JETRO Invest Japan Report 2017 (Summary) 2. Toward Improvement of Business Environment

Further improving the business environment in Japan

(1) Establishment of "regulatory sandbox" system

  • New social demonstration to allow “try first” approach. Social demonstration pertaining to a new business is carried out in order to “think while running” on new rules based on data and knowledge obtained through the process.
  • The system is expected to be used when companies start new businesses that are not envisaged by existing regulations in fields such as IoT, AI, Big Data, drones and autonomous vehicles, which have been developing rapidly.

(2) 20% reduction in costs of administrative procedures (by March 2020)

  • Three principles for reduction of administrative procedure costs: thorough digitalization of administrative procedures (digital-first principle), no second request for the same information to businesses (once-only principle), and unification of documentary formats.
  • Nine priority fields: procedures for obtaining permission or approval for business license, those for social insurance, national tax, local tax, procedures for subsidies, and cooperation provisions for surveys or statistics research.

(3) Final Report of Working Group for Revising Regulations and Administrative Procedures

  1. 1.

    Incorporation and registration of companies

    • Expansion of the scope of holders of bank accounts for proof of payment and the list of financial institutions to which contribution can be paid
    • Expansion of the places to acquire a signature certificate
    • Facilitation of procedures to open a bank account after incorporation
  2. 2.

    Status of residence

    • Establishment of the Japanese Green Card for Highly-Skilled Foreign Professionals (April 2017) to greatly shorten the residence period necessary for an application for permission of permanent residence

      Japanese Green Card for Highly-Skilled Foreign Professionals

      Before the revision, a residence period of five years was necessary for an application for permission of permanent residence if the score was 70 points or more. After the revision, it was greatly shortened to over one year of residence in Japan if the score is 80 points or more in the points-based system for highly-skilled foreign professionals, or three years of residence if their score is 70 points or more. The points are calculated based on age, annual salary, academic background, professional career, research achievement, etc. In the case of a 33-year old engineer, 10 points for “34 years old or younger,” 25 points for “annual salary 7 million yen,” 20 points for “job experience of three years,” 20 points for “master’s degree,” 5 points for “job experience of three years,” 10 points for “passed level N2 of Japanese-language proficiency test,” and 10 points for “graduated from a top-tier university” are added up, which will be in total of 80 points.

      [Source] Points-based Preferential Immigration Treatment for Highly Skilled Foreign ProfessionalsExternal site: a new window will open

    • Online procedures for obtaining status of residence (planned to start in FY2018)
  3. 3.

    Promotion of one-stop administrative services

    • Expansion of services at the Tokyo One-Stop Business Establishment Center
  4. 4.

    Import

    • Reducing companies’ burden of classification through reorganization of “national subdivisions” of the statistical code (HS code, etc.)
  5. 5.

    Other

    • Revision of guidelines on exhibiting of unapproved medical equipment at trade shows (June 2017)

(4) FY2017 Tax Reform

  • Revision of the scope of payment obligations of the inheritance and gift taxes concerning foreign assets

    An example of revision pertaining to scope of taxation

    1. 1.

      In the case that a foreign expatriate in Japan dies:

      1. a.

        If an expatriate who is living alone leaving his/her family members outside of Japan dies, the levy is limited to the assets in Japan which are to be inherited by his/her relatives outside of Japan.

      2. b.

        If an expatriate who is living in Japan together with his/her family members dies, the levy is limited to the assets in Japan which are to be inherited by his/her family members.

    2. 2.

      In the case that a relative living outside of Japan of an expatriate in Japan dies:

      1. a.

        If a relative living outside of Japan of an expatriate who is living in Japan dies, the levy is limited to the assets possessed in Japan by the relative.

  • Those pertaining to development of new “services” based on the Fourth Industrial Revolution utilizing big data, etc. are included in the categories to be supported by the R&D tax system.

(5) Deregulation in the tourism sector

  • The revision of the Licensed Guide Interpreters Act and the Travel Agency Act (May 2017): people without the qualification will be permitted to provide paid guide interpreter services for foreign tourists.
  • Enactment of the Act on Home Lodging Business (June 2017): landlords will be permitted to provide home lodging service up to 180 days a year.

(6) Introduction of Personal Advisors System for Foreign Companies

Outline of the Personal Advisors System for Foreign Companies

JETRO personnel in charge of attracting investment (Personal Advisors for Foreign Companies) proactively conduct interviews about the needs of JETRO-supported companies and provide detailed support. The Personal Advisors will proactively hear the needs of about 1,000 foreign companies such as those which are “unsure of what kind of regulations or procedures are necessary,” those which “need information on policies and market trends in English,” those which “need information on government and local incentives” and those which “request addressing of regulatory and procedural barriers and obstacles for business.” They solve the problems through the functions such as 1.support for individual projects, 2.proposals to the government and 3.cooperation with municipalities. Support for individual projects includes: providing market information, support for constructing business models through strategic proposals, consultation by an expert (administrative scrivener, judicial scrivener, tax accountant, accountant, etc.), support for human resources and property search, and provision of temporary office. Proposals to the government include recommendations for improvement of regulations and procedures to the government and ministries through “Invest Japan Hotline”. Cooperation with municipalities includes support for inspection mission and interview arrangement and providing local governments’ incentive information.

Progress of the government’s initiatives

(1) Progress of the "Five Promises for Attracting Foreign Businesses to JapanExternal site: a new window will open "

(2) Progress of the "Policy Package for Promoting Foreign Direct Investment into Japan to Make Japan a Global HubExternal site: a new window will open "

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