The Japanese government is set to levy fines against overseas IT giants that have failed to register their overseas headquarters in Japan, Nikkei has learned. A total of 48 companies, including Twitter, Facebook-owner Meta and Google, were asked to register by the end of March, but it is thought that some have still not complied. With more countries stepping up regulations on IT giants to protect users, Japan is looking to enact its own strict measures.
In early June, the Ministry of Justice reiterated its request that some companies register their global headquarters in Japan by June 13. The ministry said that it would ask courts to fine the companies if they still have no intention of registering.
If IT companies have their headquarters registered in Japan, consumers would have an easier time filing lawsuits when problems, such as defamation on social media websites, occur. The government believes proper registration is essential to protect consumers.
Japan’s corporate code requires overseas companies doing business in the country on a continuous basis to register a headquarters in Japan. Overseas IT companies maintain that they are providing their services through the internet and are not continuously developing their business by establishing bases in Japan. These companies also appear to have insisted they believe it is enough to register their Japan-based units, such as those handling marketing operations.
The companies are also less likely to register because of the small correctional fine of 1 million yen ($7,400).
However, the 48 companies that the Ministry of Internal Affairs and Communication and the Justice Ministry requested to register have all posted notice of their business operations based on the revised telecommunications act that took effect in 2021. The government has determined that the companies have been doing business continuously in Japan and that their unregistered status is a violation of their obligations under Japanese law.
According to the Commercial Affairs Division of the Ministry of Justice, “multiple companies” have completed registration. Neither Meta nor Twitter appeared to have registered by June 15, and both companies declined to comment.
Overseas IT companies are thought to be holding off on registering in Japan over concerns about an increased corporate tax burden. To address this, the Justice Ministry allows for a system in which a company’s tax burden does not increase if the authority of its agent in Japan is limited. Some companies did not meet the deadline of June 13 but informed the Justice Ministry of their intention to register. The ministry’s policy is to hold off on penalizing these companies. Nikkei.Asia