Basic Legal Information on Japan- Visa Requirement in Japan (Startup Visa)
This is the seventh in a series of articles from GVA LPC providing basic legal information to foreign companies and individuals that are planning to do business in Japan. This series of articles will highlight Japanese laws and regulations which are central to their need to smoothen their business venture into the Japanese market.
Aiming to strengthen the international competitiveness of the industry and to form a hub for international economic activities in Japan, the Startup Visa System has been introduced by the Japanese government in collaboration with local governments. Under this system, special preferential measures of the Immigration Control Act have been created. It is necessary for local governments that intend to implement the Startup Visa System to formulate a supporting plan to encourage foreigners to carry out start-up preparation activities (Supporting Plan for Management of Foreigners' Startup Activities) and obtain approval from the Minister of Economy, Trade and Industry.
A. What is the Startup Visa System?
Under this system, foreigners planning to start up a new business in Japan may be granted a Status of Residence of six (6) months as a preparation period for setting up their businesses. This system is limited to selected areas that are known as the National Strategic Special Zones. Currently, there are more than ten (10) locations, including Tokyo, that have implemented this system.
B. Why Startup Visa System?
There are various legal hurdles for foreigners to start businesses in Japan, normally if a foreigner intends to run a business in Japan, he or she has to obtain the Business Manager Visa under the Japanese Immigration Control Act, which we have previously explained in our past article.
The pre-conditions for obtaining the Business Manager Visa would include employing two or more full-time employees or investing at least JPY5 million in Japan, in addition, to establish a physical office in Japan, these requirements are seen as an uphill hurdle to some foreigners. As a result, it becomes a necessary practice for foreigners to venture with a local business partner in Japan to conduct their businesses. By having a local partner, it would allow all necessary pre works to be carried out by their local partner in advance as to fulfill the conditions for the application of a Business Manager Visa for foreigners, for them to physically located in Japan and to run the business.
However, obtaining a visa under the Startup Visa System would provide foreigners with the opportunity to enter Japan (before establishing their business) and conduct all necessary works by themselves, this would avoid the above-mentioned hurdles. Upon completion of the prework, foreigners would (later) have less difficulty to apply for a Business Manager Visa for long-term residence and to run the business.
C.Benefits of the Startup Visa System
A Startup Visa would allow a foreigner to legally enter Japan, even before conducting any preparation for starting up businesses. The period of the visa is 6 months period, which may be extended to one year under certain conditions, during the validity period of the visa the foreigner may come to Japan to establish the company and carry out other necessary activities for setting up their business, including market research, the establishment of a business network, etc.
Under the Startup Visa System, a visa will be granted before making any financial investment, which could minimize the financial risks for foreign entities or individuals. Without a Startup Visa, one can only enter into Japan for a short stay under short-term visas, which means that unnecessary expenses may be incurred for transportation, accommodation, etc. Obtaining a Startup Visa would allow foreigners to personally monitor all the pre-work in establishing their companies and to provide them more options in the manner of establishing their businesses, compared to when they rely on third-party or their local business partners. Being in Japan to monitor or personally conduct the pre-work will also minimize the risk of rejection of their application for a Business Manager Visa.
Under the normal system, foreigners would normally venture with a local partner, as this will assist them with the pre-work BUT the Startup Visa System would allow them to come to Japan to conduct a variety of preparation activities in setting up the business by themselves (within the validity period of visa). This would be considered as the major advantages of the Startup Visa as the foreigners would have full autonomy in conducting their businesses in Japan.
D.The procedure for applying for the Startup Visa.
The following are the necessary steps to apply for the Startup Visa under the Startup Visa System, for this purpose we will use Tokyo Metropolitan as the location for the business as an example.
- Preparing the necessary documents.
The basic documents for application include an application form, a business plan, a resume of the applicant, a copy of the passport, documents proving six-month residence in Japan, documents proving financial state.
The most important of necessary documents is the Business Plan. The examination of the application will be conducted based on and focusing mainly on the Business Plan. The plan has to be feasible and the explanation has to be persuasive. A detailed explanation of the Business Plan has to be made regarding the following issues:
Contents of Business Plan
Description of Business
What kind of business will be carried out
Region of Business
Location of the business that applicant planning to conduct the business
The detail on preparations and activities of the business
Financial information, as in the amount of capital, profit projection, the manner in raising the capital, etc.
Information or the organization structure, as to who is the directors/executive, and what role does the applicant plays?
Scale of Business
How big is the business planned to be?
- Applying to the authority
The application must be made to the Tokyo Metropolitan Government under the Business Concierge Tokyo. The application may be made by the applicant (the person that the name of the application is made under) or may be made by an Immigration Attorney on behalf of the applicant. It should be noted that family members or friends living in Japan cannot apply on behalf of the applicant.
- Receiving the result.
If the Tokyo Metropolitan Government accepted and admitted the application under the Startup Visa System, a Certificate of Confirmation of Startup Activity will be issued and delivered to the applicant in about two weeks. If the application is unfortunately rejected, a notice of results will also be issued.
- Submitting visa application
After receiving the Certificate of Confirmation of Startup Activity, an application for a Startup Visa must be made to the Tokyo Regional Immigration Bureau. Please ensure that an application must be made with the Certificate of Confirmation of Startup Activities attached, and after the examination by the Immigration Office is complete and the application is accepted, then a visa will be issued to the applicant.
E. After Startup Visa is obtained
After obtaining the visa, this would enable the applicant to enter into Japan to start up the business for the duration of the visa period. If the Startup Visa was obtained through the application to the Tokyo Metropolitan, then the applicant will be subjected to an interview by Tokyo Metropolitan Government officials. During such an interview, the visa holder will be asked questions about the details of the startup and its progress. It should be noted that from the date of entering Japan, the Tokyo Metropolitan Government will conduct an interview once every two months to make the necessary examination and inspection of the progress of the startup activities. For references, the following are the necessary work that should be carried out upon entering Japan:
- Setting up physical Office
The visa holder shall search for the premises of the business office before the establishment/registration of the company and conclude the lease contract.
Once the business office has been decided, the procedures for incorporation of the company shall be followed. It is necessary to establish a company to meet the requirements for obtaining the Status of Residence of Business Manager.
- Preparing for the Start of business,
After the incorporation of the company, it is necessary to submit notifications to the Tax Office and open a corporate account.
- Various administrative applications.
When starting a business requiring administrative authorization, an application for the relevant administrative authority must be made in advance.
- Application for changing to the Status of Residence to Business Manager Visa
The application conditions and application documents have to be completed and the application for a change to the Status of Residence of Business Manager has to be submitted before the Startup Visa expires.
F.Restrictions on the Startup Visa System
There are also some major restrictions on using the new system for foreign entrepreneurs. The following are 2 major examples:
- Eligibility for the new system is restricted to those who are planning to start their businesses in the prefectures that are implementing this system that fall under the National Strategic Special Zone. Currently, the list of the areas is (i) Tokyo area, including Chiba City, Narita City (ii) Sendai City, (iii) Senboku City, (iv) Niigata City, (v) Kansai area, (vi) Yabu City, (vii) Fukuoka City, (viii) Kita-Kyusyu City, (ix) Okinawa Prefecture, (x) Imabari City, and (xi) Aichi Prefecture.
- This system cannot be used by foreign nationals who are already staying in Japan with a long-term visa, for example, foreign nationals with a student visa in Japan cannot use this system. This system targets foreign nationals who have yet to enter Japan.
In the business environment, speed is vital as good business ideas or business opportunities can be devastated by the period of six months to a year which may take to obtain a Business Manager Visa, as such the Startup Visa System would be an ideal option for foreign entities or individuals to consider as a means to enter into Japan for their business venture. Please be informed that this article is merely for reference purposes, it is advisable to consult with a legal professional to better understand in detail as to make your business experience in Japan a smooth and successful one.