Business Continuity During the Renewal of Management Visas in Japan

Hi, my name is Taisei Koshida, and I am a certified public accountant as well as a tax accountant.

I aim to assist non-Japanese business owners who struggle with reading or writing in Japanese. If you find the Japanese tax return system challenging, I can help you with your tax filings.

This blog may help if you are unclear about business continuity during the renewal of management visas in Japan.

When foreigners conduct business in Japan and renew their management visas, the most critical factor is the financial status of the managed companies. If business continuity is not recognized, it becomes challenging to renew the management visas.

1. If there is a gross profit in the most recent fiscal year or the one before that

(1) No accumulated net loss exists at the end of the most recent period

Even if a net loss occurs in the most recent period, as long as it’s not significant enough to result in accumulated net loss (where accumulated net profits from the past become negative), business continuity is recognized.

(2) There is an accumulated net loss at the end of the most recent fiscal year.

① When it does not result in insolvency

Insolvency means that a significant accumulated net loss from the past causes total liabilities to exceed total assets. If you can demonstrate no doubt about business continuity with a business plan and documents projecting profits for the following year, business continuity is recognized.

② Even if there was insolvency at the end of the most recent fiscal year, there wasn’t in the year prior

If insolvency does not persist for more than a year, business continuity is recognized when there’s a concrete prospect of improvement and insolvency will be resolved within a year. This is affirmed by an evaluation report forecasting the resolution of insolvency within a year, prepared by professionals such as certified public accountants or small business consultants.

③ Insolvency occurred in the two most recent fiscal years

In such cases, business continuity is generally not recognized.

When there was no gross profit in the two most recent fiscal years

In such cases, business continuity is generally not recognized.

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