Japan Foreign Exchange and Foreign Trade Act (FEFTA) Classification Principles

Tokyo Evershine BPO Service Limited Corp.
E-mail: tyo4ww@evershinecpa.com

FEFTA Classification Principles (規類原則)

1. Basic Principle – Liberalization

• English:
  In principle, foreign direct investment (FDI) into Japan is liberalized.
  Filing is not required unless the transaction falls into designated restricted sectors.
• 日本語:
  原則として、対内直接投資は自由化されており、指定業種に該当しない限り、届出は不要。

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2. Prior Notification Required (事前届出義務)

• English:
  If the investment involves a “designated sector” related to national security, public order, or public safety, prior notification to the Ministry of Finance (via the Bank of Japan) is required before execution.
• 日本語:
  国家安全保障・公の秩序・公衆の安全に関わる「指定業種」に該当する場合、投資実行前に財務省（日本銀行経由）への 事前届出 が必要。

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3. Designated Sectors (指定業種)

• English:
  Examples include:
  • Defense, aerospace, nuclear energy, electricity, gas
  • Telecommunications, broadcasting, satellite
  • Cybersecurity, information system integration (critical infrastructure)
  • Semiconductors, AI, quantum technology, pharmaceuticals (critical use)
• 日本語:
  主な指定業種の例：
  • 防衛、航空宇宙、原子力、電力、ガス
  • 通信、放送、衛星
  • サイバーセキュリティ、情報システム統合（重要インフラ）
  • 半導体、AI、量子技術、医薬品（重要用途）

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4. Post-reporting (事後報告義務)

• English:
  If the investment does not involve a designated sector, the investor must submit a post-investment report to the authorities within 45 days after the execution of the investment.
• 日本語:
  指定業種に該当しない場合、投資実行後45日以内に 事後報告書 を提出する義務がある。

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5. Exemptions (免除)

• English:
  Certain transactions are exempt from both prior notification and post-reporting, such as:
  • Very small shareholding (typically <1%)
  • Purely passive investments (e.g., investment trusts with no management influence)
• 日本語:
  以下のような場合は、事前届出・事後報告ともに免除される場合がある：
  • 極めて少数の持株（通常1％未満）
  • 経営に影響を与えない純粋なパッシブ投資（例：投資信託）

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6. Regulatory Logic (総括的な規類原則)

• English:
  1. Default rule = investment is free (only post-reporting required).
  2. Exception = if in designated sensitive sectors → prior notification is required.
  3. Further exception = some cases exempt entirely (no filing at all).
• 日本語:
  1. 原則＝投資は自由（事後報告のみ）。
  2. 例外＝指定業種の場合 → 事前届出が必要。
  3. 再例外＝一定のケースでは完全免除（届出不要）。

Case Examples / 案例

(A) Cybersecurity and System Integration

• English:
  “Cybersecurity and system integration” falls under a designated sector, which inevitably triggers a prior notification requirement.
  Unless the investment is purely passive with no management involvement, it might be exempt. However, holding 49% of shares clearly constitutes significant participation; therefore, prior notification is required.
• 日本語:
  「サイバーセキュリティ及びシステムインテグレーション」は 指定業種 に該当し、必然的に 事前届出 が必要となります。
  投資が完全にパッシブで経営に関与しない場合には免除と見なされる可能性がありますが、49％の株式保有は明らかに重要な関与に当たるため、届出が必要です。

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(B) Air Cargo (Japanese Branch)

• English:
  “Air cargo” business through a Japanese branch also falls under a designated sector, which inevitably triggers a prior notification requirement.
• 日本語:
  「航空貨物」日本支店の事業も 指定業種 に該当し、必然的に 事前届出 が必要となります。

Contact Us

Tokyo Evershine BPO Service Limited Corp.
E-mail: tyo4ww@evershinecpa.com
Contact : Andrea Kyu, speak both Japanese and Mandarin
Onarimon Yusen Building 7F,Nishi-Shinbashi 3-23-5,Minato-ku, Tokyo 105-0003, Japan

or
For investment structure relevant with multi-national tax planning and Financial & Legal Due Diligence for M&A (Merge and Acquisition), send an email to HQ4tyo@evershinecpa.com
Dale Chen, Principal Partner/CPA in Taiwan+China+UK will be accountable to your case.
Email address:dalechen@evershinecpa.com
Linkedin address: Dale Chen  

Additional Information
Evershine has 100% affiliates in the following cities:
Headquarter, Taipei, Xiamen, Beijing, Shanghai, Shanghai,
Shenzhen, New York, San Francisco, Houston, Phoenix Tokyo,
Seoul, Hanoi, Ho Chi Minh, Bangkok, Singapore, Kuala Lumpur,
Manila, Dubai, New Delhi, Mumbai, Dhaka, Jakarta, Frankfurt,
Paris, London, Amsterdam, Milan, Barcelona, Bucharest,
Melbourne, Sydney, Toronto, Mexico

Other cities with existent clients:
Miami, Atlanta, Oklahoma, Michigan, Seattle, Delaware;
Berlin, Stuttgart; Prague; Czech Republic; Bangalore; Surabaya;
Kaohsiung, Hong Kong, Shenzhen, Donguan, Guangzhou, Qingyuan, Yongkang, Hangzhou, Suzhou, Kunshan, Nanjing, Chongqing, Xuchang, Qingdao, Tianjin.

Evershine Potential Serviceable City (2 months preparatory period):
Evershine CPAs Firm is an IAPA member firm headquartered in London, with 300 member offices worldwide and approximately 10,000 employees.
Evershine CPAs Firm is a LEA member headquartered in Chicago, USA, it has 600 member offices worldwide and employs approximately 28,000 people.
Besides, Evershine is Taiwan local Partner of ADP Streamline ®.
(version: 2024/07)

Please send email to HQ4tyo@evershinecpa.com

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