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Branch vs Rep office(Recommended)
Which is suggested Branch office or Subsidiary
We often suggest to our potential clients that "Subsidiary is preferable
to Branch office".
However your best position is depending on your company's environment.
you should consult with
your tax advisor before hand.
（Generally speaking）Subsidiary is suggested.
We suggest Subsidiary due to the below reasons.
1. From the capita per levy point of view, subsidiary is reasonable. (In case your head office's paid in capital figure is huge,
you have to pay huge amount of local tax even though your Japan branch were a loss situation.)
2. Sized tax would be chargeable in case your paid-in capital exceeds JPY 100M.
3. Financial Statement of head office is required to file for Branch office when BO submit a tax return to the tax office.
Subsidiary is not required to file shareholder's FS.
4. If your Japan branch is sued to a court, representative of Japan branvh can attend the court in Japan.
In case of subsidiary, director of Japan subsidiary should attend.
5. Tax advisor's total fee for a Branch office would be expensive due to the additional jobs 2 and 3 above.
6. It tends to be thought that "a branch is easily liquidated than a subsidiary",
however there is actually not so different of time scale and costs.
Local corporation tax (Per capita levy on corporate inhabitant tax) - Tokyo Metropolitan
| Category of corporation | main office is located within the 23 wards |
Other than left area | ||
| Capital Amount | Number of staff | Metropolitan tax | Metropolitan | City |
| Over JPY 5,000,000,000 | Over 50 | JPY 3,800,000 | JPY 800,000 | JPY 3,000,000 |
| Or under 50 | JPY 1,210,000 | JPY 410,000 | ||
| Over JPY 1,000,000,000 Or under JPY 5,000,000,000 |
Over 50 | JPY 2,290,000 | JPY 540,000 | JPY 1,750,000 |
| Or under 50 | JPY 950,000 | JPY 410,000 | ||
| Over JPY 100,000,000 Or under JPY 1,000,000,000 |
Over 50 | JPY 530,000 | JPY 130,000 | JPY 400,000 |
| Or under 50 | JPY 290,000 | JPY 160,000 | ||
| Over JPY 10,000,000 Or under JPY 100,000,000 |
Over 50 | JPY 200,000 | JPY 50,000 | JPY 150,000 |
| Or under 50 | JPY 180,000 | JPY 130,000 | ||
| Or under JPY 10,000,000 | Over 50 | JPY 140,000 | JPY 20,000 | JPY 120,000 |
| Or under 50 | JPY 70,000 | JPY 50,000 | ||
| Other than above | JPY 70,000 | JPY 20,000 | JPY 50,000 | |
Case 1: Branch office is preferable（Indian company do IT development business in Japan）
Due to the double tax treaty of India and Japan, a branch office would
be preferable.
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【Subsidiary】
20% of withholding tax is applied.
10% of reduced tax would be applied under the double tax treaty of India and Japan. |
