years beginning on or after 1 April 2026. |
Social Insurance Enrolment & Filing | Ongoing | Mandatory enrolment with Japan Pension Service and Japan Health Insurance Association within 5 days of first hire. Monthly payroll tax withholding and social insurance contributions must be remitted. Labor Standards Inspection Office notification required on first hire. |
Beneficial Ownership Statement | Ongoing | Required since 2020. A Statement of Beneficial Owner identifying UBOs (25%+ ownership or control) must be submitted to the Japanese notary at incorporation. Annual AML compliance obligations apply on an ongoing basis. |
Transfer Pricing Documentation | Ongoing | Country-by-Country Report, Master File, and Local File required for MNE groups with consolidated revenue ¥ EUR 750M. Local File must be available by the tax return filing deadline and retained for 7 years. |
KK vs GK Notes
GK costs less to form - minimum registration tax ¥60,000 vs ¥150,000 for KK; no notary fee (saving ~¥50,000)
GK takes about 1 month to form; KK takes about 2 months due to the mandatory notarisation step
KK is required if you plan to list on a Japanese stock exchange (TSE, Nagoya, Fukuoka, Sapporo)
GK cannot issue shares - it has equity interests. This limits the ability to bring in investors via conventional share rounds
GK can allocate profits at a ratio different from equity stakes - useful for flexible compensation arrangements
KK must hold an Annual General Meeting within 3 months of fiscal year end; GK has no AGM requirement
GK has no obligation to publish its financial statements; KK must make certain financials available to shareholders
GK may be eligible for certain tax-transparent treatment depending on shareholder profile; confirm current NTA guidance for the relevant structure
Foreign multinationals establishing subsidiaries for branding credibility typically choose KK - it is the more recognisable entity type in Japan
For most foreign SME founders, startups, and e-commerce businesses, GK is the recommended starting point
Frequently Asked
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