Market entry into Japan

Market overview

Foreign businesses may enter Japan through direct cross-border supply, a Japanese subsidiary, a registered branch, a representative office for preparatory activities, or arrangements with importers, distributors, agents, licensees, and local commercial partners. The appropriate pathway depends on whether the business needs a taxable or contractual presence, will employ staff, hold inventory, import regulated products, operate premises, obtain licences, or rely on a Japanese distributor or importer.

Typical entry routes

• Direct export or cross-border supply from New Zealand
• Japanese-incorporated subsidiary, commonly structured as a kabushiki kaisha or godo kaisha
• Registered Japanese branch of a foreign company
• Representative office for market research, liaison, advertising, and other non-commercial preparatory activities
• Importer, distributor, sales agent, franchise, licensing, or commercial partnership
• Joint venture with a Japanese investor or commercial partner
• E-commerce or direct-to-consumer supply, subject to Japanese tax, product, consumer, and importer obligations
• Acquisition of, or investment in, an existing Japanese business

Key regulatory issues

• The intended activities should be confirmed before selecting a subsidiary, branch, representative-office, distributor, or direct-supply model
• A representative office should not conduct sales, execute commercial contracts, invoice customers, or generate revenue in Japan
• Foreign-investment notification or screening requirements may apply to specified sectors, technologies, infrastructure, or sensitive activities
• Products may require conformity assessment, importer notification, registration, testing, certification, Japanese-language labelling, safety marks, or sector-authority approval
• Overseas businesses selling certain regulated consumer products directly into Japan may need to appoint a domestic representative and comply as a specified importer
• Food, beverages, pharmaceuticals, medical devices, cosmetics, chemicals, electrical goods, telecommunications equipment, vehicles, and agricultural products may be subject to specialised regimes
• Distribution, agency, exclusivity, resale, warranty, recall, consumer, advertising, privacy, competition, and intellectual-property requirements should be addressed contractually
• Employment, immigration, social insurance, workplace, premises, environmental, and local-authority requirements may apply
• Japanese-language documentation and local implementation should be planned before contracts, shipments, staffing, premises, or product launches are committed

Registrations and filings

• Registration of a Japanese subsidiary or foreign-company branch with the competent Legal Affairs Bureau
• Appointment of directors, representative members, or a representative in Japan as required by the selected structure
• Registration of the company seal and maintenance of corporate and beneficial-ownership records where applicable
• Tax notifications and registrations with the national, prefectural, and municipal tax authorities
• Consumption-tax registration, qualified-invoice registration, and appointment of a tax representative where applicable
• Employer, labour-insurance, employment-insurance, pension, health-insurance, payroll, immigration, and status-of-residence procedures where staff will be engaged
• Foreign-investment notifications or reports where required under applicable investment-control rules
• Sector, premises, product, food, health, telecommunications, construction, environmental, professional, or operational licences where applicable
• Importer, manufacturer, distributor, product-safety, conformity, or domestic-representative notifications where required
• Continuing corporate, tax, employment, social-insurance, investment, licence, and regulatory filings

Customs and trade

• Confirm the Japanese importer and responsibility for customs clearance, product compliance, taxes, records, and post-market obligations
• Determine whether the foreign supplier, Japanese customer, distributor, customs broker, or other party will act as importer
• Classify goods under the applicable Japanese customs tariff
• Assess customs value, origin, customs duty, import consumption tax, excise taxes, and available trade-agreement treatment
• Identify prohibited, restricted, controlled, quarantined, licensed, inspected, or permit-dependent goods before shipment
• Obtain required product, food, plant, animal, pharmaceutical, chemical, standards, telecommunications, safety, or other approvals
• Prepare the import declaration, invoice, packing list, bill of lading or air waybill, freight and insurance records, origin evidence, permits, licences, and product certificates
• Lodge the declaration directly or through a licensed customs broker and obtain an import permit after examination and payment
• Coordinate inspection, testing, quarantine, duty and tax payment, release, delivery, and recordkeeping with customs and logistics providers
• Distinguish import consumption tax from any separate consumption-tax obligations arising from subsequent domestic sales

Tax considerations

• Assess whether the proposed activities create Japanese-source income or a taxable permanent establishment
• Review the tax consequences of the selected subsidiary, branch, representative-office, contractual, warehousing, e-commerce, and distribution model
• Determine applicable national corporate tax, local corporate taxes, enterprise tax, inhabitant tax, and annual filing obligations
• Assess consumption-tax registration, taxable-sales, import-tax, invoicing, return, payment, and recordkeeping requirements
• Consider qualified-invoice-system registration and its commercial implications
• Identify withholding-tax obligations relating to employment, services, interest, royalties, dividends, rent, and payments to non-residents
• Review payroll, employee-income-tax, pension, health-insurance, labour-insurance, and employment-related obligations
• Consider transfer-pricing, related-party, financing, management-fee, royalty, treaty, documentation, and profit-repatriation requirements
• Establish compliant Japanese accounting, invoicing, filing, payment, reconciliation, documentation, and recordkeeping processes

Common pitfalls

• Selecting a representative office for activities that involve sales, contracting, invoicing, inventory, or revenue generation
• Assuming that company registration completes tax, employment, product, customs, and sector requirements
• Appointing a distributor without defining exclusivity, territory, targets, importer responsibilities, compliance ownership, warranty, and termination rights
• Shipping products before confirming Japanese standards, testing, certification, labelling, importer, and sector-approval requirements
• Assuming overseas product approvals or English-language labels are sufficient for the Japanese market
• Treating import consumption tax as the only possible Japanese consumption-tax obligation
• Holding or selling inventory in Japan without assessing permanent-establishment and consumption-tax consequences
• Entering commercial arrangements without suitable Japanese-language documents and locally workable implementation procedures
• Underestimating employment, immigration, social-insurance, workplace, and payroll obligations
• Allowing corporate, tax, customs, product, employment, banking, and regulatory records to become inconsistent