Employer Of Record in Japan

Japan Country Facts

Japan has a long history of trade with China and Korea. It has also been ruled by imperial dynasties for more than a thousand years with the major cultural players the nobles and military governors.This system gave place to a more western way of doing business and experienced an amazing economic growth.

Japan is prone to tsunamis and earthquakes and has adapted to those threats by developing pioneering engineering structures. Japan has also impacted world markets with its automotive technologies, video games, and anime creations. This country is also known for its vending machines which sell everything from technology products to soups. It is one of the world’s largest economies but imports most of its raw materials. The major cities are Tokyo, Yokohama, Osaka, Nagoya, and Sapporo.

The Economy

Japan enjoys a free-market economy and it is the third largest by GDP, its currency is the yen. It is highly industrialized and exports many products such as medical equipment, vehicles, and electronics. It has well- developed services like banking, real estate, and insurance. Japan is also a top tourist destination and is a premier exporter of fish. Japan’s strongest trading partner is the United States and it is the fourth-largest consumer market in the world, behind China, the European Union, and the United States.

Small and Medium Enterprises

Small and Medium Businesses (SMEs) account for 99.7% of all companies in Japan. They provide a key strategic role by adapting rapidly to market changes. SMEs in manufacturing account for 21.5% of employment, in wholesale and retail for 34%, in services for 19%, in construction for 12.4%, in transportation for 6% and in real estate for 2%.

Starting a Business

The “Start-Up” visa is the simplest way to start a business in Japan and it is valid for 6 months. You will need to have a Japanese office address which cannot be a place of residence and you will need to bring an investment capital of 5 million yen or have at least two full time employees or have 2.5 million yen and 1 employee.

You can use a 4-month business manager visa to first set up your bank account, hire personnel, provide a business plan, and register the business. The business will either be a corporation or a Limited Liability Company. To get help with the process, contact the Tokyo One-Stop Business Center Establishment.

Payroll

The employee Social Security tax is 17.8%, but half of the payment is made by the employee. Worker’s compensation insurance costs between 0.3% and 10.3% depending on the industry.

Renewable Energy

Japan creates 10% of its energy from renewable technology. The country wants to increase its renewable energy technology to be less dependent on nuclear technology and energy imports. There is a good opportunity for growth using solar, wind, geothermal and biomass. To show its commitment to clean energy, Japan used 100% renewable energy to power the Tokyo Olympics hydrogen technology; they also used biomass and solar.

Business Culture

Japan has an ancient ritualistic tradition of honor and efficiency.

• Ancient Modern Tradition
  This tradition is merged with modern technologies, making business dealings very formal and professional. There is a formal introduction protocol which will connect you with the internal decision- making process. This process can be slow.
• Trustworthy People
  Japanese people value trust and sincerity. As a person, it will be important to show that your main interest is not solely profit, but also the well-being of the employees and the company.
• The Bow
  When first meeting a Japanese decision maker, it is typical for you to shake hands and slightly bow. It is also important to have direct eye contact and a good body posture when discussing business.

Food Culture

Japanese cuisine is based on long traditions and favors rice and noodle soups made from meat, vegetables and fish. Japanese people also like to eat raw fish, or sushi.

Many Japanese Buddhists are vegetarian. The most popular vegetables are lotus roots, yams, mushrooms, and bean sprouts.

The traditional beverages are teas and sake (this is a wine made with rice). The cuisine is well liked by foreigners and the presentation is usually stunning.

Population

The population of Japan is 125.8 million but it is slowly decreasing and has the highest proportion of elderly citizens in the world. About 38% of the Japanese population is above 60 years old. This trend is mostly due to a baby boom in the late 1940s and a subsequent low fertility rate.

Japan is one of the most populous countries in the world–it ranks 11th–it also enjoys one of the highest life expectancies. The main language is Japanese. The population is used to making long commutes to large cities for work, in fact the transportation system is outstanding. About 90.7% of Japanese people live in cities, the Tokyo-Yokohama regions have a population of 35 million residents. This makes the Tokyo area the most highly populated city in the world.

Geography

Japan is situated close to Russia, Korea, and China. It is the 4th largest island country in the world. Composed of a string of islands on the eastern edge of Asia, this country has more than 6000 small islands in the area and most people live on 5 main islands.

It is mainly made up of mountain ranges, plateaus, and 66% of it is forests. The entire Japanese archipelago is about 1,900 miles long. The climate is humid continental to the north and humid subtropical in the south.

• Tokio
  As this is one of the most populous cities in the entire world it is a massive economic center and a hub for technology and innovation. There are a lot of diverse sectors represented including software, robotics, advanced manufacturing, fintech and consumer services. The best part about this city is that the government and corporations are aiming to expand Tokyo’s innovative mindset to be more inclusive with cross-country and cross-cultural collaboration.
• Osaka
  This has long been an economic hub with 180,000 businesses. This attracts a lot of tourists and commuters, in fact there are up to 3.5 million people here during the day. Partnerships have also been leveraged between public and private sectors to fuel innovation in Japan and worldwide.
• Fukuoka
  This is the startup hub of Japan. It has the highest population growth rate of any city. The city has significantly lowered corporate tax rates for startups and eased visa requirements to make businesses easier to establish and grow, this is because the mayor is hoping this becomes a hub of technology and services. In 2014 the city was designated to be the national strategic special zone to test how to grow an innovative ecosystem, so that they could spread this across the country.

What you need to know about employing personal in Japan:

Laws and Agencies that regulate labor relationships

Key Tax and Labor Authorities

Labor Contracts

Corporate Tax Rates
A domestic corporation in Japan is taxed by its worldwide income, the tax is rather complicated with several different taxes and stipulations applied. 95% of dividends received by a company from a foreign country (in which it has held at least 25% of the outstanding shares for a continuous period of six plus months) can be excluded from the company’s taxable income.

Beginning from 2019 companies are also expected to pay a local tax of 10.3%.

Public Holidays