Form a Kabushiki Kaisha (KK) or the lighter weight Godo Kaisha (GK) and start invoicing Japanese customers in JPY. Combined corporate tax lands around 30.62% (national 23.2% + local inhabitants and enterprise), but SMEs pay 15% on the first JPY 8M, qualifying IP can drop to about 20% effective under the FY2025 Innovation Box, and consumption tax is 10%.
When Japan is the right call, and when it is not.
Japanese enterprise procurement strongly prefers a local KK on the invoice (banking, qualified invoice issuer status, audit comfort). A KK with a JPY 5M paid in capital and a Tokyo Houmukyoku registration removes most procurement objections, and the qualified invoice regime (適格請求書) lets your customers reclaim consumption tax.
The FY2025 Innovation Box taxes qualifying patent and AI software income at roughly 20% effective, layered with R&D tax credits of 6 to 14% under the General R&D Credit. JETRO Invest Japan grants subsidise office, recruitment, and consulting costs for foreign affiliated companies setting up in Tokyo, Osaka, or Fukuoka.
Japan has 86 double tax treaties and an extensive network of customs FTAs (CPTPP, RCEP, Japan EU EPA). A KK is treaty resident, qualifies for participation exemption on foreign sub dividends (95% exempt under the foreign dividend exclusion), and is comfortable for both US bound and APAC bound holding structures.
Even a fast tracked KK takes 28 days because the articles must be notarised at the Houmukyoku (Legal Affairs Bureau) and capital deposited before registration. GK formation is faster (14 days) but is unfamiliar to many Japanese enterprise procurement teams. Singapore or Hong Kong incorporate in 3 days.
Houmukyoku filings, NTA tax returns, social insurance enrolments, and most bank documentation are Japanese language only. You will need a Japanese speaking accountant (税理士) and bookkeeper from day one. English language banking exists at SMBC Trust and Shinsei Powerflex but for true operations, plan for Japanese language compliance.
Working data for Japan. Cite check each figure before use.
Bundle for Japan, one invoice.
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Each rate, threshold, and deadline below is cited from an authoritative source.
Information is provided for general guidance and reflects tax year 2025 unless noted. Specific situations require advice from a local practitioner. Always confirm against the cited tax authority and registrar before relying on a figure.