Japan

Ease of Doing Business Rank: 29

Overview 

Geographic location 

Japan is an island nation off the eastern coast of the Asian continent. It lies in the Pacific Ocean, with South Korea, North Korea, and China to the west. 

The nation includes about 7,000 island, but only 430 are inhabited. The main islands are Hokkaido, Honshu, Shikoku, and Kyushu. Honshu is the largest and referred to as the Japanese mainland. 

Spoken language 

Japanese is the official language of JapanApproximately 99% of inhabitants speak Japanese as their first language. 

Foreign languages include English, Russian, German, French, Portuguese, Spanish, however these are typically used in business and with a younger demographic. 

Population 

The 2019 population estimate is 126,847 million.  

The majority of the population lives in urban centers along the coastAccording to the 2010 census, the largest cities are Tokyo (8.94 million), Yokohama (3.68 million), Osaka (2.66 million), Nagoya (2.26 million), and Sapporo (1.91 million). Japan has five other cities with over 1 million residents. 

Popular industries 

The top industries in Japan are manufacturing and industrial, hi-tech, consumer goods, financial and business services, and defense and security. 

Education 

The Times Higher Education World Rankings ranked two Japanese universities in the top 100 in the world. They also ranked 22 others in the top 1,000 in the world.  

The Legatum Prosperity Index ranks Japan’s education system 21 out of 149. 

Popular entity types 

The most common business entities in Japan are stock company, limited liability company, general partnership company, and limited partnership company. 

The most commonly incorporated entities in Japan are stock company and the limited liability company. 

Japanese incentives for business 

Japan offers many incentives to encourage foreign investment, many for SMEs. These include a 30% depreciation rate, or tax credit of 7% in the manufacturing sector for qualified machinery and equipment or energy-saving machinery 

The 2018 Tax Act increased salary tax credits for corporations based on their level of investment in their domestic enterprise. They also offer a tax credit for staff training expenses. 

Additionally, Japan offers an Internet of Things tax credit or accelerated depreciation on costs related to the data gathering and analytic information systems.  

R&D companies may qualify for a corporate tax reduction of up to 20% if their expenses are higher than in previous years.  

Japan also has 22 Foreign Access Zones (FAZ) to attract foreign business to the country. Operating in these areas may qualify a foreign business for tax and financing benefits as well as advisory services and access to rented premises. 

Japan offers local area tax incentives outside of major areas to encourage revitalization. 

History & Features 

 

Main cities for business 

Japan is heavily-populated and has many business regions. These include Chiba, Fukuoka, Hiroshima, Kobe, Kyoto, Nagoya, Osaka, Sapporo, Tokyo, and Yokohama. 

Tokyo is the capital city and the country’s main financial center. It is also a major global financial center. 

Popular historical & tourist attractions 

Japan is renowned for Mount Fuji, sumo wrestling, geishas, samurai, and karaoke, but it offers much more. 

Japan has 23 UNESCO World Heritage sites, which is impressive for a country with a total land space of about 142,000 square miles about the size of New York State. 

Himeji Castle, or White Heron Castle, is one of these sites. It sits in a strategic position atop a hill and the six-story wooden structure amazingly survived war, earthquake, and fires. It was completed in 1609 and is one of the country’s twelve original feudal castles. 

The Hakone Open-Air Museum offers an indoor/outdoor exhibition of paintings, sculptures and ceramic works of some the world’s most famous artists. You’ll find pieces by Picasso, Henry Moore, and Japanese artists Taro Okamoto and Yasuo Mizui. 

The Kinkakuji Temple, or Golden Temple, was built in 1397. The top two floors are completely covered in gold leaf. It was originally the retirement home for a shogun. In 1408, it became a Zen temple. It was rebuilt several times and echoes the extravagant Kitayama culture of the wealthy aristocrats of Kyoto. Each floor is built in a different architectural style. 

Koyasan or Mount Koya, is the center of Shingon Buddhism introduced to Japan in 805 AD. The secluded temple town originally stood alone on a wooded mountaintop. Now, over 100 temples line the streets and it is an important pilgrimage site. There is also a cemetery holding the remains over 200,000 thousand samurai. 

Kenrokuen Garden, or the Garden of the Six Sublimities, relies on the Japanese landscape principles of spaciousness, seclusion, artificiality, antiquity, abundant water, and broad views. The garden includes water features, bridges, teahouses, trees, flowers, stones, viewpoints and hidden nooks and it is considered one of the three most beautiful landscape gardens in Japan. 

Shinjuku Gyoen National Garden in central Tokyo is one of the best places in Japan to see cherry blossoms. It was originally a feudal lord’s Tokyo residence, then a botanical garden, and finally a personal garden for the Imperial Family. It was almost completely destroyed during World War II, but was rebuilt and opened to the public in 1949. 

Japan also pays homage to those lost in the bombing of Hiroshima in World War II. The Hiroshima Peace Memorial Museum exhibits include chilling accounts from survivors, artifacts, and photographic evidence of the atomic devastation. The A-Bomb Dome is a UNESCO World Heritage Site and one of the few buildings to survive the blast. 

The Fushimi Inari-taisha Shrine in Kyoto is the most popular site in Japan. It is famous for its almost 5,000 massive torii gates painted bright red. They line the pathways into this Shinto shrine which wind through almost 3 miles of forest. 

Japan has many natural wonders too. Mount Fuji is the best-known, while Yakushima Island is another UNESCO World Heritage Site and haven for native flora and fauna. Nachi Waterfall is Japan’s tallest single drop waterfall, while Mount Aso on the island of Kyushu has a group of four peaks, and a spectacular active volcano. 

The Akiyoshido Cave is massive and reaches for over six miles in depth in some places. The largest cave is over three hundred feet wide and features stalagmites and stalactites and water carved limestone formations. 

History 

Japan has one of the oldest histories on the planet. However, its location on an archipelago kept the population isolated for centuries. 

Archaeological evidence suggests imperial rule began in Japan between the third and seventh centuries. During the 8th century, Chinese culture significantly influenced Japanese traditions and the emperor held political power. 

Later, the affluent aristocracy established a capital city in Kyoto and it was the residence of Japanese emperorsEventually, the aristocracy lost their power and military rule under Shoguns and regional warlords began.  

Shoguns controlled large areas of land. They made the regional warlords responsible for provinces and the Samurai were their army entrusted to protect their people and the land. 

During the 15th century, anarchy erupted as provinces warred amongst themselves. Eventually, the Tokugawa Shogunate established a feudal system and stability. However, the country remained remote with little development. 

By the 19th century, Japan was technologically and militarily lacking. In 1854, the U.S. finalized a trade agreement with Japan. Commodore Matthew Perry commanded a heavily armed fleet of steam frigates or “Black Ships” that threatened to overtake the region. 

By 1867, the Tokugawa Shogunate had collapsed. The imperial capital moved from Kyoto to Edo (Tokyo). Japan began a major push towards industrialization and modernization.  

During World War I, the U.S. and Japan fought as allies. However, it was a tenuous arrangement as both vied for power in the Pacific. Japan went into recession following the war. This resulted in political turmoil and eventually militarism. 

Japan still wanted to seize China’s vast material reserves and natural resources. During the early 1930’sChina and Japan engaged in many small-scale military encounters. By 1937, full-scale war broke out as Japan tried to dominate Asia and the Pacific. 

World War II began in 1939 as all the great powers eventually formed two opposing military alliances. Germany, Italy, and Japan became the Axis alliance.  

Great Britain, China, and the Soviet Union were the original Allies. However, the U.S. joined forces after the attack on Pearl Harbor in 1941. 

In 1945, U.S. forces dropped atomic bombs on the Japanese cities of Hiroshima and Nagasaki. Japan surrendered soon afterward. Allied Forces occupied the nation until 1951. 

Japan shifted from military and imperial rule to parliamentary democracy. The nation rebuilt its economy, education system, and infrastructure. The country started to regain economic footing as a manufacturer of consumer devices and electronics. 

Today, Japan has a highly developed and market-oriented economy. It is the third largest in the world by nominal GDP. 

Other relevant facts 

Several surveys indicate less than 40% of the population of Japan identifies with an organized religion35% are Buddhists, 3% to 4% are members of Shinto sects and derived religions, and a small percentage is Christian. 

Japanese peoples make up approximately 98.5% of the population. 

Small populations of Chinese, Korean, Filipino, Brazilian, Vietnamese, Peruvian, American, and Thai also live in Japan. 

Additional Information for Business 

According to Forbes’ 2019 Best Countries for Business, Japan is the 19th best country in the world for conducting business.  

The 2019 Index of Economic Freedom rates Japan 30th globally and 8th among 43 countries in the Asia–Pacific region 

World Bank’s “Doing Business” rankings rate Japan 34th for ease of doing business in the world. 

Japan Entity Support Services by Blueback Global

Blueback Global provides a one-stop integrated solution to managing all aspects of your global operations. We can take the burden off you or your company’s internal resources by managing Entity Setup, Local Payroll, Accounting, Tax Reporting, HR Admin and Regulatory Compliance matters associated with operating in a foreign country. Our services are designed to be flexible and customized, so whether you are starting from entity registration, or have already registered but need support in setting payroll or hire employees, we can help at every point of the process.

The common scenarios that may give rise to the need for Blueback Global’s services include the following:

With our integrated approach, you can expect the following experience:

We have an initial complimentary meeting to discuss the scope, objectives and plans for your expansion plan into Japan. After this meeting, you can expect a follow-up proposal from Blueback Global within 1 to 3 business days, that outlines that the approach, scope of work and expected deliverables and outcome. Thereafter, our implementation team will then work closely with your team to register the local entity, set up payroll, accounting process, employee social security and benefits. We will then develop a mutually agreed timeline and approach for ongoing payroll, accounting, tax reporting and HR support. Blueback Global will set up a compliance calendar so that you know exactly what and when compliance items such as tax reporting and payroll returns are due. We will of course facilitate all of these, so you do not have to keep track of the compliance dates.

Our goal is to make the process as smooth, simple and successful as possible, and remove the anxiety of operating in a foreign location, to deliver a great customer experience.

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