Japan foreign-owned subsidiary dissolving Procedures

What are  the necessary procedures for dissolving a foreign-owned subsidiary in Japan?What are the documents that need to be submitted to the tax office when dissolving a company in Japan ?

Email: 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

Country-wise procedures of dissolution liquidation for foreigner-owned company

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What is the logic behind the deregistration and liquidation process of a foreign-owned company in Japan?
Answer:
The dissolution and liquidation procedures in each country may initially seem quite complex and difficult to comprehend. However, to understand the dissolution and liquidation process of a foreign-owned company, it’s helpful to start by understanding the initial setup process, which makes the foundation clearer.

In Japan, when establishing a foreign subsidiary, it’s necessary to conduct name pre-check and company registration with the Legal Affairs Bureau.
Correspondingly, when deciding to close a foreign subsidiary, a declaration must also be submitted to the Legal Affairs Bureau.
This declaration occurs twice in Japan: once when deciding to dissolve, and another after the completion of the liquidation.

In Japan, after the Legal Affairs Bureau approves the establishment of a foreign subsidiary, various registrations need to be completed with institutions such as the National Tax Agency, local tax offices, and local administrative authorities. This includes obtaining the National CIT number, local CIT number, JCT number, local administrative authorization number, import/export number, and bank account.

Correspondingly, during dissolution, each of these officially registered numbers needs to be canceled.
The relevant authorities, such as the National Tax Agency, local tax offices, and local administrative authorities, need to be notified.
As the foreign subsidiary starts to dissolve and initiate the liquidation process, tax declarations are required during the liquidation period, followed by another tax declaration after the liquidation is completed.
Subsequently, upon approval from the Legal Affairs Bureau, the cancellation of these registered numbers must be processed with institutions like the National Tax Agency, local tax offices, and local administrative authorities.

Simultaneously, each cancellation process requires relevant tax declarations to be attached.

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What are  the necessary procedures for dissolving a foreign-owned subsidiary in Japan?

Answer:
From here, we will explain in detail the procedures necessary for dissolving a company.
Here, we will explain the procedures for a general corporation to dissolve the company by normal liquidation.
Normal liquidation is a procedure that is carried out in cases where the debt does not exceed the company’s assets, unlike special liquidation, which involves filing a petition with the court and proceeding with the procedure.

Step 1.Resolution of dissolution at the shareholders’ meeting
As explained in the section on the reasons for dissolution, if you want to dissolve the company by normal liquidation, you first need to pass a resolution of dissolution at the shareholders’ meeting.
The resolution of dissolution requires the attendance of shareholders who have more than half of the voting rights, and the approval of more than two-thirds of the voting rights of the attending shareholders. This is called a special resolution.
In addition, if there is no provision in the articles of incorporation, you will also appoint a “liquidator”.
The liquidator is the person who carries out the dissolution and liquidation procedures, but in the case of small and medium-sized enterprises that are not large in scale, it is often the case that the representative director becomes the liquidator.
If all shareholders who can exercise their voting rights express their consent, it is possible to omit the holding of a shareholders’ meeting.
However, a written resolution of the shareholders’ meeting is required as an attachment to the dissolution registration.

Step 2.Registration of dissolution and appointment of liquidator
Within two weeks from the date of dissolution of the company, you must register the dissolution and appointment of the liquidator.
The registration is applied to the Legal Affairs Bureau, but registration license tax is required for registration.
Also, please note that minutes of the shareholders’ meeting are also required for both dissolution registration and liquidator appointment registration.
Competent Organization: to the Legal Affairs Bureau

Step 3.Notification of dissolution
Once the registration with the Legal Affairs Bureau is completed, you must notify the tax office, city hall, social insurance office, etc. of the dissolution of the company.
The notification form at this time is called “change notification form”.
You can download this format from the website of each public institution or receive it at the counter.
Also, you will need a certificate of registered matters for notification, so please receive it at the counter of the Legal Affairs Bureau.

Document for step 3
• Change notification form (notice of dissolution)
The Competent Organization: the tax office, city hall, social insurance office, etc.

Step 4 Preparation of inventory and balance sheet by liquidator
The liquidator must prepare an inventory and balance sheet of the company’s assets as of the date of dissolution and obtain approval at a shareholders’ meeting.
After approval, it will be stored in the company.

Step 5.Creditor protection procedure
The company will contact creditors who are aware of them that they are dissolving.
In addition to contacting them directly, you must also post a notice in the official gazette and set a period of more than two months to receive claims from creditors.
This procedure to protect the right of creditors to receive payment is called creditor protection procedure.

Step 6.Final tax return for dissolution
Within two months from the date of dissolution of the company, you must file a final tax return for the period from the beginning of your business year to the date of dissolution.
The period is from the beginning of your business year to your date of dissolution, so it will be less than one year in many cases.
Since regular tax returns are one year, when you file a final tax return for dissolution, let’s create a tax return form while consulting with a tax accountant or other professional.

Documents for step 6
Within two months from the day after the date of dissolution, you must file a final tax return for the period from the beginning of your business year to the date of dissolution, considering it as one business year.
• Final tax return (dissolution business year)
• Certificate of all history items (copy)
The Competent Organization: the tax office

Step 7.Distribution of residual property
After preparing an inventory of assets, The liquidator will also determine The Company’s claims and liabilities.
After that, if there are any unrecovered accounts receivable etc., they will be collected and The Company’s accounts payable and borrowings etc. will be paid off.
If there is any property left after paying off all debts, it will be distributed to shareholders.

Step 8.Final tax return for liquidation
When The Residual Property Is Determined, You Will File A Final Tax Return For Liquidation With The Tax Office Within One Month.
If there is income during The Liquidation Period, You Will Also Need To Pay Taxes So Please Be Careful.
This final tax return uses The Same Documents As Usual But The Contents Are Different From Usual Times.
Final tax return for liquidation For step 8
Within one month from the date of determination of residual property by liquidation, you must file a final tax return for liquidation.
This is the final tax return for the last business year.
• Final tax return (liquidation completion year)
The Competent Organization: the tax office

Step 9.Approval of Financial Statements
After The Distribution Of Residual Property Is Completed, The Liquidator Will Prepare A Financial Statement And Obtain Approval At A Shareholders’ Meeting.
This approval means that The Liquidation Is Completed And The Company Is Officially Dissolved.

Step 10. Registration Of Liquidation Completion

Within Two Weeks From The Date Of Approval Of The Financial Statements At The Shareholders’ Meeting You Must Register The Completion Of Liquidation. The registration is applied to the Legal Affairs Bureau.
For The Registration Of Liquidation Completion You Will Need A Registration Application Form For Liquidation Completion As Well As A Financial Statement And Minutes Of The Shareholders’ Meeting That Received Approval.
By This Registration Of Liquidation Completion The Company Will Officially Cease To Exist.
Competent Organization: to the Legal Affairs Bureau

Step 11.Notification Of Liquidation Completion

Finally You Must Notify The Tax Office City Ward Town And Village Office And Prefectural Tax Office Of The Completion Of Liquidation.
For This Notification You Will Need A Change Notification Form And A Certificate Of Registered Matters (Certificate Of All Closed Matters).
When You Submit These Notification Documents The Procedures For Dissolving The Company Will Be Completed.

Documents for step 11
After the liquidation completion registration is completed, submit the final notice of liquidation completion.
• Change notification form (notice of liquidation completion)
• Certificate of registered matters (certificate of all closed matters)
Competent Organization: The Tax Office City Ward Town And Village Office And Prefectural Tax Office

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What are the documents that need to be submitted to the tax office when dissolving a company in Japan ?

In the explanation of the dissolution procedure, some documents that need to be submitted to the tax office came up, but let’s explain them here as documents to be submitted to the tax office.

Notice of dissolution for step 3

Submit after the dissolution and liquidator appointment registration.

• Change notification form (notice of dissolution)
The Competent Organization: the tax office, city hall, social insurance office, etc.

Final tax return for dissolution for step 6

Within two months from the day after the date of dissolution, you must file a final tax return for the period from the beginning of your business year to the date of dissolution, considering it as one business year.

• Final tax return (dissolution business year)

• Certificate of all history items (copy)
The Competent Organization: the tax office

Final tax return during liquidation Between Step 7 and Step 8
(No Need if liquidation period less than 1 year)
If the residual property is determined within one year from the date of dissolution of the company, it is not necessary, but if the liquidation does not end in one year, a final tax return for the liquidation business year is required.
The liquidation business year is every year from the date of dissolution.
This final tax return must be filed within two months from the day after the end of the liquidation business year.
• Final tax return (liquidation business year)
The Competent Organization: the tax office

Final tax return for liquidation For step 8
Within one month from the date of determination of residual property by liquidation, you must file a final tax return for liquidation.
This is the final tax return for the last business year.
• Final tax return (liquidation completion year)

The Competent Organization: the tax office

Notice of liquidation completion for step 11
After the liquidation completion registration is completed, submit the final notice of liquidation completion.
• Change notification form (notice of liquidation completion)
• Certificate of registered matters (certificate of all closed matters)
Competent Organization: The Tax Office City Ward Town And Village Office And Prefectural Tax Office

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Version 2023/08/10
***
Based on  our  real service experiences plus digesting  study result  from several  web-pages  about this topic,  above contents just for your references.
Law and Regulations might be changed as following by time.
Please check with your trust-able professionals   or contact us  for verifying before  making decision.
***
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Country-wise procedures of dissolution liquidation for foreigner-owned company

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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

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