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Japan Branch Office versus (vs) Subsidiary Company Registration, Incorporation, Formation. Difference between Setting-up and Opening of a branch office and Subsidiary Company (Kabushiki-Kaisha [KK] or Godo-Kaisha [GK]) of a foreign company in Japan.
Some Basic differences between Opening a Branch Office and a Subsidiary Company of a foreign corporation in Japan
There are no fundamental differences between the branch offices and domestic corporations regarding the range of business activities allowed. But regardless of the firm being foreign or not, some companies, depending on the category of business, are required to secure authorization of the supervisory ministries at the time of the founding.
A branch office of a foreign company carries commercial transactions in Japan as per the parent company's decision/instruction and usually is not expected to independent decision-making.
A Branch office is not regarded as an independent legal entity but as acting based on decisions and instructions from the parent company (head office) to provide services and carry out business activities, including purchasing, importing, sales, etc. In transactions with other businesses, the branch office concludes contracts as its parent company (head office).
Some major differences between Opening a Branch Office and a Subsidiary Company (Kabushiki-Kaisha [KK] or Godo-Kaisha [GK])of a foreign corporation in Japan.
A branch office or a domestic corporation may enter into business activities by its own name as a legal business entity. Tax rates are also fundamentally the same for a branch office and a domestic corporation. However, the differences are in the following areas:
Time-frame for registration: For the procedure, please refer to the registration flowchart of the Branch Office and Kabushiki-Kaisha [KK] Co. & Godo-Kaisha [GK] Co. Upon applying to Legal Affairs Bureau for registration, it takes about 2(two) weeks to obtain the registration certificate.
Note: The exception is allowed that "No Local Resident in Japan" is required as a mandatory requirement for registration of a “subsidiary company” since the change of regulation effective Mar'2015.
Japanese govt. has allowed foreign companies to register a local subsidiary company(Kabushiki-Kaisha [KK] or Godo-Kaisha [GK]) in Japan without a local “Resident in Japan."
Option regarding the formation of a legal business entity in Japan for ongoing commercial activities: The choice is either to establish a “Branch Office” or a local “Subsidiary Co. (Kabushiki-Kaisha or Godo-Kaisha)."
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