Paid-in capital JPY1 company

Actually, we can incorporate Japanese company as JPY1 paid-in capital legally. However, it is not realistic from real business perspectives.

We can incorporate a Japanese company as JPY1 paid-in capital figure.

Foreign company, especially in US company, would like to incorporate a Japanese subsidiary with JPY 1 paid-in capital figure which is legally under the current Japanese company law.

Actually, we can incorporate Japanese company as JPY1 paid-in capital legally. However, it is not realistic from real business perspectives..

Reasons for unrealistic as paid-in capital figure JPY 1.

1．It is difficult to open a bank account in Japan.

From our past experience, one of our US company incorporated their subsidiary as JPY 1. When the company try to open a bank account, banks refused for long time.

As in these days, due to the Japanese money laundering law, it is very difficult to open a company bank account newly.

In case paid-in capital is very small, Japanese bank requires several documents to show a business existence in Japan (e.g. detailed business plan in Japan, copy of contracts with current Japanese customers etc).

２．It is difficult to open a business account in Japanese companies.

It is also difficult to open a business account in a Japanese company. Paid-in capital figure JPY 1 has difficulty to clear a credit test review by a Japanese company.

3．Thin capitalisation Rule (Japanese corporation tax regulation)

In case "Debt from Foreign parent company > Paid-in capital figure X 3", interest on loan is not tax deductible under the Japanese corporation tax regulation. It is recognised as Dividend.

How much would be recommended as the initial paid in capital figure.

1．Standard：JPY 10M

We normally suggest to incorporate a company paid-in capital figure as JPY 10M.

Paid in capital is not a deposit to Japan government and it can be utilised for business running cash fund of the Japan subsidiary.

２．Second option：Less than JPY 10M

From the consumption tax point of view for the first accounting period, some company can enjoy tax merit if their paid in capital figure is less than JPY10M..