Foreign companies that employ workers in Japan face complex and numerous challenges when trying to adhere to the nation’s employment regulatory framework. In some cases, using an outsourced employer will make the process smoother, and it is recommended to use professional legal services as well. Our guide explains Japanese policies on contracts, probation periods, termination procedures, leave and payment of benefits.
Complying with local payroll and tax requirements is essential for a company doing business in Japan. For a foreign company to comply with Japanese tax laws they will need to consider individual income tax (for employees in Japan), public welfare pension costs, health insurance, payroll tax, sales tax, business tax and permanent establishment concerns. These tax rate and social security issues are all essential in ensuring a seamless human resources operation. Many companies will consider outsourcing these administrative tasks to a GEO (Global Employment Organization).
Foreign workers are required to have the proper visas and work permits in Japan, as established by immigration laws. Workers entering Japan generally enter through a points based highly skilled visa (高度専門職1号イ，ロ及びハ) or one of the industry specific categories for working visas. These categories include areas such as ‘business manager’ (経営・管理) or ‘intra-company transferee’ (企業内転勤). The entire process of applying for work visas can take over 3 months and may require a large amount of technical, industry specific documents.
There are several business structures available for incorporation in Japan, and each has advantages and disadvantages. In some cases it will depend upon the type of industry that you are in, and the scope of planned business activity. Our guide discusses important factors to consider when incorporating in Japan, such as business factors, regional factors, regional language and authorities. We then compare the time and cost of incorporating standard company structures including a Subsidiary Company (joint-stock or limited liability corporation), Branch Office and Representative office.
Companies entering Japan must make a decision whether to use their own resources for a Do-It-Yourself (DIY) approach, or to use a Global Employment Organization to handle payroll and employment responsibilities. A GEO or Japan Employer of Record solution makes it faster, easier and cheaper to deploy staff if they don’t have a Japanese entity established that can run payroll.
A DIY approach will be delayed until there is a properly incorporated company or branch ready to run payroll and can be a costly option. Shield GEO can deploy foreign staff in 4-6 weeks and local staff in 48 hours. Additionally Shield GEO is responsible for all compliance issues related to the employment.
|Corporate Tax Requirements||
Corporations are required to file a final tax return within two months of the end of its annual accounting period. Corporate taxpayers are obligated to file and pay a national ‘local corporate tax’ of 4.4%.
|Employers Social Security and statutory contributions||
Social insurance premiums are deducted from a salaried worker’s monthly salary. A pension insurance premium for salaried workers is imposed at 17.828%, half of which must be paid by the employer. Employer covered worker’s accident compensation insurance varies between 0.3% to 10.3% depending on a company’s industry.
|Employees Social Security and statutory contributions||
Half of the pension insurance premium of 17.828% must be paid by the employee.
|Corporate Income Tax Rate||
Rents (from real properties): 20%
Local inhabitant tax is made up of prefectural tax (4%) and municipal tax (6%).
|Can Sponsor Work||
|Work Permit process||
Chinese nationals must also submit the following documents:
Depending on the nationality of the applicant, other documents may be necessary in addition to the above.
A Certificate of Eligibility is issued before a visa application by a regional immigration authority under the jurisdiction of the Ministry of Justice as evidence that the foreign national meets the conditions for landing in Japan, including the requirements that the activity in which the foreign national wishes to engage in Japan at the time of the landing examination is not fraudulent and is an activity that comes under a status of residence (excluding Temporary Visitor Status) stipulated in the Immigration Control Act. (Application for the Certificate of Eligibility by a proxy in Japan is allowed.)
A foreign national in possession of a Certificate of Eligibility can get a visa issued more easily at an embassy or consulate within the standard processing period (five working days from the day after the date of the acceptance of application). (However, issuance of the visa is not guaranteed.) Furthermore, by presenting the certificate at the time of examination for landing, the examination procedures will be smoothly carried out.
Even in the case that the purpose of visit is a long-term stay, the visa application can be made to the embassy or consulate without this certificate but please be aware that in this case it will be necessary to submit a large number of verifying documents in addition to those above; and the processing will take a long time (several months) because the visa application documents will have to be sent to the Ministry of Justice via the Ministry of Foreign Affairs in Japan for examination.
|Can Work Permit be processed in country||
|Can Spouse work on dependent visa?||
Limited, but normally yes