Despite an ongoing economic slump, the Japanese market still lures multinationals from around the world. Sorting through the paperwork is the first challenge. Elise Krentzel reports.

• Social Security
• Taxes
• Alien Registration Card
• Visas
• Self-employment
• Driving licence

Located in eastern Asia, Japan is an island chain between the North Pacific Ocean and the Sea of Japan, east of the Korean Peninsula.

While retaining its time-honored culture, Japan rapidly absorbed Western technology during the late 19th and early 20th centuries. After its devastating defeat in World War II, Japan recovered to become the second most powerful economy in the world and a staunch ally of the US.

While the emperor retains his throne as a symbol of national unity, actual power rests in networks of powerful politicians, bureaucrats, and business executives. The economy experienced a major slowdown in the 1990s following three decades of unprecedented growth.

SOCIAL SECURITY

Social security programs in Japan include health insurance, nursing care insurance (for employees 40-64 years of age) welfare pension insurance, unemployment insurance and workers accident compensation insurance.   

International Social Security agreements

The USA has international social security agreements with 19 nations mostly European. Japan, on the other hand, has thus far concluded social security agreements with only two countries: Germany (agreement entered into force in 2000) and the United Kingdom (agreement entered into force in 2001).

This does not bode well for Japan whose largest amount of expats are based in the USA of which over 20,000 are long-term employees and 50,000 are salaried employees. Japan is currently in discussions with France, South Korea and Belgium for international agreements.

TAXES

Who is liable to pay Japanese income tax?

• A permanent resident – someone who has resided continuously in Japan for more than 5 years. This group is taxed on their total worldwide revenue.
• A non-permanent resident – an individual who does not intend to permanently reside in Japan and who has resided in Japan less than 5 years. This group is taxed on their Japanese source income and on foreign-source income that is paid in or remitted to Japan.
• A nonresident – an individual who has not established a domicile in Japan and who has lived in Japan less than 1 year. This group ia subject to tax on their Japanese-source income only.

The first year foreigners are paying taxes in Japan, their withholding will be 20 percent but they will be refunded. After the first year the withholding is reduced to 10 percent, unless their earnings are above JPY 9 million.

Income tax

Taxable income after all deductions follows this schedule:

Income up to JPY 3.3 million Up to JPY 9 million Up to JPY 18 million Up to JPY 30 million JPY 30 million

10 percent 20 percent 30 percent 40 percent 50 percent

These rates apply to both Japanese and foreign residents. In general taxpayers file their own returns. Yet when individuals are compensated up to JPY 20 million annually the employer withholds income if income other than employment income does not exceed JPY 200,000.

Income tax returns must be filed between 16 February and 15 March.

Tax exemptions

The following transfers of assets and related transactions within the domestic economy are exempted from taxation.

(a) transfer or lease of land
(b) transfer of securities and transfer of means of payment
(c) interest on loans and insurance premiums
(d) transfer of postal and revenue stamps
(e) fees for government services, international postal money orders, international postal transfers, and foreign exchange
(f) medical care under the medical insurance laws
(g) social welfare services specified by the social welfare services law
(h) midwifery service
(i) burial and crematory service
(j) transfer or lease of goods for physically handicapped persons
(k) tuition, entrance fee, facilities fees and examination fees of schools designated by Article of the School Education Law
(l) transfer of school textbooks
(m) lease of housing units

Double-tax treaties

Japan has double tax treaties with the following countries: Armenia, Australia, Austria, Bengladesh, Belarus, Belgium, Brazil, Bulgaria, Canada, China, Czech Republic, Denmark, Egypt, Finland, India, Indonesia, Ireland, Israel, Italy, Korea, Kyrgyzstan, Luxenbourg, Malaysia, Mexico, Moldova, Netherlands, New Zealand, Norway, Russian Federation, Singapore, Slovak Republic, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Tajikistan, Thailand, Turkey, Turkmenistan, Ukraine and United Kingdom, France, Georgia, Germany, Hungary, Pakistan, Philippines, Poland, Romania, United States, Uzbekistan, Vietnam and Zambia.

Most of these treaties reduce the tax rates on Japanese-source interest, dividends, royalties and similar income, and also provide relief from double taxation through tax credits. 

ALIEN REGISTRATION CARD 

Under the system of Alien Registration administered by the Immigration Service, all foreign residents in Japan are required to appear in person and register themselves at the municipal office of the city, ward, town, or village in which they are living.

Foreign residents in Japan who will be staying for longer than 90 days are required to obtain an Alien Registration Card (Gaikokujin Toroku Shomeisho), available free of charge from the municipal office of the city or ward of residence.

Foreign residents are required to bring their passport and two passport-sise photos (4.5 x 3.5 cm). If residents move within Japan to another domain, they are required to re-register in their new place of residence within 14 days.

The Alien Registration Card must be carried at all times, as the Japanese Police are allowed to stop foreign residents and ask to see the card. Not carrying the card is a violation of local law.

VISAS

 Japan has seven types of visas:

DIPLOMATIC VISA	Diplomat
OFFICIAL VISA	Official
WORKING VISA	Professor Artist Religious Activities Journalist Investor/Business Manager Legal/Accounting Services Medical Services Researcher Instructor Engineer Specialist in Humanities/International Services Intracompany Transferee Entertainer Skilled Labor
TEMPORARY VISITOR'S VISA	Temporary Visitor*
TRANSIT VISA	Temporary Visitor*
GENERAL VISA	Cultural Activities* College Student* Precollege Student* Trainee* Dependent*
SPECIFIED VISA	Designated Activities+ Spouse or Child of Japanese National Spouse or Child of Permanent Resident Long-Term Resident

*Statuses of residence not permitting work.
+Whether work is permitted or not depends on the content of individual permits.

Documents to be submitted with visa applications

It is quite a complex process of submitting the correct documentation for whatever the purpose of one’s visit. In every case, the following documents must be submitted:

• passport
• two 45mm x 45mm passport-type photos taken within the previous six months (stateless persons must submit three photos)
• two official visa application forms, available at the Japanese embassy or consulate
• documents certifying the purpose of the visit (see the accompanying list below)

An application must be made in person at a Japanese embassy or consulate after preparing the following documents:

Documents certifying the purpose of the visit

The documents shown in the accompanying list (below) are for general business cases and families.

In specific cases, applicants may be able to omit some documents, or they may be requested to submit additional documents depending on the content of the application.

In particular, applicants for Temporary Visitor Status may be requested to submit such documents as a letter giving the reason for the invitation or a letter of guarantee from the person in Japan inviting them, in addition to the documents shown in the accompanying table.

In principle, foreigners who possess a Certificate of Eligibility can submit two copies (the original and a photocopy) of the certificate, instead of documents certifying the purpose of the visit.

However, they may be requested to submit additional documents. As all documents are to be submitted directly by the applicant, any documents prepared in Japan must be sent to the applicant.

For further details, please inquire at the Ministry of Foreign Affairs or at the embassy or consulate where the application will be made.

When submitting the required documents:

• One copy each of the documents should be submitted. (If you are requested to submit two or more copies of a document, please submit the original and one or more photocopies.)
• If it is impossible to submit the original of a document, please submit a photocopy.
• The letter of guarantee should be similar to the example shown after the accompanying table. As long as the necessary items are all included, you can produce your own.
• For all other documents besides the letter of guarantee, there is no official format, so please produce your own in an appropriate manner.

List of support documents required by status of residence

TEMPORARY VISITOR

1. A ticket for boarding an airplane or a vessel to leave Japan, or a written guarantee issued by a transport company.
2. A valid passport which enables the foreign national concerned to enter foreign countries out of Japan.
3. Documents certifying that the person concerned can defray all expenses incurred during the stay in Japan.

INVESTOR/ BUSINESS MANAGER

1. In cases where the person concerned intends to commence the operation of international trade or other business, or to invest in the business, the following materials are required.
   • A business plan, copies of the company registration, and a statement of profit and loss.
   • Material showing the number of full-time staff except the foreign national concerned, and in the case where the number of the full-time staff is two, copies of resident cards or certificates of alien registration and documents regarding wage payments of the staff concerned.
   • Material showing the outline of the business office.
2. In cases where the person concerned intends to engage in management of international trade or other business on behalf of the foreign national who began or invested the business concerned, the following materials are required.
   • A business plan, copies of the company registration, and a statement of profit and loss.
   • Material showing the number of full-time staff except the foreign national concerned, and in the case where the number of the full-time staff is two, copies of resident cards or certificates of alien registration and documents regarding wage payments of the staff concerned.
   • Material showing the outline of the business office.
   • Documents certifying the activity, its duration, the position, and the remuneration of the person concerned.
3. In cases where the person concerned intends to engage in management of international trade or other business on behalf of the foreign national who began or invested in the business concerned or is engaged in management of the business concerned which was begun or invested in Japan, the following materials are required.
   • A business plan, copies of the company registration, and a statement of profit and loss.
   • Material showing the number of full-time staff except the foreign national concerned, and in the case where the number of the full-time staff is two, copies of resident cards or certificates of alien registration and documents regarding wage payments of the staff concerned.
   • Material showing the outline of the business office.
   • Documents certifying the career of the person concerned and his or her certificate of graduation with a major in management or administration.
4. Documents certifying the activity, its duration, the position, and the remuneration of the person concerned.

LEGAL/ ACCOUNTING SERVICES

Japan at a glance Government: constitutional monarchy with a parliamentary government Population: 126.9 million (2001 est.) Ethnic groups: Japanese 99 percent, others 1 percent (Korean 511,262, Chinese 244,241, Brazilian 182,232, Filipino 89,851, other 237,914). Capital: Tokyo Currency: Japanese Yen (JPY) Economy: Government-industry cooperation, a strong work ethic, mastery of high technology, and a comparatively small defense allocation (1 percent of GDP) have helped Japan advance with extraordinary rapidity to the rank of second most technologically powerful economy in the world after the US and third largest economy in the world after the US and China. Government efforts to revive economic growth have met with little success and were further hampered in 2000-02 by the slowing of the US and Asian economies. Among the world's largest and technologically advanced producers of motor vehicles, electronic equipment, machine tools, steel and nonferrous metals, ships, chemicals; textiles, processed foods Key trading partners: (Exports) US 30.1 percent, China 7.7 percent, South Korea 6.3 percent, Taiwan 6.0 percent, Hong Kong 5.8 percent (Imports) US 18.1 percent, China 16.6 percent, South Korea 4.9 percent, Taiwan 4.1 percent, Indonesia 4.3 percent - 2001 estimates Languages: Japanese

1. Documents certifying that the person concerned is qualified to do the activities under the status of residence of "Legal/Accounting Services" provided for in Annexed Table 1 (2) of the Immigration Control Act.
2. Documents certifying the activity, its duration, the position, and the remuneration of the person concerned.

MEDICAL SERVICES

1. Material showing the outline of the recipient organisation.
2. Documents certifying that the person concerned is qualified to do the activities under the status of residence of "Medical Services" provided for in Annexed Table 1 (2) of the Immigration Control Act.
3. Documents certifying the activity, its duration, the position, and the remuneration of the person concerned.

ENGINEER

1. Copies of the company registration and a statement of profit and loss of the recipient organisation.
2. Materials describing the business undertaken by the recipient organisation.
3. A diploma or a certificate of graduation with a major in the subject regarding the activity of the person concerned, and documents certifying his or her professional career.
4. Documents certifying the activity, its duration, the position, and the remuneration of the person concerned.

INTRA-COMPANY TRANSFEREE

1. Documents certifying the relationship between the business office in a foreign country and the business office in Japan.
2. Copies of the company registration and a statement of profit and loss of the business office in Japan, and material describing the business activities.
3. Documents certifying the details of his or her duty and its duration at the business office in a foreign country.
4. Copies of the company registration of the business office in a foreign country, and material showing its outline.
5. Documents certifying the activity, its duration, the position, and the remuneration of the person concerned.
6. A diploma and documentation certifying the career of the person concerned.

SKILLED LABOUR

1. Copies of the company registration and a statement of profit and loss of the recipient organisation.
2. Materials describing the business undertaken by the recipient organisation.
3. A personal history and documents issued by the official organisation which is certifying the career and the qualification regarding the activity of the person concerned.
4. Documents certifying the activity, its duration, the position, and the remuneration of the person concerned.

TRAINEE

1. A training plan showing the substance of the training, its necessity, location, duration, and the conditions of stay.
2. Documents certifying that the person concerned intends to engage in a duty that requires the technique, skill, and knowledge learned during the stay in Japan after returning home.
3. A diploma and documentation certifying the professional career of the person concerned.
4. Documents certifying the professional career of the trainer regarding the training concerned.
5. Material showing the outline of the foreign organisation which is sending the person concerned.
6. Copies of the company registration, a statement of profit and loss, a list of full-time staff of the organisation inviting the person concerned, and a list of trainees.

DEPENDENT

1. Documents certifying the personal relationship between the person concerned and the person who is to support him or her.
2. Copies of the certificate of alien registration or the passport of the person who is to support the person concerned.
3. Documents certifying the profession and the income of the person who is to support the person concerned.

DESIGNATED ACTIVITIES

1. In cases where the person concerned intends to engage in management of a gainful business or to engage in an activity to be paid, documents certifying the activity, its duration, the position, and the remuneration of the person concerned are required.
2. In other cases, the following materials are required.
   • Documents certifying the activity during the stay of the person concerned in Japan.
   • Documents certifying that the person concerned can defray all expenses incurred during the stay in Japan.

SPOUSE OR CHILD OF JAPANESE NATIONAL

1. In cases where the person concerned is a spouse of a Japanese national, the following materials are required.
   • Documents certifying that the person concerned is a spouse of the Japanese national and his or her resident card.
   • Documents certifying the profession and the income of the person concerned or his or her spouse.
   • A letter of guarantee by a person living in Japan.
2. In cases where the person concerned is a child or an adopted child of Japanese national, the following materials are required.
   • A copy of the family registration of the Japanese national concerned, the birth certificate of the foreign national concerned, and other documents certifying the personal relationship between the parent and the child.
   • Documents certifying the profession and the income of the foreign national concerned or his or her father or mother.
   • A letter of guarantee by the Japanese national concerned or another person living in Japan.

SPOUSE OR CHILD OF PERMANENT RESIDENT

1. In cases where the person concerned is a spouse of a permanent resident, the following materials are required.
   • Documents certifying the personal relationship between the person concerned and the permanent resident concerned.
   • Copies of the certificate of alien registration or the passport of the permanent resident concerned.
   • Documents certifying the profession and the income of the foreign national concerned or his or her spouse.
   • A letter of guarantee by the permanent resident concerned.
2. In cases where the person concerned is a child of a permanent resident, the following materials are required.
   • The birth certificate of the person concerned and other documents certifying the personal relationship between the parent and the child.
   • Copies of the certificate of alien registration or the passport of the permanent resident concerned.
   • Documents certifying the profession and the income of the foreign national concerned or his or her father or mother.
   • A letter of guarantee by the permanent resident concerned or another person living in Japan.

LONG-TERM RESIDENT

1. A copy of the family registration, the marriage certificate, the birth certificate, and other documents certifying the status of the foreign national concerned.
2. Documents certifying that the person concerned can defray all expenses incurred during the stay in Japan. In cases where the expenses incurred during the stay in Japan are defrayed by another person, documents certifying the income of the person who intends to defray all expenses.
3. A letter of guarantee by a person living in Japan.

SELF-EMPLOYMENT 

It is possible for expatriates to be self-employed in Japan however it is very difficult to get the appropriate approvals.

A certificate of eligibility must be obtained and includes a judgment of "moral character".

DRIVING LICENCE 

Recent changes to the Japan Traffic Act now states that anyone staying longer than 12 months in Japan must obtain a Japanese driver’s licence, gaikoku menkyo kirikae.

One can still use an international driver’s licence up to 12 months after the first date of arrival in Japan, unless one were to leave Japan for a minimum period of three months whereby the 12-month countdown begins anew.

The process

If one holds a Swiss, German, Australian, New Zealand or British driver’s licence the process to obtain a Japanese one is much shorter than for Canadians or Americans. What’s needed:

• Official translation of the home country driver’s licence from the JAF (Japan Automobile Federation)
• Date of issuance showing the driver had the licence at least 3 months before entering Japan
• A letter showing the date of issuance in case it is not stated on the licence from the Department of Motor Vehicles or similar organisation, translated into Japanese
• A visit to the local driving test center with: original licence, Japanese official translation, a passport, an alien registration card, one passport-sised photo and the application fee
• After completing the application and a eye exam a written test will be given. If the written test is successfully completed a road test will be scheduled. Note: the written test can be in English, but staff may not speak English

If a human resource professional expects his/her employees to drive to work in Japan or to be able to drive for pleasure, they need to consider the level of support they’ll provide since obtaining the licence takes at least one full day out of the office plus application fees, translating services etc.