Because of its strong work culture, long-term political stability, and well-developed supporting infrastructure, Japan, the third-largest economy in the world, is a great place to start a business.
For foreign businesses looking to establish a presence in Japan and obtain access to the prosperous Japanese market and surrounding Asian markets, the branch office is a very common corporate structure.
To know more about the company structures and incorporation process, refer to Japan business registration.
THINGS TO CONSIDER BEFORE OPENING A BRANCH OFFICE IN JAPAN
Taxation
A Japanese branch office will be obliged to pay corporate taxes on the profits generated by the branch office based on Japan’s corporate tax rates since it is recognized as a Permanent Establishment in Japan. Branch offices won’t be obliged to pay withholding tax (WHT) on the repatriation of revenues from the branch to the parent firm, unlike a subsidiary company.
Local Representative
To represent the business in Japan and communicate with local organizations, each branch office in Japan has to appoint a local representative. The local representative need not be a citizen of any country, but they must have a long-term visa that is currently valid to enter Japan. All businesses in Japan are required to have an official seal. The local representative is the one who registers the corporate seal with the local Legal Affairs Bureau for a branch office. The corporate seal may only be used locally by a branch office’s authorized representative.
Preparing financial records
A branch office must declare the income and assets of its parent business and, if applicable, provide audited financial accounts of its parent company, even if it is only required to pay corporate taxes on the income received by the branch office. Financial statements must be submitted each year along with a branch office’s tax return in Japan.
HOW TO REGISTER A BRANCH OFFICE IN JAPAN?
Finding an Address for a Representative and a Branch Office in Japan
The applicant must choose a physical location for their branch office in Japan. The place will serve as the business’s registered office. A representative must also be named who will be in charge of representing the branch office and addressing business-related challenges.
Making an Affidavit
The articles of incorporation of the parent business and the registry certificate should be the foundation of the affidavit. This affidavit should contain details on the activities, objectives, location, contact information, etc. of the branch office. The chosen language must be Japanese.
Notarization of the affidavit
Either a notary public or the Japanese Embassy or Consulate in the home country must notarize the prepared affidavit. This process is essential to confirming the legitimacy of the document.
Obtaining a Branch Office’s Official Seal (Stamp)
The applicant will require an official seal for their branch office. The seal is used to sign official papers. The layout of the seal shall incorporate the name and registration number of the branch office. It is suggested to have a legal expert review the design before placing an order.
Application for Branch Office Registration
To register a branch office in Japan, the applicant must submit an application to the Legal Affairs Bureau. Information about the parent company, the branch office, the affidavit, the articles of incorporation, and more will be requested on the application form. The application fee is usually 90,000 Yen.
The applicant will receive a branch office registration certificate once their application has been examined and approved. This document confirms the existence of the branch office in Japan.
Getting the branch office’s registry and seal certificates
After the registration is complete, the applicant will be handed their branch office’s registry and seal certificates. These documents are required to manage tax and social security procedures and open a bank account.
Reach out to us at Relin Consultants – Leading Global Business Set Up Partners for our branch office registration services in Japan.
