Stock Company (KK)
株式会社 (Kabushiki Kaisha)
Company formation in Japan
The KK is best suited for: Foreign companies establishing a full subsidiary in Japan, Businesses seeking to raise capital from Japanese investors, Companies that need maximum credibility with Japanese clients and partners, Enterprises planning to list on a Japanese stock exchange in the future. A KK is subject to national corporate income tax at 23.2% on taxable income. In addition, the company pays local inhabitants tax (approximately 5% of the national tax liability) and enterprise tax (3–7% depending on the prefecture and income level). The combined effective tax rate is typically 30–34%. Japan imposes a 20.42% withholding tax on dividends paid to non-resident shareholders, which may be reduced under an applicable double tax treaty. Capital gains are generally treated as ordinary income and taxed at the standard corporate rate. Consumption tax (VAT equivalent) is 10% on most goods and services, with a reduced rate of 8% on food and beverages. Small companies with taxable income up to JPY 8 million benefit from a reduced national rate of 15%.
- Foreign companies establishing a full subsidiary in Japan
- Businesses seeking to raise capital from Japanese investors
- Companies that need maximum credibility with Japanese clients and partners
- Enterprises planning to list on a Japanese stock exchange in the future
Key Facts
Step-by-Step Formation Process
Prepare the Articles of Incorporation (Teikan)
Draft the Articles of Incorporation specifying the company name (which must include 株式会社), business purposes, registered office address, total number of authorized shares, fiscal year, and details of the incorporators. The articles must be prepared in Japanese.
Notarize the Articles of Incorporation
Submit the Articles of Incorporation to a Japanese notary public (Koshonin) for authentication. The notary verifies the content, confirms the incorporators' identities, and affixes their seal. The notarization fee is approximately JPY 30,000–50,000 plus stamp duty of JPY 40,000.
Deposit capital and obtain proof
Deposit the stated capital into a bank account held by one of the incorporators (a corporate account cannot be opened until after registration). Obtain a certificate of deposit or bank statement showing the capital payment. Note: some banks may be reluctant to accept deposits from foreign residents without an existing account.
Prepare company seals (Hanko / Inkan)
Order at least three official company seals: the representative seal (Daihyo-in, registered with the Legal Affairs Bureau), the bank seal (Ginko-in, used for banking transactions), and the corporate seal (Kaku-in, used for everyday business documents). Seal carving typically takes 2–5 business days.
Register with the Legal Affairs Bureau (Homukyoku)
Submit the incorporation application to the local Legal Affairs Bureau (Homukyoku) along with the notarized articles, proof of capital deposit, directors' consent forms, seal registration forms, and the registration license tax of JPY 150,000 (or 0.7% of capital, whichever is greater). The registration date becomes the official date of incorporation.
Post-registration filings and compliance
Notify the tax office (Zeimusho), prefectural tax office, and municipal tax office of the new company. Register for consumption tax if applicable. Register for social insurance (Shakai Hoken) and labor insurance if hiring employees. Open a corporate bank account using the certificate of registration and registered seal.
Required Documents
- Articles of Incorporation (Teikan) in Japanese
- Passport copies and proof of address for all directors and incorporators
- Registered seal (Jitsuin) of each incorporator or notarized signature
- Proof of capital deposit (bank statement or certificate)
- Consent-to-act forms for directors
- Registered office address in Japan
- Company seal registration form (In-Kan Todoke)
Cost Overview
Tax Treatment
A KK is subject to national corporate income tax at 23.2% on taxable income. In addition, the company pays local inhabitants tax (approximately 5% of the national tax liability) and enterprise tax (3–7% depending on the prefecture and income level). The combined effective tax rate is typically 30–34%. Japan imposes a 20.42% withholding tax on dividends paid to non-resident shareholders, which may be reduced under an applicable double tax treaty. Capital gains are generally treated as ordinary income and taxed at the standard corporate rate. Consumption tax (VAT equivalent) is 10% on most goods and services, with a reduced rate of 8% on food and beverages. Small companies with taxable income up to JPY 8 million benefit from a reduced national rate of 15%.
Pros & Cons
- The most recognized and prestigious corporate form in Japan — essential for winning contracts with large Japanese enterprises
- Can issue shares and raise capital from investors; eligible for future IPO on TSE or other exchanges
- Limited liability for shareholders — personal assets are protected
- No restrictions on foreign ownership or nationality of directors since 2015 reforms
- Access to Japan's extensive network of 84 double tax treaties
- Perpetual succession — the company continues regardless of changes in ownership
- Effective corporate tax rate of 30–34% when national, prefectural, and municipal taxes are combined — one of the highest in Asia-Pacific
- Annual compliance obligations include filing corporate tax returns, consumption tax returns, financial statements, and maintaining statutory books in Japanese
- The seal (Hanko) system adds complexity — certain transactions and filings require specific registered seals
- Minimum registration license tax of JPY 150,000, making initial setup relatively expensive
- All official filings and documentation must be in Japanese, requiring translation services for foreign founders
- Closing or dissolving a KK is a formal, multi-step process that takes several months
Other Structures in Japan
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Get StartedThis content is educational and does not constitute legal or tax advice. Always consult a qualified professional for your specific situation. Data last verified March 2026.