Understanding business laws in Japan

Australians conducting business in Japan need to deal with a wide range of local legal issues, including laws
and regulations covering tax, employment, importing, foreign investment, property, banking and repatriation
of profits. Laws and regulations that may apply to your business in Japan are also subject to changes as the Government moves to attract more foreign investment and business operations to Japan.

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Investment rules

Foreign investment in Japan is governed by the Foreign Exchange and Foreign Trade Act (FEFTA). The Ministry of Finance (MoF) and the Ministry of Economy, Trade and Industry (METI) are primarily responsible for enforcing the act. Other agencies such as the Bank of Japan may also be involved depending on the type of investment.

Restrictions and prohibitions on foreign investment

Japan has relatively few restrictions on inbound foreign direct investment. However, some sectors of the economy, including broadcasting, are subject to tighter regulation of foreign investment than others. And for investment in the following sectors, prior notification of at least six months must be given to the Bank of Japan:

  • Agriculture, forestry and fisheries
  • Petroleum, utilities and nuclear energy
  • Aviation, maritime transport and defence
  • Leather making

Under the FEFTA, the Government may reject an application for foreign investment in these sectors if
it is deemed to ‘undermine national security, disrupt public order, impinge on public safety and seriously affect the smooth operation of the national economy’. MoF administers this process and may consult relevant ministries to determine whether or not a foreign investment breaches these terms.

Government policies for investment promotion

Increasing foreign direct investment in Japan is a stated aim of the Government as it tries to reinvigorate the economy after a long period of low growth. The broad framework and goals of the policy are set out in the 2015 documents Five Promises for Attracting Foreign Businesses to Japan and Revitalising Japan. Significant incentives are on offer for prospective foreign investors, including tax deductions for R&D activity and reduced rents, particularly in designated special economic zones. For more information on the incentives available for foreign investment into Japan, visit the JETRO website.

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Land and property rights

There are no restrictions on foreign investors purchasing real estate in Japan, except that the Ministry of Finance must be informed within 20 days of the purchase. Certain exemptions may apply.

Intellectual property (IP)

The Japan Patent Office administers all applications for trademarks, designs and patents. The trademark system, established under the Trademark Act, provides for the protection of the marks and logos used in commercially traded goods and services. The protection of designs– including the shape, pattern, colour and other characteristics – is regulated by the Design Act, and the Patent Act covers patents.

Trademarks

Trademarks are registered under the first-to-file rule. They do not have to be currently in use (either in Japan or overseas) in order to be registered in Japan; if the trademark owner has the intention of using the trademark in the future, it can be registered in Japan as long as certain criteria are met. Once registered, a trademark is protected for 10 years from the registration date. 

Design

Design rights protection begins once a design is registered and continues for 20 years. A fixed sum must be paid each year to maintain protection. The Design Law provides some protections that are unique to Japan. Designs can be registered as ‘similar designs’ such as a set of objects, a partial design, a design for movable elements and screen designs. Secret registration, where the gazetting of a design is delayed, is also allowed.

Patents

Patents are granted for 20 years and attract annual fees. Like trademarks, patents are made under the first-to-file rule.

Want to learn more? Explore our other Indonesia information categories or download the Japan Country Starter Pack.