Representative Office in Japan
Advantage of Representative Office in Japan
The advantage of creating a Representative Office in Japan is that it will allow you to carry on marketing surveys and information gathering activities in Japan before starting a full-scale operation. This way you can get started on your venture without having to support the burden of a full-size company, keep a Japanese Yen general ledger, or pay taxes in Japan. With a representative office, you can employ people in Japan without having to register with legal authorities like the Legal Affairs Bureau. The only registration needed is with the tax office to pay employees’ withheld income taxes, making it simpler to test the waters of entering the Japanese market before you invest too much. A representative office is often used by companies that wish to employ people in Japan for support activities or before starting full-scale business operations.
Limitation of Representative Office in Japan
While opening a Japanese office can give you more flexibility, it does have some drawbacks related to the types of business activities you can perform. When you open a representative office in Japan, you cannot engage in sales or marketing activity. Your office cannot be engaged in any “for-profit” activity that would give rise to a tax liability in Japan. A representative office is a light first step to establishing a company in Japan. Typical activities of a representative office are public relations, advertising, market intelligence, research, and preparation to set up a subsidiary.
How to create a Representative Office in Japan
- The representative office needs to have a representative resident in Japan.
- To pay salaries to employees and give them the same benefits of Social Insurance and Pension that are enjoyed by other regular company employees, the process is relatively strict, and a lot of paperwork is required by the Social Insurance Office.
- The representative office needs to prove its existence by showing:
– a lease for office space in its name
– a utility bill in the representative office’s name
– a copy of the contract between the representative and the foreign company - The representative of the representative office also needs to prove its good standing with the Social Insurance, Tax, and Legal authorities by providing documents such as:
– Registration with the local ward office “Juminhyo”
– Registration with Social Insurance; typically, a copy of the Pension Book is needed.
– Proof of payment of resident tax and national tax, as well as individual enterprise tax if the representative was self-employed. - The representative office also needs to register with the relevant tax office to report and pay the tax withheld on employees’ salaries.
For further details, on the Japanese payroll system, click on the link.
This whole process can be a bit cumbersome; however, JMC can assist you. Our team can help you do everything you need to do to employ people in Japan without having to create a company in Japan and pay the taxes associated with it.
Representative and Labor Insurance
Please note that the representative of a representative office usually cannot be registered with Labor insurance in Japan, nor can the representative of a branch or a joint-stock company.
Bank Account
JMC can help the representative office to establish a bank account with a local Japanese bank. We can also set up a dedicated JMC bank account for use by the representative office. JMC provides a full range of cash management services and payment services for companies that wish to have a presence in Japan.
Contact Us Today to Learn More about Establishing a Representative Office
Expanding into the Japanese market can be a huge step for any company wishing to increase its international profile; however, starting a K.K. or G.K. company is an involved process. Opening a representative office may be exactly what you need to accomplish your goals without all the difficulties presented by forming a company in another country. The only way to find out which option is best for you is to speak with someone who has been through this process before.
At JMC, we have combined decades of experience in the international business world and our consultants can give you all the advice you need to expand the scope of your operation. Get in touch with us right away to find out more about what is required to start any type of business in the Japanese market.
This information provided here is given for informational purposes only. If you are considering any of the options listed in this article, you should consult with a licensed social insurance consultant and a tax accountant before making any decisions.