Make a Business Plan
It is important first to make a business development plan. We will introduce some websites and organizations that can be used as references during the process, explain the differences in incentives depending on the city in which you plan to establish your business, and explore the means to recover your investment.
Write your business plan
To start your business in Japan, you should write a business plan. Here are examples of questions to consider:
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What do you need to do to expand your product or service in Japan?
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What about licenses and permits?
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Can you hire staff in Japan with the expertise you need? Or will you send them as expatriates from your home country? If so, what about their visas?
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How much do you need to establish a company and start its operations?
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What is the market size and number of customers for your products and services in Japan?
Careful research in advance is always essential when you leave your home country to start a business in another country. However, conducting your own research thoroughly is even more critical in this case since Japan has a language, culture, and business environment that are vastly different from other markets.
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Introduction to some helpful research sites
To research the business environment in Japan, it is a good idea to visit JETRO's website first.
JETRO, or the Japan External Trade Organization, is a government-related organization that promotes mutual trade and investment between Japan and the rest of the world and provides valuable information for foreign companies investing in Japan.
In addition to publicly available information, you may want detailed information based on actual experiences from predecessors already doing business in Japan.
For example, if you are an American company, the American Chamber of Commerce in Japan provides an active environment for networking among its members. In addition to the U.S., there are 36 other national and regional Chambers of Commerce in Japan, including the UK, Germany, and France. (The link to the list of foreign Chambers of Commerce in Japan is here)
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Determine the location
Japan has 47 prefectures, each with its regional characteristics, but the laws and taxes are nearly identical in every prefecture. However, many local governments offer incentives and support for business expansion in their region, so you should research in advance which area is best for your business.
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Plan how you will repatriate your investment.
If you are investing in Japan, you should also consider how you will repatriate your investment.
Japan has tax treaties with about 90 countries to avoid double taxation and prevent tax avoidance.
(The List of Japan's Tax Conventions listed on Ministry of Finance, Japan).
There are two ways when transferring funds from your home country to the Japanese subsidiary: equity or debt. In line with international trends toward tax avoidance, Japan has also recently introduced the Thin Capitalization Rule and Earnings Stripping Rule, so it is necessary for you to pay attention to these rules.
Under these rules, a portion of interest expense could be disallowed as an expense for Japanese tax purposes if the debt-to-equity ratio (or the ratio of interest paid to the parent company to the income of the subsidiary in Japan) exceeds a certain threshold.
6STEPS
Here we explain each task divided into six steps
If you are considering expanding your business to Japan, please contact Quantum Accounting Inc. for a free consultation during the planning phase or general consultation (available in both English and Japanese). Quantum Accounting's professionals are experts in accounting, tax, legal, and labor issues. Our goal is to provide you with a one-stop professional firm for all the services you need to expand your business into Japan.
We are confident that we can help you. For further information, please contact from CONTACT US.