JPOperating in Japan
Payroll, accounting, employment, immigration, entity setup, and corporate compliance managed locally through a single international coordination model.
Request a country assessmentThe regulatory landscape
Japan's national corporate tax rate is 23.2% (reduced to 15% on the first JPY 8 million of taxable income for SMEs with paid-in capital of JPY 100 million or less), but the figure that matters for budgeting is the effective combined rate once local taxes are layered on: national local corporate tax, enterprise tax and inhabitants tax bring the effective rate to approximately 31.5% for large corporations and up to 35.4% for SMEs. Two further changes apply to fiscal years beginning on or after 1 April 2026 — a revised 10.3% national local corporate tax rate and a new 4% "defence capabilities" surcharge on base corporate tax above a JPY 5 million deduction — both of which shift the effective rate mid-transition for companies whose fiscal year does not align with 1 April.
The more consequential structural fact for foreign entrants, however, sits outside the tax code. The Companies Act sets no meaningful minimum capital to incorporate a Kabushiki Kaisha (KK) or Godo Kaisha (GK) — JPY 1 is legally sufficient — but as of a Ministry of Justice ordinance effective 16 October 2025, a foreign national seeking the Business Manager residence status needed to actually run that company from within Japan must show at least JPY 30 million in paid-in capital, plus either three or more years of management experience or a relevant master's degree, at least one full-time employee, and Japanese-language proficiency held by the applicant or that employee. Capital planning for a Japan entity can no longer be decided on Companies Act minimums alone if a foreign principal intends to be resident and managing it.
Official language
Japanese
Legal forms
Kabushiki Kaisha (KK) · Godo Kaisha (GK)
Corporate tax rate
23.2% national (15% on the first JPY 8M for SMEs with capital ≤JPY 100M); effective combined rate ~31.5–35.4% with local taxes
Currency
JPY (Japanese yen)
Employer social security
~15.6% combined (health ~4.925% + welfare pension 9.15% + employment insurance 0.85% + child/childcare support 0.115%), plus 0.81% long-term care insurance for staff aged 40–64 (2026, Tokyo/Kyokai-kenpo)
Dividend tax
20.315% for residents on listed-share dividends (15.315% national + 5% local, incl. 2.1% reconstruction surtax) · 20.42% for non-residents before treaty relief
Minimum share capital
JPY 1 legally (KK/GK) · JPY 30,000,000 practical minimum for a foreign owner-manager to qualify for the Business Manager visa (since Oct 2025)
Consumption tax
10% standard · 8% reduced (takeaway food and non-alcoholic beverages, qualifying newspaper subscriptions)
Integrated services in Japan
Each service is delivered as part of an integrated service model, coordinated across functions under a single point of accountability. Clients engage one team, not a coordination layer between independent providers.
Accounting & Tax Compliance
Statutory accounts and consumption tax filings aligned with Japanese GAAP, including Qualified Invoice System compliance and its stepped-down transitional deduction rates.
Explore Accounting & Tax CompliancePayroll & Workforce Management
Full-cycle Japanese payroll including health, welfare pension, employment and long-term care insurance contributions, and compliance with the 2026 contribution rate and surcharge changes.
Explore Payroll & Workforce ManagementCompany Formation & Entity Setup
KK and GK incorporation, Legal Affairs Bureau registration, inkan registration, and post-formation compliance setup.
Explore Company Formation & Entity SetupWorkforce Mobility
Business Manager and Engineer/Specialist in Humanities/International Services visa coordination, including the post-October 2025 capital and staffing requirements.
Explore Workforce MobilityClient profiles in Japan
HR & Employment Advisory
Multinationals establishing or restructuring Japanese operations
Company Formation & Entity Setup
Foreign entrepreneurs and first-time market entrants planning entity capital against the Business Manager visa threshold
Workforce Mobility
Companies approaching the JPY 500 million statutory audit capital threshold
Payroll & Workforce Management
Companies already operating in Japan consolidating fragmented HR, payroll and accounting providers under a single governance layer
At the center of your HR operations
What clients say about our services in Japan
We incorporated with a modest capital figure because the Companies Act doesn't require more than a token amount. It was only when our founder applied for the Business Manager visa that we learned the real minimum had just increased sixfold to JPY 30 million, and that we would also need a full-time employee in place before the application could proceed. We now size capital against the visa requirement from day one, not the incorporation minimum.
Managing Director, Technology Group — Japanese OperationsInsights on Japan
Selected articles on regulatory developments and operational frameworks relevant to companies in Japan.
The October 2025 reform raised capital, experience and staffing requirements together. What that means for how a foreign owner-manager should capitalise a Japanese entity.
Read articleInput tax on purchases from non-registered suppliers steps down from 80% to 70% deductible. What it costs to keep working with suppliers outside the system.
Read articleTwo changes take effect for fiscal years starting on or after 1 April 2026. How each one feeds into the total effective rate.
Read articleFrequently asked questions
Questions raised most often by companies entering or operating in Japan.
What services does HTLC Network provide in Japan?
HTLC Network provides Payroll & Workforce Management, Accounting & Tax Compliance, HR & Employment Advisory, Company Formation & Entity Setup, and Workforce Mobility services in Japan through a coordinated international service model.
Can a foreign company hire employees in Japan without opening a Japanese entity?
Depending on the operating model it may be possible, but payroll obligations, labour law requirements and potential tax exposure must be assessed first.
What makes employment compliance in Japan different?
Japanese employment relationships are often characterized by strong expectations around workforce stability, formal employment practices and local employment compliance.
What payroll obligations apply in Japan?
An employer generally manages income tax withholding, social insurance contributions, labour insurance requirements and payroll reporting.
What is the actual minimum capital to incorporate a company in Japan?
Legally, JPY 1 is sufficient to incorporate either a Kabushiki Kaisha (KK) or Godo Kaisha (GK) under the Companies Act. In practice, registration tax is calculated as 0.7% of capital with a minimum of JPY 150,000 for a KK and JPY 60,000 for a GK, and — separately — a foreign national who wants to manage the company under the Business Manager visa needs at least JPY 30 million in paid-in capital as of October 2025.
How did the Business Manager visa change in 2025?
A Ministry of Justice ordinance effective 16 October 2025 raised the minimum capital requirement from JPY 5 million to JPY 30 million — a sixfold increase — and added requirements for either 3+ years of management experience or a relevant master's degree, at least one full-time employee, and Japanese-language proficiency held by the applicant or that employee. Applications submitted before 16 October 2025 were assessed under the old JPY 5 million threshold.
What is the Qualified Invoice System and what changes in 2026?
Since October 2023, businesses must hold invoices from registered ("qualified") issuers to claim input consumption tax credits. A transitional measure currently allows partial credit on purchases from non-registered suppliers; that allowance steps down from 80% to 70% deductible starting October 2026, and continues stepping down through 2031.
When does a Japanese company require a statutory audit?
The Companies Act requires a CPA or audit-corporation statutory audit for "large" Kabushiki Kaisha — defined as paid-in capital of JPY 500 million or more, or liabilities of JPY 20 billion or more — and for any company that voluntarily establishes an accounting auditor, audit committee, or nominating committee.
Talk to a Japan expert
For companies structuring a market entry or consolidating an existing Japanese operation under a single governance model.