Japan Nominee Director Services

Some key benefits of JTAX’s Japan Nominee Director Service include:

a. Smoother Incorporation Process:

Using a Japan resident nominee director allows for a smoother incorporation process.An experienced Japan resident nominee director can quickly provide all the required documents to the Legal Affairs Bureau(in Japanese) and provide prompt responses to any follow-up questions posed by the authorities.

b. Bank Accounts:

In all countries it is becoming increasingly difficult to open bank accounts. When a newly incorporated Japanese company does not have a local director, it is difficult (often impossible) to establish a bank account in Japan.

c. Internal Control:

The representative director of a Japanese company has basically unlimited authority to represent the company with respect to third parties. But, it can be challenging for even large well organized foreign companies to maintain adequate internal control in Japan. The Japan operation is often quite small and most documentation will be in Japanese.

As a result, foreign companies are generally reluctant to use a local employee in the representative director role.

d. Promotor:

In the case of Kabushiki Kaisha (“KK”) and Godo Kaisha (“GK”), JTAX’s Japan Nominee Director Service also covers acting as the Promotor of the new company.

In order to incorporate a KK or a GK in Japan, a “Promotor” is needed. Technically speaking, it is the Promotor who is legally responsible for the acts leading up to incorporation. A particular benefit of our Japan Nominee Director Service is that the resident Promotor may be able to facilitate receipt of the new company’s paid in capital. Where there is no Japan resident Promotor, special (and time consuming) arrangements need to be made with a Japanese bank.

e. Corporate Tax Deductibility Issues :

Compensation structuring for directors is a problem in Japanese companies. In part, this is because bonuses (defined broadly for Japanese tax purposes) paid to a director are generally not deductible for Japanese corporate tax purposes. Such non-deductible compensation includes most performance based payments (such as commissions and annual bonuses) which are often an important component of compensation packages in multinational companies.

The following (simplified) example illustrates this point:

While it is not possible to fully eliminate this deductibility problem, the tax risk may be reduced via the use of a Japan nominee director who receives no bonus payment. :

f. Visa Issues :

JTAX’s Japan Nominee Directors are familiar with the procedures associated with obtaining Japan work visas. They can work with the client to assist in the visa application process once the Japan entity has been established.

g. Individual Tax Issues :

Expat employees often benefit from a reduction in their Japanese tax liability based upon business days spent outside Japan (this is referred to as the Days-in-Days-out benefit). However, it is important to note that the Days-in-Days-out benefit is generally not available to directors.

In addition, tax benefited housing (an important compensation element for expats and senior Japanese employees) is significantly less beneficial for directors.

Use of a Japan nominee director may help mitigate the above issues.

h. Japanese Statutory Benefits :

Employees in Japan receive a range of important statutory benefits including Japanese Labor Insurance. This program provides workers accident compensation and also unemployment insurance protection.

However, directors of Japanese companies are typically not eligible for enrolment in the Labor Insurance program in the same manner as a regular employee.

Contact us for more information about JTAX’s Japan Nominee Director Service.