A limited liability company in Japan, “godo gaisha”, is a form of business where the company’s members have limited liability based on their contribution to the capital. It is regulated by the New Companies Act, established in 2006 and it’s replacing the former yugen gaisha, usually established by the small businesses.
The company’s entrepreneurs are called ‘’members’’ unlike the investors of a joint stock company, called “shareholders”.
There is no minimum share capital required at registration and the contribution of the members can be made only in cash or non-cash assets and never in services.
The members choose a manager to act in the name of the company and their interests. This manager may be a natural person or a corporate body. If a corporate body is elected as manager, it must appoint a functional manager to act in the name of the company.
The procedure of incorporation of a limited liability company in Japan starts with making a company seal. Also the representative manager must register for the personal seal, then receive a certificate of seal registration for it.
After that, the company must register the Articles of Association at the Japan Legal Affairs Bureau, along with a standard application. The Articles must state the company’s name, the reason why the company is incorporated, the name and address of the incorporator, the authorized capital and details regarding the shares.
Also, a list of all the members which made contributions in non-cash and the value of it must be provided by the Articles.
If the above documents are accepted, the certificate of seal registration must be then delivered to the Legal Affairs Bureau in order to register the newly formed company.
The next steps are submitting the following notification to the District Tax Office: the notification of the company registration (no longer than two months since the incorporation), the notification of opening a payroll office (no longer than a month from opening it) and the request for approval of blue tax returns (no longer than three months from registration).
The local tax office must also be notified regarding the starting the business, no later than 15 days.
If the limited liability company opened in Japan will hire personnel it must register at the Labor Standards Inspection Office for the labor insurance. Also, a notification must be sent to the Social Insurance Office, so the company is registered for health insurance and public welfare pension.
The last step in establishing a limited liability company in Japan is submitting an application to the Public Employment Security Office no longer than 10 days from beginning to employ personnel.
Limited liability companies in Japan are taxed at the usual corporate income tax rate of 23.4% for corporations with a share capital over 100 million JPY. Companies are also subject to various other taxes such as the local inhabitant's tax (that varies according to the size of the company and its location), withholding taxes on dividends, royalties and interest, the enterprise tax (which also varies), the real estate taxes and the stamp duty. Japan imposes a consumption tax which is similar to the value added tax. This is levied on the supply of goods and services and the sale of the lease of some assets. Our Japan company formation agents can give you further details on this tax and the needed registration process for limited liability companies.
The Japanese Accounting Standards (Japanese GAAP) are used for all accounting, filing and auditing purposes. The tax year in Japan is the same as the calendar year and penalties apply for those taxpayers who fail to comply with the requirements for submitting the tax payments and tax returns.
As you can observe, there are several steps that must be followed in order to start such a company in Japan. Our team of company registration agents in Japan is ready to help businessmen through the entire process of registering a LLC in this country. Please contact our team for a customized offer.