Yukio Kagawa(Japan Certified Public Accountant) Office

DOING BUSINESS IN JAPAN

INTRODUCTION

Doing Business in Japan has been prepared by us as a general introduction to those wishing to set up an enterprise in Japan.
The information in this guide is current as of April 2004 unless so stated. However, those wishing to do business in Japan should seek detailed professional advice.

FACTS & BACKGROUND

Comprises: The mainisland of Japan,honsyu,and many islands

Area: Approximately 377,900 square kilometres"

Population: Approximately 129 million

"Main cities: Tokyo 12 m, Yokohama 8m,Osaka 6 m,

"Economy: Based mainly on private enterprise.The services sector of the economy is the strongest of the world, Manufacturing sector of ecinomy is the strongest of the world.

Currency: The unit of currency is the Yen. (1us$=98.23yen (at Mar 2009))

BUSINESS ENTITIES

The main choices of business entity are as follows:

The minimum share capital is 1yen.(but have to be increase to 10,000,000yen or 3,000,000yen after 5years)

Statutory Audits

An audit is required for any company where 1 of the following 2 limits are reached for one consecutive (12 month) financial years(cimmercial law):
capital>>>>>>>>>>>>>>more than 500,000,000yen
debt>>>>>>>>>>>>more than 20,000,000,000yen

the Securities Exchange Act,other regulations

MAIN TAXES: COMPANIES

Companies are subject to a national corporate income tax, withholding taxes, social security taxes and the value added tax. And a tax on the value of immovable property is levied. There are no significant local taxes.

Corporate Income Tax
The general corporation tax rate is 30%. (But if the capitalis less than 100,000,000yen,the general corporation tax rate is 18%.)

Losses may be carried forward for seven years. Loss carry-backs are not permitted.

MAIN TAXES: INDIVIDUALS

Permanent residents are taxed on worldwide income. Others are taxed on income earned in Japan, at the rates shown below:

taxable income<<<>>>rate(state tax&local tax)
2,000,000yen or less<<<>>>15%
2,000,000yen-3,300,000yen <<<>>>20%
3,300,000yen-7,000,000yen<<<>>>30%
7,000,000yen-9,000,000yen<<<>>>33%
9,000,000yen-18,000,000yen<<<>>>43%
18,000,000yen-<<<>>>50%

MAIN TAXES: OTHER

Value Added Tax (VAT)
VAT is charged on sales and importations of goods and services. The rate is 5%(state tax4%&local tax1%).

Property Transfer Tax
Sales of land and buildings are taxed at rates varying from 3% to 4%.

GOVERNMENT INCENTIVES

JETRO(The Japan External Trade Organization)and other goverment supported organizations are supporting on regulations(state&local).

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