Doing Business 2020 Japan Economy Profile Japan Page 1 Doing Business 2020 Japan Economy Profile of Japan Doing Business 2020 Indicators (in order of appearance in the document) Starting a business Procedures, time, cost and paid-in minimum capital to start a limited liability company Dealing with construction permits Procedures, time and cost to complete all formalities to build a warehouse and the quality control and safety mechanisms in the construction permitting system Getting electricity Procedures, time and cost to get connected to the electrical grid, and the reliability of the electricity supply and the transparency of tariffs Registering property Procedures, time and cost to transfer a property and the quality of the land administration system Getting credit Movable collateral laws and credit information systems Protecting minority investors Minority shareholders’ rights in related-party transactions and in corporate governance Paying taxes Payments, time, total tax and contribution rate for a firm to comply with all tax regulations as well as postfiling processes Trading across borders Time and cost to export the product of comparative advantage and import auto parts Enforcing contracts Time and cost to resolve a commercial dispute and the quality of judicial processes Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency and the strength of the legal framework for insolvency Employing workers Flexibility in employment regulation and redundancy cost Page 2 Doing Business 2020 Japan About Doing Business The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. Doing Business captures several important dimensions of the regulatory environment as it applies to local firms. It provides quantitative indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of employing workers. Although Doing Business does not present rankings of economies on the employing workers indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business, it does present the data for these indicators. By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages economies to compete towards more efficient regulation; offers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector researchers and others interested in the business climate of each economy. In addition, Doing Business offers detailed subnational studies, which exhaustively cover business regulation and reform in different cities and regions within a nation. These studies provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected cities can compare their business regulations with other cities in the economy or region and with the 190 economies that Doing Business has ranked. The first Doing Business study, published in 2003, covered 5 indicator sets and 133 economies. This year’s study covers 11 indicator sets and 190 economies. Most indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013 (Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States) where Doing Business also collected data for the second largest business city. The data for these 11 economies are a population-weighted average for the 2 largest business cities. The project has benefited from feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the regulatory environment for business around the world. To learn more about Doing Business please visit doingbusiness.org Page 3 Doing Business 2020 Japan Ease of Doing Business in DB RANK DB SCORE Region OECD high income Japan Income Category High income 29 Population 126,529,100 78.0 City Covered Tokyo, Osaka Rankings on Doing Business topics - Japan 3 18 14 43 51 50 57 57 94 106 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Topic Scores 86.1 83.1 93.2 75.6 55.0 64.0 81.6 85.9 65.3 90.2 Starting a Business (rank) 106 Getting Credit (rank) 94 Trading across Borders (rank) 57 Score of starting a business (0-100) 86.1 Score of getting credit (0-100) 55.0 Score of trading across borders (0-100) 85.9 Procedures (number) 8 Strength of legal rights index (0-12) 5 Time to export Time (days) 11 Depth of credit information index (0-8) 6 Documentary compliance (hours) 2 Cost (number) 7.5 Credit registry coverage (% of adults) 0.0 Border compliance (hours) 27 Paid-in min. capital (% of income per capita) 0.0 Credit bureau coverage (% of adults) 100.0 Cost to export Documentary compliance (USD) 54 Dealing with Construction Permits (rank) 18 Protecting Minority Investors (rank) 57 Border compliance (USD) 272 Score of dealing with construction permits (0-100) 83.1 Score of protecting minority investors (0-100) 64.0 Time to export Procedures (number) 12 Extent of disclosure index (0-10) 7.0 Documentary compliance (hours) 3 Time (days) 108 Extent of director liability index (0-10) 6.0 Border compliance (hours) 40 Cost (% of warehouse value) 0.5 Ease of shareholder suits index (0-10) 8.0 Cost to export Building quality control index (0-15) 13.0 Extent of shareholder rights index (0-6) 4.0 Documentary compliance (USD) 107 Extent of ownership and control index (0-7) 2.0 Border compliance (USD) 315 Getting Electricity (rank) 14 Extent of corporate transparency index (0-7) 5.0 Score of getting electricity (0-100) 93.2 Enforcing Contracts (rank) 50 Procedures (number) 2 Paying Taxes (rank) 51 Score of enforcing contracts (0-100) 65.3 Time (days) 81 Score of paying taxes (0-100) 81.6 Time (days) 360 Cost (% of income per capita) 0.0 Payments (number per year) 19 Cost (% of claim value) 23.4 Reliability of supply and transparency of tariff index (0-8) 8 Time (hours per year) 129 Quality of judicial processes index (0-18) 7.5 Total tax and contribution rate (% of profit) 46.7 Registering Property (rank) 43 Postfiling index (0-100) 95.2 Resolving Insolvency (rank) 3 Score of registering property (0-100) 75.6 Score of resolving insolvency (0-100) 90.2 Procedures (number) 6 Recovery rate (cents on the dollar) 92.1 Time (days) 13 Time (years) 0.6 Cost (% of property value) 5.3 Cost (% of estate) 4.2 Quality of the land administration index (0-30) 25.5 Outcome (0 as piecemeal sale and 1 as going 1 concern) Strength of insolvency framework index (0-16) 13.0 Page 4 Doing Business 2020 Japan Starting a Business This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-sized limited liability company to start up and formally operate in each economy’s largest business city. To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times the income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one company is owned by 5 married women and the other by 5 married men. The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally start and formally operate a company To make the data comparable across economies, several assumptions about the business and the (number) procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay no bribes. • Preregistration (for example, name verification or reservation, notarization) The business: • Registration in the economy’s largest business city -Is a limited liability company (or its legal equivalent). If there is more than one type of limited • Postregistration (for example, social security registration, liability company in the economy, the limited liability form most common among domestic firms is company seal) chosen. Information on the most common form is obtained from incorporation lawyers or the statistical office. • Obtaining approval from spouse to start a business or to leave -Operates in the economy’s largest business city. For 11 economies the data are also collected for the home to register the company the second largest business city. • Obtaining any gender specific document for company -Performs general industrial or commercial activities such as the production or sale to the public of registration and operation or national identification card goods or services. The business does not perform foreign trade activities and does not handle products subject to a special tax regime, for example, liquor or tobacco. It is not using heavily Time required to complete each procedure (calendar days) polluting production processes. • Does not include time spent gathering information -Does not qualify for investment incentives or any special benefits. -Is 100% domestically owned. • Each procedure starts on a separate day (2 procedures cannot -Has five business owners, none of whom is a legal entity. One business owner holds 30% of the start on the same day) company shares, two owners have 20% of shares each, and two owners have 15% of shares • Procedures fully completed online are recorded as ½ day each. -Is managed by one local director. • Procedure is considered completed once final document is received -Has between 10 and 50 employees one month after the commencement of operations, all of them domestic nationals. • No prior contact with officials -Has start-up capital of 10 times income per capita. -Has an estimated turnover of at least 100 times income per capita. Cost required to complete each procedure (% of income per -Leases the commercial plant or offices and is not a proprietor of real estate. capita) -Has an annual lease for the office space equivalent to one income per capita. • Official costs only, no bribes -Is in an office space of approximately 929 square meters (10,000 square feet). -Has a company deed that is 10 pages long. • No professional fees unless services required by law or commonly used in practice The owners: Paid-in minimum capital (% of income per capita) -Have reached the legal age of majority and are capable of making decisions as an adult. If there • Funds deposited in a bank or with third party before registration is no legal age of majority, they are assumed to be 30 years old. or up to 3 months after incorporation -Are in good health and have no criminal record. -Are married, the marriage is monogamous and registered with the authorities. -Where the answer differs according to the legal system applicable to the woman or man in question (as may be the case in economies where there is legal plurality), the answer used will be the one that applies to the majority of the population. Page 5 Doing Business 2020 Japan Starting a Business - Tokyo Standardized Company Legal form Godo Kaisha Paid-in minimum capital requirement JPY 1 City Covered Tokyo Indicator Tokyo OECD high income Best Regulatory Performance Procedure – Men (number) 8 4.9 1 (2 Economies) Time – Men (days) 11.5 9.2 0.5 (New Zealand) Cost – Men (% of income per capita) 7.5 3.0 0.0 (2 Economies) Procedure – Women (number) 8 4.9 1 (2 Economies) Time – Women (days) 11.5 9.2 0.5 (New Zealand) Cost – Women (% of income per capita) 7.5 3.0 0.0 (2 Economies) Paid-in min. capital (% of income per capita) 0.0 7.6 0.0 (120 Economies) Figure – Starting a Business in Tokyo – Score 58.8 88.9 96.3 100.0 Procedures Time Cost Paid-in min. capital Figure – Starting a Business in Tokyo and comparator economies – Ranking and Score DB 2020 Starting a Business Score 0 100 93.4: Korea, Rep. (Rank: 33) 91.6: United States (Rank: 55) 86.3: Osaka 86.0: Tokyo 83.3: Malaysia (Rank: 126) 100: New Zealand (Rank: 1) Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. Page 6 Doing Business 2020 Japan Figure – Starting a Business in Tokyo – Procedure, Time and Cost Time (days) Cost (% of income per capita) 8 10 7 Cost (% of income per capita) 6 8 Time (days) 5 6 4 3 4 2 2 1 0 0 1 2 3 4 5 6 7 8 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 7 Doing Business 2020 Japan Details – Starting a Business in Tokyo – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Search the company name Less than one day no charge Agency : Legal Affairs Bureau of the Ministry of Justice (online procedure) Under the Japanese Company Laws, entrepreneurs may not file an application for incorporating a company if the same company name and head office address are already registered. There is no need for entrepreneurs to check the uniqueness of the company name and make the name reservation at the Legal Affairs Bureau of the Ministry of Justice. Entrepreneurs usually check if the proposed company name and head office address has been registered. This can be easily be checked through books or personal computers installed and offered for searching at the Legal Affairs Bureaus or online at http://www1.touki.or.jp/gateway.html. 2 Make a company seal 3 days JPY 10,000 - JPY 20,000 Agency : Seal maker A company seal is required by law: Article 20 of the Commercial Registration Act. The associated fee is JPY 10,000 for machine-carved seal or JPY 20,000 for hand-carved seal. The company seal must be registered at the Legal Affairs Bureau at the time of the incorporation under the Commercial Registration Act. An entrepreneur usually files the registration of the company seal as well as the registration of incorporation of the company with the competent Legal Affairs Bureau. 3 Register the company at the Legal Affairs Bureau of the Ministry of Justice 3 days 0.7% of the capital amount Agency : Legal Affairs Bureau of the Ministry of Justice or JPY 60,000, whichever To apply for registration, the entrepreneur must submit supporting documents with the application is higher plus Yen 450 for to the Legal Affairs Bureau headquarter or any of its branch offices designated in major cities, the Certificate of including: corporation seal registration - Articles of incorporation (signed by 5 entrepreneurs who contributed capital) - Application of seal registration - Letter of proxy (if company is registered by a lawyer or a judicial scrivener) - Personal seal of the executive member - Proof of paid-in capital (bank statement or letter from the company's representative certifying the receiving of capital contributions) - Proof of address - Confirmation of appointment of the company representative - Confirmation from company representative that he agrees to the appointment. Additionally, the company’s seal must be registered at the Legal Affairs Bureau of the Ministry of Justice upon registration of the company. The Certificate of corporation seal registration costs Yen 450. Once the filed documents are reviewed and approved, the company applies for the issuance of a company registration certificate. Normally, a judicial scrivener completes this registration procedure on behalf of the company. By virtue of the amended Commercial Registration Regulations in force since June 2004, company registration applications can be submitted online. To do so, the user must first obtain an electronic signature or a digital certification. There are two types of digital certifications: data file and IC card. The user must purchase an IC card reader to use the IC card system. 4 File the notification of company incorporation and the opening of a payroll office and apply 1 day no charge for the approval of blue tax returns Agency : National Tax Agency A notification of the company incorporation must be filed to the Tax Agency (District Tax Office) within 2 months of the incorporation date. The notification of opening a payroll office must be filed within one month of the opening of a payroll office. As of January 2016, 13-digit "corporation identification numbers" (houjin bangou) must be indicated on (a) the notification of company incorporation, (b) notification of the opening of a payroll office and (c) application for the approval of blue tax returns.The application for the approval of blue tax returns must be filed either within 3 months of the incorporation date, or a day prior to the end of the first fiscal year, whichever comes first. Applicants can submit their application either online or in person. 5 File the notification of commencement of business at the local tax office 1 day no charge Agency : Local tax department of Tokyo Metropolitan Government A notification of commencement of business must be provided to the relevant authorities. If the head office of the company is located within Tokyo’s 23 wards, the company must file a Notification for the Commencement of Business at the tax office of the Tokyo Metropolitan Government within 15 days of company incorporation. If the head office of the company is located outside Tokyo’s 23 wards, the company must file a Notification of Incorporation at the tax office of the municipal government and the tax office of the prefectural government within 1 month of company incorporation. Page 8 Doing Business 2020 Japan 6 File the labor insurance notifications and employment rules 1 day no charge Agency : Labor Standards Inspection Office Employees are automatically provided with labor insurance as soon as they are hired. Labor insurance usually includes employment and worker's compensation insurance. Upon recruitment, the company must file without delay the following documents at the competent Labor Standards Inspection Office: • Notification of the application for labor insurance within 10 days of the insurance coverage commencement date • Notification of the approximate insurance contributions within 50 days of the insurance coverage commencement date • The rules of employment (once the company hires 10 or more employees) • Certificate of Registered Matters (Certificate of Company Registration) 7 File the applications for health insurance and public welfare pension 1 day no charge Agency : Japan Pension Service As soon as the company and its employees are covered for health insurance and public welfare pension, the company must file the following documents at the Social Insurance Office within 5 days of the business insurance coverage commencement date: - Notification of the acquisition of insured status - The insurance details covering Health and Employee Pension insurance - Certificate of Registered Matters (Certificate of Company Registration) 8 File the company application for employment insurance 1 day no charge Agency : Public Employment Security Office The notification of the company's application for employment insurance must be filed at the Public Employment Security Office within 10 days of commencement of employment by the company. When a new employee is recruited, he/she is automatically insured under the company's employment insurance. The company must thus file a "Notification of Acquisition of Insured Status under Employment Insurance" at the Public Employment Security Office by the 10th day of the month immediately consecutive to that of the employee's appointment date. Takes place simultaneously with previous procedure. Page 9 Doing Business 2020 Japan Starting a Business - Osaka Standardized Company Legal form Godo Kaisha (LLC) Paid-in minimum capital requirement JPY 1 City Covered Osaka Indicator Osaka OECD high income Best Regulatory Performance Procedure – Men (number) 8 4.9 1 (2 Economies) Time – Men (days) 10.5 9.2 0.5 (New Zealand) Cost – Men (% of income per capita) 7.5 3.0 0.0 (2 Economies) Procedure – Women (number) 8 4.9 1 (2 Economies) Time – Women (days) 10.5 9.2 0.5 (New Zealand) Cost – Women (% of income per capita) 7.5 3.0 0.0 (2 Economies) Paid-in min. capital (% of income per capita) 0.0 7.6 0.0 (120 Economies) Figure – Starting a Business in Osaka – Score 58.8 89.9 96.3 100.0 Procedures Time Cost Paid-in min. capital Figure – Starting a Business in Osaka and comparator economies – Ranking and Score DB 2020 Starting a Business Score 0 100 93.4: Korea, Rep. (Rank: 33) 91.6: United States (Rank: 55) 86.3: Osaka 86.0: Tokyo 83.3: Malaysia (Rank: 126) 100: New Zealand (Rank: 1) Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. Page 10 Doing Business 2020 Japan Figure – Starting a Business in Osaka – Procedure, Time and Cost Time (days) Cost (% of income per capita) 8 10 7 Cost (% of income per capita) 8 6 Time (days) 5 6 4 4 3 2 2 1 0 0 1 2 3 4 5 6 7 8 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 11 Doing Business 2020 Japan Details – Starting a Business in Osaka – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Search the company name Less than one day no charge Agency : Legal Affairs Bureau of the Ministry of Justice (online procedure) Under the Japanese Company Laws, entrepreneurs may not file an application for incorporating a company if the same company name and head office address are already registered. There is no need for entrepreneurs to check the uniqueness of the company name and make the name reservation at the Legal Affairs Bureau of the Ministry of Justice. Entrepreneurs usually check if the proposed company name and head office address has been registered. This can be easily be checked through books or personal computers installed and offered for searching at the Legal Affairs Bureaus or online at http://www1.touki.or.jp/gateway.html. 2 Make a company seal 3 days JPY 10,000 - JPY 20,000 Agency : Seal maker A company seal is required by law: Article 20 of the Commercial Registration Act. The associated fee is JPY 10,000 for machine-carved seal or JPY 20,000 for hand-carved seal. The company seal must be registered at the Legal Affairs Bureau at the time of the incorporation under the Commercial Registration Act. An entrepreneur usually files the registration of the company seal as well as the registration of incorporation of the company with the competent Legal Affairs Bureau. 3 Register the company at the Legal Affairs Bureau of the Ministry of Justice 2 days 0.7% of the capital amount Agency : Legal Affairs Bureau of the Ministry of Justice or JPY 60,000, whichever To apply for registration, the entrepreneur must submit several supporting documents with the is higher plus Yen 450 for application to the Legal Affairs Bureau headquarter or any of its branch offices designated in major the Certificate of cities, including: corporation seal registration - Articles of incorporation - Application of seal registration - Letter of proxy (if company is registered by a lawyer or a judicial scrivener) - Personal seal of the director or a lawyer registering the company - Proof of paid-in capital (bank statement or letter from the company's representative certifying the receiving of capital contributions) - Proof of address - Confirmation of appointment of the company representative - Confirmation from company representative that he agrees to the appointment. Additionally, the company’s seal must be registered at the Legal Affairs Bureau of the Ministry of Justice upon registration of the company. Certificate of corporation seal registration costs Yen 450. Once the filed documents are reviewed and approved, the company applies for the issuance of a company registration certificate. Normally, a judicial scrivener completes this registration procedure on behalf of the company. By virtue of the amended Commercial Registration Regulations in force since June 2004, company registration applications can be submitted online. To do so, the user must first obtain an electronic signature or a digital certification. There are two types of digital certifications: data file and IC card. The user must purchase an IC card reader to use the IC card system. 4 File the notification of company incorporation and the opening of a payroll office and apply 1 day no charge for the approval of blue tax returns Agency : National Tax Agency The notification of the company incorporation must be filed within 2 months of the incorporation date. The notification of opening a payroll office must be filed within one month of the opening of a payroll office. The application for the approval of blue tax returns must be filed either within 3 months of the incorporation date, or a day prior to the end of the first fiscal year, whichever comes first. Applicants can submit their application either online or in person. 5 File the notification of commencement of business at the local tax office 1 day no charge Agency : Local tax department The company must file a Notification of Incorporation at the tax office of the municipal government and the tax office of the prefectural government within 2 months of company incorporation. Page 12 Doing Business 2020 Japan 6 File the labor insurance notifications and employment rules 1 day no charge Agency : Labor Standards Inspection Office Employees are automatically provided with labor insurance as soon as they are hired. Labor insurance usually includes employment and worker's compensation insurance. Upon recruitment, the company must file without delay the following documents at the competent Labor Standards Inspection Office: • Notification of the application for labor insurance within 10 days of the insurance coverage commencement date • Notification of the approximate insurance contributions within 50 days of the insurance coverage commencement date • The rules of employment (once the company hires 10 or more employees) • Certificate of Registered Matters (Certificate of Company Registration) 7 File the applications for health insurance and public welfare pension 1 day no charge Agency : Japan Pension Service As soon as the company and its employees are covered for health insurance and public welfare pension, the company must file the following documents at the Social Insurance Office within 5 days of the business insurance coverage commencement date: - Notification of the acquisition of insured status - The insurance details covering Health and Employee Pension insurance - Certificate of Registered Matters (Certificate of Company Registration) 8 File the company application for employment insurance 1 day no charge Agency : Public Employment Security Office The notification of the company's application for employment insurance must be filed at the Public Employment Security Office within 10 days of commencement of employment by the company. When a new employee is recruited, he/she is automatically insured under the company's employment insurance. The company must thus file a "Notification of Acquisition of Insured Status under Employment Insurance" at the Public Employment Security Office by the 10th day of the month immediately consecutive to that of the employee's appointment date. Takes place simultaneously with previous procedure. Page 13 Doing Business 2020 Japan Dealing with Construction Permits This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required notifications, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certification requirements. The most recent round of data collection was completed in May 2019. See the methodology for more information What the indicators measure Case study assumptions Procedures to legally build a warehouse (number) To make the data comparable across economies, several assumptions about the construction company, the warehouse project and the utility connections are used. • Submitting all relevant documents and obtaining all necessary clearances, licenses, permits and certificates The construction company (BuildCo): • Submitting all required notifications and receiving all necessary - Is a limited liability company (or its legal equivalent) and operates in the economy’s largest inspections business city. For 11 economies the data are also collected for the second largest business city. • Obtaining utility connections for water and sewerage - Is 100% domestically and privately owned; has five owners, none of whom is a legal entity. Has a licensed architect and a licensed engineer, both registered with the local association of architects • Registering and selling the warehouse after its completion or engineers. BuildCo is not assumed to have any other employees who are technical or licensed Time required to complete each procedure (calendar days) experts, such as geological or topographical experts. - Owns the land on which the warehouse will be built and will sell the warehouse upon its • Does not include time spent gathering information completion. • Each procedure starts on a separate day—though procedures that can be fully completed online are an exception to this rule The warehouse: • Procedure is considered completed once final document is - Will be used for general storage activities, such as storage of books or stationery. received - Will have two stories, both above ground, with a total constructed area of approximately 1,300.6 square meters (14,000 square feet). Each floor will be 3 meters (9 feet, 10 inches) high and will be • No prior contact with officials located on a land plot of approximately 929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the warehouse is valued at 50 times income per capita. Cost required to complete each procedure (% of income per - Will have complete architectural and technical plans prepared by a licensed architect. If capita) preparation of the plans requires such steps as obtaining further documentation or getting prior • Official costs only, no bribes approvals from external agencies, these are counted as procedures. - Will take 30 weeks to construct (excluding all delays due to administrative and regulatory Building quality control index (0-15) requirements). • Quality of building regulations (0-2) The water and sewerage connections: • Quality control before construction (0-1) - Will be 150 meters (492 feet) from the existing water source and sewer tap. If there is no water • Quality control during construction (0-3) delivery infrastructure in the economy, a borehole will be dug. If there is no sewerage • Quality control after construction (0-3) infrastructure, a septic tank in the smallest size available will be installed or built. - Will have an average water use of 662 liters (175 gallons) a day and an average wastewater flow • Liability and insurance regimes (0-2) of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and • Professional certifications (0-4) a peak wastewater flow of 1,136 liters (300 gallons) a day. - Will have a constant level of water demand and wastewater flow throughout the year; will be 1 inch in diameter for the water connection and 4 inches in diameter for the sewerage connection. Page 14 Doing Business 2020 Japan Dealing with Construction Permits - Tokyo Standardized Warehouse Estimated value of warehouse JPY 225,125,001.20 City Covered Tokyo Indicator Tokyo OECD high income Best Regulatory Performance Procedures (number) 12 12.7 None in 2018/19 Time (days) 108 152.3 None in 2018/19 Cost (% of warehouse value) 0.5 1.5 None in 2018/19 Building quality control index (0-15) 13.0 11.6 15.0 (6 Economies) Figure – Dealing with Construction Permits in Tokyo – Score 72.0 76.4 97.4 86.7 Procedures Time Cost Building quality control index Figure – Dealing with Construction Permits in Tokyo and comparator economies – Ranking and Score DB 2020 Dealing with Construction Permits Score 0 100 89.9: Malaysia (Rank: 2) 86.5: New Zealand (Rank: 7) 84.4: Korea, Rep. (Rank: 12) 83.1: Tokyo 83.0: Osaka 80.0: United States (Rank: 24) Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores are the simple average of the scores for each of the component indicators. Page 15 Doing Business 2020 Japan Figure – Dealing with Construction Permits in Tokyo – Procedure, Time and Cost Time (days) Cost (% of warehouse value) 0.25 100 Cost (% of warehouse value) 0.2 80 Time (days) 0.15 60 0.1 40 20 0.05 0 0 1 *2 3 *4 5 6 7 8 9 10 11 12 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 16 Doing Business 2020 Japan Figure – Dealing with Construction Permits in Tokyo and comparator economies – Measure of Quality 16 15.0 14 13.0 13.0 12.4 13.0 12.0 11.6 12 Index score 10 8 6 4 2 0 Tokyo Korea, Malaysia New United Osaka OECD Rep. Zealand States high income Details – Dealing with Construction Permits in Tokyo – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Obtain consent of neighborhood 30 days no charge Agency : Local Authority BuildCo must post a sign board with specific information about the planned construction on the plot. BuildCo must obtain the non objection of neighbors and cannot begin construction until 30 days have elapsed. 2 Hold initial consultation with local authority 24 days no charge Agency : Local Authority BuildCo must obtain clearance at the initial consultation phase with as many as 14 different departments at the prefecture level. The consultations are mandated by the the Building Standards Law of Japan (Law No.201 from May 24th 1950) and vary according to the prefecture. 3 Obtain building permit from Japan Building Center 21 days JPY 225,000 Agency : Japan Building Center After the initial consultation with the local authority, BuildCo must submit a building permit application. A building official from the Japan Building Center shall, upon receiving an application, examine the plan for the building concerned as to whether it conforms to the provisions related to building regulations. Normally, architects submit the application on behalf of their clients. The Fire Office is also involved in the permit examination process. The application must be amended when any changes are made after the building permit is obtained. 4 Request and obtain workmen’s compensation insurance proof from Labor Control Office 2 days no charge Agency : Labor Control Office BuildCo must submit the Labor insurance proof 10 days prior to the first day of construction. BuildCo must also submit the estimated insurance premiums declaration to the Labor Control Office within 20 days after the construction work starts and must pay the labor insurance premiums. No cost is incurred for obtaining confirmation.Worker compensation insurance is valid for a year, and it must be extended every year between April 1 and May 20. The Labor insurance for the construction industry is 0.2185% of the construction cost. 5 Purchase and post statutory construction notice sign board 1 day JPY 50,000 Agency : Local Authority The construction notice sign board should include the following information: • Construction company registry certificate number • Proof of worker compensation insurance • Building permit number • Name of client, designer, contractor, project name, address, the person in charge, etc. 6 Submit construction method plan to local authority and obtain approval 1 day no charge Agency : Local Authority The construction method plan is submitted to the local authority with the project drawings along with an application form. The local authorities have seven days to object to the final construction method plan. A water and sewerage request is included in the submission. 7 Submit project safety and health and resources recycling plan to local authority and obtain 1 day no charge approval Agency : Local Authority According to the Building Recycling Law, BuildCo must submit the project safety, health and resources recycling plan to the local authorities seven days before the first day of construction. Page 17 Doing Business 2020 Japan 8 Conduct intermediate inspection and submit inspection report to the Japan Building 2 days JPY 211,000 Center Agency : Japan Building Center The in-house engineer responsible for building quality control must inspect structural conditions and conduct new building position surveys when the construction is half-completed. The inspection report must be submitted to the Japan Building Center. Larger buildings require the Japan Building Center and the Fire Department to conduct an on site inspection. 9 Receive connection to water and sewage services 21 days no charge Agency : Tokyo Water Company The installation cost is included in water and sewerage charges. 10 Request and receive final inspection from Japan Building Center 1 day JPY 220,000 Agency : Japan Building Center A final inspection must be conducted by the Japan Building Center. If there are any outstanding issues pointed out by inspectors, remedial work must be completed and the building re-inspected before the completion certificate is issued. 11 Obtain completion certificate 18 days no charge Agency : Japan Building Center The completion certificate is required to start occupying and using the building. 12 Register the building with the Land and Building Registry 12 days JPY 450,250 Agency : Land and Building Registry The building registration involves two steps. First, the description of the building should be registered (usually through a notary public). This part cannot be done by BuildCo or its lawyer. No formal registration cost is required. Second, proof of building ownership should be registered. It takes about 10 to 14 days for the registration to be completed. The cost of proof of building ownership registration varies depending on the value of the building (0.2% of the building’s taxable value). Takes place simultaneously with previous procedure. Page 18 Doing Business 2020 Japan Details – Dealing with Construction Permits in Tokyo – Measure of Quality Answer Score Building quality control index (0-15) 13.0 Quality of building regulations index (0-2) 2.0 How accessible are building laws and regulations in your economy? (0-1) Available online; Free 1.0 of charge. Which requirements for obtaining a building permit are clearly specified in the building regulations or on any List of required 1.0 accessible website, brochure or pamphlet? (0-1) documents; Fees to be paid; Required preapprovals. Quality control before construction index (0-1) 1.0 Which third-party entities are required by law to verify that the building plans are in compliance with existing Licensed architect; 1.0 building regulations? (0-1) Licensed engineer. Quality control during construction index (0-3) 2.0 What types of inspections (if any) are required by law to be carried out during construction? (0-2) Inspections by 1.0 external engineer or firm; Inspections at various phases. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0 inspections are always done in practice. Quality control after construction index (0-3) 3.0 Is there a final inspection required by law to verify that the building was built in accordance with the approved Yes, final inspection 2.0 plans and regulations? (0-2) is done by government agency; Yes, in-house engineer submits report for final inspection; Yes, external engineer submits report for final inspection. Do legally mandated final inspections occur in practice? (0-1) Final inspection 1.0 always occurs in practice. Liability and insurance regimes index (0-2) 1.0 Which parties (if any) are held liable by law for structural flaws or problems in the building once it is in use Architect or engineer; 1.0 (Latent Defect Liability or Decennial Liability)? (0-1) Construction company; Owner or investor. Which parties (if any) are required by law to obtain an insurance policy to cover possible structural flaws or No party is required 0.0 problems in the building once it is in use (Latent Defect Liability Insurance or Decennial Insurance)? (0-1) by law to obtain insurance . Professional certifications index (0-4) 4.0 What are the qualification requirements for the professional responsible for verifying that the architectural plans Minimum number of 2.0 or drawings are in compliance with existing building regulations? (0-2) years of experience; University degree in architecture or engineering; Being a registered architect or engineer. Page 19 Doing Business 2020 Japan What are the qualification requirements for the professional who supervises the construction on the ground? (0- Minimum number of 2.0 2) years of experience; University degree in engineering, construction or construction management; Being a registered architect or engineer; Passing a certification exam. Page 20 Doing Business 2020 Japan Dealing with Construction Permits - Osaka Standardized Warehouse Estimated value of warehouse JPY 225,125,001.20 City Covered Osaka Indicator Osaka OECD high income Best Regulatory Performance Procedures (number) 12 12.7 None in 2018/19 Time (days) 109 152.3 None in 2018/19 Cost (% of warehouse value) 0.5 1.5 None in 2018/19 Building quality control index (0-15) 13.0 11.6 15.0 (6 Economies) Figure – Dealing with Construction Permits in Osaka – Score 72.0 76.1 97.4 86.7 Procedures Time Cost Building quality control index Figure – Dealing with Construction Permits in Osaka and comparator economies – Ranking and Score DB 2020 Dealing with Construction Permits Score 0 100 89.9: Malaysia (Rank: 2) 86.5: New Zealand (Rank: 7) 84.4: Korea, Rep. (Rank: 12) 83.1: Tokyo 83.0: Osaka 80.0: United States (Rank: 24) Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores are the simple average of the scores for each of the component indicators. Page 21 Doing Business 2020 Japan Figure – Dealing with Construction Permits in Osaka – Procedure, Time and Cost Time (days) Cost (% of warehouse value) 0.25 100 Cost (% of warehouse value) 0.2 80 Time (days) 0.15 60 0.1 40 20 0.05 0 0 1 *2 3 *4 5 6 7 8 9 10 11 12 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 22 Doing Business 2020 Japan Figure – Dealing with Construction Permits in Osaka and comparator economies – Measure of Quality 16 15.0 14 13.0 13.0 12.4 13.0 12.0 11.6 12 Index score 10 8 6 4 2 0 Osaka Korea, Malaysia New United Tokyo OECD Rep. Zealand States high income Details – Dealing with Construction Permits in Osaka – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Obtain consent of neighborhood 30 days no charge Agency : Local Authority BuildCo must post a sign board with specific information about the planned construction on the plot. BuildCo must obtain the non objection of neighbors and cannot begin construction until 30 days have elapsed. 2 Hold initial consultation with local authority 24 days no charge Agency : Local Authority BuildCo must obtain clearance at the initial consultation phase with as many as 14 different departments at the prefecture level. The consultations are mandated by the the Building Standards Law of Japan (Law No.201 from May 24th 1950) and vary according to the prefecture. 3 Obtain building permit from Japan Building Center 22 days JPY 225,000 Agency : Japan Building Center After the initial consultation with the local authority, BuildCo must submit a building permit application. A building official from the Japan Building Center shall, upon receiving an application, examine the plan for the building concerned as to whether it conforms to the provisions related to building regulations. Normally, architects submit the application on behalf of their clients. The Fire Office is also involved in the permit examination process. The application must be amended when any changes are made after the building permit is obtained. In addition, a change permit must be obtained prior to final inspection by local authorities. 4 Request and obtain workmen’s compensation insurance proof from Labor Control Office 2 days no charge Agency : Labor Control Office BuildCo must submit the Labor insurance proof 10 days prior to the first day of construction. BuildCo must also submit the estimated insurance premiums declaration to the Labor Control Office within 20 days after the construction work starts and must pay the labor insurance premiums. No cost is incurred for obtaining confirmation.Worker compensation insurance is valid for a year, and it must be extended every year between April 1 and May 20. The Labor insurance for the construction industry is 0.2185% of the construction cost. 5 Purchase and post statutory construction notice sign board 1 day JPY 50,000 Agency : Local Authority The construction notice sign board should include the following information: • Construction company registry certificate number • Proof of worker compensation insurance • Building permit number • Name of client, designer, contractor, project name, address, the person in charge, etc. 6 Submit construction method plan to local authority 1 day no charge Agency : Local Authority The construction method plan is submitted to the local authority with the project drawings along with an application form. The local authorities have seven days to object to the final construction method plan. A water and sewerage request is included in the submission. 7 Submit project safety and health and resources recycling plan to local authority 1 day no charge Agency : Local Authority According to the Building Recycling Law, BuildCo must submit the project safety, health and resources recycling plan to the local authorities seven days before the first day of construction. 8 Conduct intermediate inspection and submit inspection report to the Japan Building 2 days JPY 211,000 Center Agency : Japan Building Center The in-house engineer responsible for building quality control must inspect structural conditions and conduct new building position surveys when the construction is half-completed. The inspection report must be submitted to the Japan Building Center. Larger buildings require the Japan Building Center and the Fire Department to conduct an on site inspection. Page 23 Doing Business 2020 Japan 9 Request and receive connection to water and sewage services 21 days no charge Agency : Osaka City Water The installation cost is included in water and sewerage charges. 10 Request and receive final inspection from Japan Building Center 1 day JPY 220,000 Agency : Japan Building Center A final inspection must be conducted by the Japan Building Center. If there are any outstanding issues pointed out by inspectors, remedial work must be completed and the building re-inspected before the completion certificate is issued. 11 Obtain completion certificate 18 days no charge Agency : Japan Building Center The completion certificate is required to start occupying and using the building. 12 Register the building with the Land and Building Registry 12 days JPY 450,250 Agency : Land and Building Registry The building registration involves two steps. First, the description of the building should be registered (usually through a notary public). This part cannot be done by BuildCo or its lawyer. No formal registration cost is required. Second, proof of building ownership should be registered. It takes about 10 to 14 days for the registration to be completed. The cost of proof of building ownership registration varies depending on the value of the building (0.2% of the building’s taxable value). Takes place simultaneously with previous procedure. Page 24 Doing Business 2020 Japan Details – Dealing with Construction Permits in Osaka – Measure of Quality Answer Score Building quality control index (0-15) 13.0 Quality of building regulations index (0-2) 2.0 How accessible are building laws and regulations in your economy? (0-1) Available online; Free 1.0 of charge. Which requirements for obtaining a building permit are clearly specified in the building regulations or on any List of required 1.0 accessible website, brochure or pamphlet? (0-1) documents; Fees to be paid; Required preapprovals. Quality control before construction index (0-1) 1.0 Which third-party entities are required by law to verify that the building plans are in compliance with existing Licensed architect; 1.0 building regulations? (0-1) Licensed engineer. Quality control during construction index (0-3) 2.0 What types of inspections (if any) are required by law to be carried out during construction? (0-2) Inspections at various 1.0 phases. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0 inspections are always done in practice. Quality control after construction index (0-3) 3.0 Is there a final inspection required by law to verify that the building was built in accordance with the approved Yes, final inspection 2.0 plans and regulations? (0-2) is done by government agency; Yes, in-house engineer submits report for final inspection; Yes, external engineer submits report for final inspection. Do legally mandated final inspections occur in practice? (0-1) Final inspection 1.0 always occurs in practice. Liability and insurance regimes index (0-2) 1.0 Which parties (if any) are held liable by law for structural flaws or problems in the building once it is in use Architect or engineer; 1.0 (Latent Defect Liability or Decennial Liability)? (0-1) Construction company; Owner or investor. Which parties (if any) are required by law to obtain an insurance policy to cover possible structural flaws or No party is required 0.0 problems in the building once it is in use (Latent Defect Liability Insurance or Decennial Insurance)? (0-1) by law to obtain insurance . Professional certifications index (0-4) 4.0 What are the qualification requirements for the professional responsible for verifying that the architectural plans Minimum number of 2.0 or drawings are in compliance with existing building regulations? (0-2) years of experience; University degree in architecture or engineering; Being a registered architect or engineer. Page 25 Doing Business 2020 Japan What are the qualification requirements for the professional who supervises the construction on the ground? (0- Minimum number of 2.0 2) years of experience; University degree in engineering, construction or construction management; Being a registered architect or engineer; Passing a certification exam. Page 26 Doing Business 2020 Japan Getting Electricity This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tariffs index measures reliability of supply, transparency of tariffs and the price of electricity. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to obtain an electricity connection (number) To make the data comparable across economies, several assumptions about the warehouse, the electricity connection and the monthly consumption are used. • Submitting all relevant documents and obtaining all necessary clearances and permits The warehouse: • Completing all required notifications and receiving all necessary - Is owned by a local entrepreneur and is used for storage of goods. inspections - Is located in the economy’s largest business city. For 11 economies the data are also collected for • Obtaining external installation works and possibly purchasing the second largest business city. material for these works - Is located in an area where similar warehouses are typically located and is in an area with no physical constraints. For example, the property is not near a railway. • Concluding any necessary supply contract and obtaining final supply - Is a new construction and is being connected to electricity for the first time. - Has two stories with a total surface area of approximately 1,300.6 square meters (14,000 square Time required to complete each procedure (calendar days) feet). The plot of land on which it is built is 929 square meters (10,000 square feet). • Is at least 1 calendar day The electricity connection: • Each procedure starts on a separate day - Is a permanent one with a three-phase, four-wire Y connection with a subscribed capacity of 140- • Does not include time spent gathering information kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1 kilowatt (kW). - Has a length of 150 meters. The connection is to either the low- or medium-voltage distribution • Reflects the time spent in practice, with little follow-up and no network and is either overhead or underground, whichever is more common in the area where the prior contact with officials warehouse is located and requires works that involve the crossing of a 10-meter road (such as by excavation or overhead lines) but are all carried out on public land. There is no crossing of other Cost required to complete each procedure (% of income per owners’ private property because the warehouse has access to a road. capita) - Does not require work to install the internal wiring of the warehouse. This has already been • Official costs only, no bribes completed up to and including the customer’s service panel or switchboard and the meter base. • Value added tax excluded The monthly consumption: The reliability of supply and transparency of tariffs index (0-8) - It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00 p.m. (8 hours • Duration and frequency of power outages (0–3) a day), with equipment utilized at 80% of capacity on average and that there are no electricity cuts • Tools to monitor power outages (0–1) (assumed for simplicity reasons) and the monthly energy consumption is 26,880 kilowatt-hours (kWh); hourly consumption is 112 kWh. • Tools to restore power supply (0–1) - If multiple electricity suppliers exist, the warehouse is served by the cheapest supplier. • Regulatory monitoring of utilities’ performance (0–1) - Tariffs effective in January of the current year are used for calculation of the price of electricity for the warehouse. Although January has 31 days, for calculation purposes only 30 days are used. • Financial deterrents limiting outages (0–1) • Transparency and accessibility of tariffs (0–1) Price of electricity (cents per kilowatt-hour)* • Price based on monthly bill for commercial warehouse in case study *Note: Doing Business measures the price of electricity, but it is not included in the ease of doing business score nor in the ranking on the ease of getting electricity. Page 27 Doing Business 2020 Japan Getting Electricity - Tokyo Standardized Connection Name of utility Tokyo Electric Power Company (TEPCO) Power Grid, Inc. Price of electricity (US cents per kWh) 23.7 City Covered Tokyo Indicator Tokyo OECD high income Best Regulatory Performance Procedures (number) 2 4.4 3 (28 Economies) Time (days) 104 74.8 18 (3 Economies) Cost (% of income per capita) 0.0 61.0 0.0 (3 Economies) Reliability of supply and transparency of tariff index (0-8) 8 7.4 8 (26 Economies) Figure – Getting Electricity in Tokyo – Score 100.0 62.6 100.0 100.0 Reliability of supply and transparency of Procedures Time Cost tariff index Figure – Getting Electricity in Tokyo and comparator economies – Ranking and Score DB 2020 Getting Electricity Score 0 100 99.9: Korea, Rep. (Rank: 2) 99.3: Malaysia (Rank: 4) 97.8: Osaka 90.7: Tokyo 84.0: New Zealand (Rank: 48) 82.2: United States (Rank: 64) Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the scores for all the component indicators except the price of electricity. Figure – Getting Electricity in Tokyo – Procedure, Time and Cost Time (days) Cost (% of income per capita) 1.2 100 Cost (% of income per capita) 1 80 0.8 Time (days) 60 0.6 40 0.4 20 0.2 0 0 1 2 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures Page 28 Doing Business 2020 Japan reflected here, see the summary below. Figure – Getting Electricity in Tokyo and comparator economies – Measure of Quality 8.2 8 8 8 8 8 7.8 Index score 7.6 7.4 7.4 7.2 7 7 7 6.8 6.6 6.4 Tokyo Korea, Malaysia New United Osaka OECD Rep. Zealand States high income Page 29 Doing Business 2020 Japan Details – Getting Electricity in Tokyo – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Submit application to TEPCO Power Grid, Inc. and await external connection works 93 calendar days JPY 0 Agency : TEPCO Power Grid, Inc. Required documents for the application are single-line diagram, a lay-out of premise, harmonic calculation documents and application form. There is no external inspection. As there is no inspection of the internal wiring, TEPCO Power Grid, Inc. is asking the customer for the necessary information regarding the licensed electrician who did the internal wiring. Japanese laws require every owner/user to hire a licensed electrician to install the wiring. The information is submitted on the formatted application document and contains the name, license number and contact information of the electrician. There is no notarization needed for the documents, however the signature of the customer needs to be on the documents when applying online. The contractor building the warehouse will usually make an application for power supply and connection several months before the required date of the connection to allow TEPCO Power Grid, Inc. sufficient time to survey the proposed area in terms of electricity supply route and capacity required for the specific building. If the electricity main supply is not suitable, TEPCO Power Grid, Inc. will carry out necessary infrastructure work to provide the required utility services. There is usually no estimate prior to the determination of the actual contract start date. There is no connection fee: In case of overhead wiring, up to 1000 meters long, construction work does not require any financial responsibility by the customer. 2 Receive connection works and meter installation by TEPCO Power Grid, Inc. 11 calendar days JPY 0 Agency : TEPCO Power Grid, Inc. With this class of customer TEPCO Power Grid, Inc. provides electricity on high-voltage (6600V) power line. On the primary side, TEPCO Power Grid, Inc. builds an aerial high-voltage service wire with some related equipments such as pole-mounted switches, and on the secondary side of the transformer (usually 200V) it installs a meter at a specified location and connects it to the internal wiring system. TEPCO Power Grid, Inc. usually executes the external wiring construction and meter installation at the same time. All the material is provided by TEPCO Power Grid, Inc. Takes place simultaneously with previous procedure. Page 30 Doing Business 2020 Japan Details – Getting Electricity in Tokyo – Measure of Quality Answer Reliability of supply and transparency of tariff index (0-8) 8 Total duration and frequency of outages per customer a year (0-3) 3 System average interruption duration index (SAIDI) 0.0 System average interruption frequency index (SAIFI) 0.0 What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI 1.0 Mechanisms for monitoring outages (0-1) 1 Does the distribution utility use automated tools to monitor outages? Yes Mechanisms for restoring service (0-1) 1 Does the distribution utility use automated tools to restore service? Yes Regulatory monitoring (0-1) 1 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of supply? Yes Financial deterrents aimed at limiting outages (0-1) 1 Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages exceed a certain cap? Yes Communication of tariffs and tariff changes (0-1) 1 Are effective tariffs available online? Yes Link to the website, if available online http://www.tepco.co.jp/ep/ corporate/plan_h/index- j.html Are customers notified of a change in tariff ahead of the billing cycle? Yes Note: If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index. If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Page 31 Doing Business 2020 Japan Getting Electricity - Osaka Standardized Connection Name of utility The Kansai Electric Power Co., INC.- KEPCO Price of electricity (US cents per kWh) 16.7 City Covered Osaka Indicator Osaka OECD high income Best Regulatory Performance Procedures (number) 3 4.4 3 (28 Economies) Time (days) 38 74.8 18 (3 Economies) Cost (% of income per capita) 0.0 61.0 0.0 (3 Economies) Reliability of supply and transparency of tariff index (0-8) 8 7.4 8 (26 Economies) Figure – Getting Electricity in Osaka – Score 100.0 91.3 100.0 100.0 Reliability of supply and transparency of Procedures Time Cost tariff index Figure – Getting Electricity in Osaka and comparator economies – Ranking and Score DB 2020 Getting Electricity Score 0 100 99.9: Korea, Rep. (Rank: 2) 99.3: Malaysia (Rank: 4) 97.8: Osaka 90.7: Tokyo 84.0: New Zealand (Rank: 48) 82.2: United States (Rank: 64) Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the scores for all the component indicators except the price of electricity. Figure – Getting Electricity in Osaka – Procedure, Time and Cost Time (days) Cost (% of income per capita) 1.2 35 Cost (% of income per capita) 1 30 25 0.8 Time (days) 20 0.6 15 0.4 10 0.2 5 0 0 1 *2 3 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 32 Doing Business 2020 Japan Figure – Getting Electricity in Osaka and comparator economies – Measure of Quality 8.2 8 8 8 8 8 7.8 Index score 7.6 7.4 7.4 7.2 7 7 7 6.8 6.6 6.4 Osaka Korea, Malaysia New United Tokyo OECD Rep. Zealand States high income Page 33 Doing Business 2020 Japan Details – Getting Electricity in Osaka – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Submit application to Kepco and await external connection works 30 calendar days JPY 0 Agency : Kepco The application form is submitted along with other documents including single-line diagram, a lay- out of premise, harmonic calculation documents . As there is no inspection of the internal wiring, KEPCO asks the customer for the necessary information regarding the licensed electrician who did the internal wiring. Japanese laws require every owner/user to hire a licensed electrician to install the wiring. The information is submitted on the formatted application document and contains the name, license number and contact information of the electrician. There is no notarization needed for the documents, however the signature of the customer needs to be on the documents when applying online. If the electricity main supply is not suitable, KEPCO will carry out necessary infrastructure work to provide the required utility services. There is usually no estimate prior to the determination of the actual contract start date. There is no connection fee. 2 Receive external site inspection by Kepco for preparing technical study 1 calendar day JPY 0 Agency : Kepco The utility visits the location of the building and conducts external site inspection necessary for preparation of technical study. It is necessary that the customer is present on the plot during this inspection. 3 Await and receive meter installation and final connection 8 calendar days JPY 0 Agency : Kepco With this class of customer KEPCO provides electricity on high-voltage (6600V) power line. On the primary side, KEPCO builds an aerial high-voltage service wire with some related equipment such as pole-mounted switches, and on the secondary side of the transformer (usually 200V) it installs a meter at a specified location and connects it to the internal wiring system. All the material is provided by KEPCO free of charge because all costs are included in consumption charges. Takes place simultaneously with previous procedure. Page 34 Doing Business 2020 Japan Details – Getting Electricity in Osaka – Measure of Quality Answer Reliability of supply and transparency of tariff index (0-8) 8 Total duration and frequency of outages per customer a year (0-3) 3 System average interruption duration index (SAIDI) 0.1 System average interruption frequency index (SAIFI) 0.1 What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI 1.0 Mechanisms for monitoring outages (0-1) 1 Does the distribution utility use automated tools to monitor outages? Yes Mechanisms for restoring service (0-1) 1 Does the distribution utility use automated tools to restore service? Yes Regulatory monitoring (0-1) 1 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of supply? Yes Financial deterrents aimed at limiting outages (0-1) 1 Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages exceed a certain cap? Yes Communication of tariffs and tariff changes (0-1) 1 Are effective tariffs available online? Yes Link to the website, if available online http://www.kepco.co.jp/en glish/ http://kepco.jp/biz http://kepco.jp/biz/oshiras e/ Are customers notified of a change in tariff ahead of the billing cycle? Yes Note: If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index. If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Page 35 Doing Business 2020 Japan Registering Property This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has five dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally transfer title on immovable property To make the data comparable across economies, several assumptions about the parties to the (number) transaction, the property and the procedures are used. • Preregistration procedures (for example, checking for liens, The parties (buyer and seller): notarizing sales agreement, paying property transfer taxes) - Are limited liability companies (or the legal equivalent). • Registration procedures in the economy's largest business city. - Are located in the periurban (that is, on the outskirts of the city but still within its official limits) • Postregistration procedures (for example, filling title with area of the economy’s largest business city. For 11 economies the data are also collected for the municipality) second largest business city. - Are 100% domestically and privately owned. Time required to complete each procedure (calendar days) - Perform general commercial activities. • Does not include time spent gathering information The property (fully owned by the seller): • Each procedure starts on a separate day - though procedures - Has a value of 50 times income per capita, which equals the sale price. that can be fully completed online are an exception to this rule - Is fully owned by the seller. • Procedure is considered completed once final document is - Has no mortgages attached and has been under the same ownership for the past 10 years. received - Is registered in the land registry or cadastre, or both, and is free of title disputes. • No prior contact with officials - Is located in a periurban commercial zone (that is, on the outskirts of the city but still within its official limits), and no rezoning is required. Cost required to complete each procedure (% of property - Consists of land and a building. The land area is 557.4 square meters (6,000 square feet). A two- value) story warehouse of 929 square meters (10,000 square feet) is located on the land. The warehouse is 10 years old, is in good condition, has no heating system and complies with all safety standards, • Official costs only (such as administrative fees, duties and building codes and legal requirements. The property, consisting of land and building, will be taxes). transferred in its entirety. • Value Added Tax, Capital Gains Tax and illicit payments are - Will not be subject to renovations or additional construction following the purchase. excluded - Has no trees, natural water sources, natural reserves or historical monuments of any kind. - Will not be used for special purposes, and no special permits, such as for residential use, Quality of land administration index (0-30) industrial plants, waste storage or certain types of agricultural activities, are required. • Reliability of infrastructure index (0-8) - Has no occupants, and no other party holds a legal interest in it. • Transparency of information index (0–6) • Geographic coverage index (0–8) • Land dispute resolution index (0–8) • Equal access to property rights index (-2–0) Page 36 Doing Business 2020 Japan Registering Property - Tokyo Indicator Tokyo OECD high income Best Regulatory Performance Procedures (number) 6 4.7 1 (5 Economies) Time (days) 13 23.6 1 (2 Economies) Cost (% of property value) 5.3 4.2 0.0 (Saudi Arabia) Quality of the land administration index (0-30) 25.5 23.2 None in 2018/19 Figure – Registering Property in Tokyo – Score 58.3 94.3 64.8 85.0 Procedures Time Cost Quality of the land administration index Figure – Registering Property in Tokyo and comparator economies – Ranking and Score DB 2020 Registering Property Score 0 100 94.6: New Zealand (Rank: 2) 79.5: Malaysia (Rank: 33) 76.9: United States (Rank: 39) 76.3: Korea, Rep. (Rank: 40) 75.6: Osaka 75.6: Tokyo Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of the scores for each of the component indicators. Page 37 Doing Business 2020 Japan Figure – Registering Property in Tokyo – Procedure, Time and Cost Time (days) Cost (% of property value) 4 12 3.5 Cost (% of property value) 10 3 Time (days) 8 2.5 2 6 1.5 4 1 2 0.5 0 0 1 *2 *3 *4 5 6 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 38 Doing Business 2020 Japan Figure – Registering Property in Tokyo and comparator economies – Measure of Quality 30 27.5 25.5 26.5 26.5 25.5 25 23.2 Index score 20 17.6 15 10 5 0 Tokyo Korea, Malaysia New United Osaka OECD Rep. Zealand States high income Details – Registering Property in Tokyo – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 The seller obtains a certificate of evaluation for fixed asset tax of the real property at a 1 day JPY 500; (JPY 400 for local tax office land + JPY 100 for building Agency : Tax Authority (for two or more The owner of the property must obtain the latest certificate of evaluation for fixed asset tax of the certificates of the same real property before to apply for registration. Registration license tax will be calculated based on type of the certificate in the most updated value resulting from evaluation. The certificate is obtained from the relevant one application, it will cost local tax authority. JPY 100 per certificate from the second certificate)) 2 Prepare the sale agreement and obtain the stamp tax 1 day JPY 60,000 Agency : Legal Affairs Bureau, post offices or convenience stores It is not a legal requirement for title registration to prepare a written sales agreement. However, it is common in practice to make the agreement between the parties. The agreement is subject to the stamp tax. Taxpayers can buy stamps in various places such as post offices, Legal Affairs Bureaus and convenience stores and receive an imprint on the agreement. 3 Obtain a corporate registry certificate Less than one day, JPY 960; (JPY 480 each Agency : Legal Affairs Bureau online copy (Applying online and The parties (as companies) obtain a corporate registry certificate issued within 3 months before obtaining the certificate at the registration application. In November 2015, the Real Property Registration Order was revised. the Legal Affairs Bureau), As a result, the parties can submit the corporate identification number for title registration instead JPY 500 each copy of the certificate. However, it is still common to obtain the certificate for due diligence. The (Applying online and certificate is obtained at the Legal Affairs Bureau. receiving the certificate by post), JPY 600 each copy (applying and obtaining the certificate at the Legal Affairs Bureau) Two copies needed (480x2)) 4 Obtain a certificate of Seller's seal impression (inkan shomei) Less than one day, JPY 780; (JPY 390 for Agency : Legal Affairs Bureau online each copy (Applying online The seller must obtain a certificate of its seal impression to be attached to the application for and obtaining the registration of transfer of the title. The certificate must be issued within 3 months before the certificate at the Legal application. It can be obtained from the Legal Affairs Bureau. Affairs Bureau), JPY 410 for each copy (Applying online and receiving the certificate by post), JPY 450 for each copy (applying and obtaining the certificate at the Legal Affairs Bureau). Two copies needed (390x2)) Page 39 Doing Business 2020 Japan 5 File an application at the Legal Affairs Bureau 9 days JPY 3,939,687.52; (2% of Agency : Legal Affairs Bureau building value + 1.5% of An application for registration is filed at the Legal Affairs Bureau. The Legal Affairs Bureau will land value evaluated for register the title under the name of the new owner. The parties can apply for the registration by fixed asset tax (registration themselves. However, it is common to retain a judicial scrivener (Shiho-Shoshi) for the application and license tax)) because the registration process requires legal knowledge. The registration and license tax are paid at the Legal Affairs Bureau. There is an 8% (from April 2014) consumption tax in Japan. Sales or leases of land are exempted from consumption tax. However, sales or leases of buildings are subject to consumption tax. In case the transaction includes the sales or lease of the building, the consumption tax is imposed only on the price of the building. The application can be made online. However, most of the attachments necessary for the application should be submitted to the Legal Affairs Bureau by mail or in person. It takes between 7 and 10 days. The necessary documents for the application are: • Information certifying the reason of registration • Certificate of registration of seller's title of the real property (Toukizumi kenri sho) or registration identification code (Touki shikibetsu joho) (Already in his possession) • Certificate of corporate registry or corporate identification numbers of the parties (if any of them is a corporation) (obtained in Procedure 3) • Certificate of the seller’s seal impression (obtained in Procedure 4) • Certificate of evaluation for fixed asset tax of the real property (obtained in Procedure 1) • Power of attorney of the parties (if a judicial scrivener applies for the registration on behalf of any of the parties) 6 Payment of the real property acquisition tax 1 day JPY 7,879,375.04; (4 % of Agency : Metropolitan Tax Office building value + 3 % of This is a post-closing matter. The purchaser will receive a tax paper from the Metropolitan taxation land value) office after the registration. The real property acquisition tax must be paid by the deadline stated on the tax paper at the tax office. 4% is the normal tax rate. Since 2006, the 3% reduced tax rate is applicable for lands and residential buildings. The reduced rate is applied from April 1, 2006, to March 31, 2021 unless the law providing such reduced rate is extended. Takes place simultaneously with previous procedure. Page 40 Doing Business 2020 Japan Details – Registering Property in Tokyo – Measure of Quality Answer Score Quality of the land administration index (0-30) 25.5 Reliability of infrastructure index (0-8) 8.0 Type of land registration system in the economy: Title Registration System What is the institution in charge of immovable property registration? Legal Affairs Bureau In what format are past and newly issued land records kept at the immovable property registry of the largest Computer/Fully digital 2.0 business city of the economy —in a paper format or in a computerized format (scanned or fully digital)? Is there a comprehensive and functional electronic database for checking for encumbrances (liens, mortgages, Yes 1.0 restrictions and the like)? Institution in charge of the plans showing legal boundaries in the largest business city: Legal Affairs Bureau In what format are past and newly issued cadastral plans kept at the mapping agency of the largest business Computer/Fully digital 2.0 city of the economy—in a paper format or in a computerized format (scanned or fully digital)? Is there an electronic database for recording boundaries, checking plans and providing cadastral information Yes 1.0 (geographic information system)? Is the information recorded by the immovable property registration agency and the cadastral or mapping agency Single database 1.0 kept in a single database, in different but linked databases or in separate databases? Do the immovable property registration agency and cadastral or mapping agency use the same identification Yes 1.0 number for properties? Transparency of information index (0–6) 4.0 Who is able to obtain information on land ownership at the agency in charge of immovable property registration Anyone who pays the 1.0 in the largest business city? official fee Is the list of documents that are required to complete any type of property transaction made publicly available– Yes, online 0.5 and if so, how? Link for online access: http://www.moj.go.jp/ MINJI/minji72.html https://www.touki- kyoutaku- online.moj.go.jp/touki net/fudosan/fudosan_ 2.html Is the applicable fee schedule for any type of property transaction at the agency in charge of immovable property Yes, online 0.5 registration in the largest business city made publicly available–and if so, how? Link for online access: http://www.moj.go.jp/ MINJI/TESURYO/ http://www.nta.go.jp/t axes/shiraberu/taxan swer/inshi/7191.htm Does the agency in charge of immovable property registration agency formally commit to deliver a legally Yes, online 0.5 binding document that proves property ownership within a specific timeframe –and if so, how does it communicate the service standard? Link for online access: http://houmukyoku.m oj.go.jp/tokyo/static/k anryoyotei.htm#RAN GE!A61 Is there a specific and independent mechanism for filing complaints about a problem that occurred at the agency No 0.0 in charge of immovable property registration? Contact information: Are there publicly available official statistics tracking the number of transactions at the immovable property Yes 0.5 registration agency? Number of property transfers in the largest business city in 2018: 1225973.0 Page 41 Doing Business 2020 Japan Who is able to consult maps of land plots in the largest business city? Anyone who pays the 0.5 official fee Is the applicable fee schedule for accessing maps of land plots made publicly available—and if so, how? Yes, online 0.5 Link for online access: http://www.moj.go.jp/ MINJI/TESURYO/ http://houmukyoku.m oj.go.jp/homu/content /000130938.pdf Does the cadastral/mapping agency formally specifies the timeframe to deliver an updated cadastral plan—and No 0.0 if so, how does it communicate the service standard? Link for online access: http://houmukyoku.m oj.go.jp/tokyo/static/k anryoyotei.htm#RAN GE!A61 Is there a specific and independent mechanism for filing complaints about a problem that occurred at the No 0.0 cadastral or mapping agency? Contact information: Geographic coverage index (0–8) 8.0 Are all privately held land plots in the largest business city formally registered at the immovable property Yes 2.0 registry? Are all privately held land plots in the economy formally registered at the immovable property registry? Yes 2.0 Are all privately held land plots in the largest business city mapped? Yes 2.0 Are all privately held land plots in the economy mapped? Yes 2.0 Land dispute resolution index (0–8) 5.5 Does the law require that all property sale transactions be registered at the immovable property registry to make Yes 1.5 them opposable to third parties? Legal basis: Article 177 of the Civil Code and Aritcle 4 of the Real Property Registration Act Is the system of immovable property registration subject to a state or private guarantee? No 0.0 Type of guarantee: Legal basis: Is there a is a specific, out-of-court compensation mechanism to cover for losses incurred by parties who No 0.0 engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry? Legal basis: Does the legal system require a control of legality of the documents necessary for a property transaction (e.g., Yes 0.5 checking the compliance of contracts with requirements of the law)? If yes, who is responsible for checking the legality of the documents? Registrar; Does the legal system require verification of the identity of the parties to a property transaction? Yes 0.5 If yes, who is responsible for verifying the identity of the parties? Registrar; Lawyer Is there a national database to verify the accuracy of government issued identity documents? Yes 1.0 What is the Court of first instance in charge of a case involving a standard land dispute between two local District Court businesses over tenure rights for a property worth 50 times gross national income (GNI) per capita and located in the largest business city? How long does it take on average to obtain a decision from the first-instance court for such a case (without Between 1 and 2 2.0 appeal)? years Are there publicly available statistics on the number of land disputes at the economy level in the first instance No 0.0 court? Page 42 Doing Business 2020 Japan Number of land disputes in the economy in 2018: Equal access to property rights index (-2–0) 0.0 Do unmarried men and unmarried women have equal ownership rights to property? Yes Do married men and married women have equal ownership rights to property? Yes 0.0 Page 43 Doing Business 2020 Japan Registering Property - Osaka Indicator Osaka OECD high income Best Regulatory Performance Procedures (number) 6 4.7 1 (5 Economies) Time (days) 13 23.6 1 (2 Economies) Cost (% of property value) 5.3 4.2 0.0 (Saudi Arabia) Quality of the land administration index (0-30) 25.5 23.2 None in 2018/19 Figure – Registering Property in Osaka – Score 58.3 94.3 64.8 85.0 Procedures Time Cost Quality of the land administration index Figure – Registering Property in Osaka and comparator economies – Ranking and Score DB 2020 Registering Property Score 0 100 94.6: New Zealand (Rank: 2) 79.5: Malaysia (Rank: 33) 76.9: United States (Rank: 39) 76.3: Korea, Rep. (Rank: 40) 75.6: Osaka 75.6: Tokyo Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of the scores for each of the component indicators. Page 44 Doing Business 2020 Japan Figure – Registering Property in Osaka – Procedure, Time and Cost Time (days) Cost (% of property value) 4 12 3.5 Cost (% of property value) 10 3 Time (days) 8 2.5 2 6 1.5 4 1 2 0.5 0 0 1 *2 *3 *4 5 6 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 45 Doing Business 2020 Japan Figure – Registering Property in Osaka and comparator economies – Measure of Quality 30 27.5 25.5 26.5 26.5 25.5 25 23.2 Index score 20 17.6 15 10 5 0 Osaka Korea, Malaysia New United Tokyo OECD Rep. Zealand States high income Details – Registering Property in Osaka – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 The seller obtains a certificate of evaluation for fixed asset tax of the real property at the 1 day JPY 600; (JPY 300 for the Municipal Authority certificate of land + JPY Agency : Municipal Authority 300 for the certificate of The owner of the property must obtain the latest certificate of evaluation for fixed asset tax of the building) real property before to apply for registration. Registration license tax will be calculated based on the most updated value resulting from evaluation. The certificate is obtained from the Municipal Authority. 2 Prepare the sale agreement and obtain the stamp tax 1 day JPY 60,000 Agency : Legal Affairs Bureau, post offices or convenience stores It is not a legal requirement for title registration to prepare a written sales agreement. However, it is common in practice to make the agreement between the parties. The agreement is subject to the stamp tax. Taxpayers can buy stamps in various places such as post offices, Legal Affairs Bureaus and convenience stores and receive an imprint on the agreement. 3 Obtain a corporate registry certificate Less than one day, JPY 960; (JPY 480 each Agency : Legal Affairs Bureau online copy (Applying online and The parties (as companies) obtain a corporate registry certificate issued within 3 months before obtaining the certificate at the registration application. In November 2015, the Real Property Registration Order was revised. the Legal Affairs Bureau), As a result, the parties can submit the corporate identification number for title registration instead JPY 500 each copy of the certificate. However, it is still common to obtain the certificate for due diligence. The (Applying online and certificate is obtained at the Legal Affairs Bureau. receiving the certificate by post), JPY 600 each copy (applying and obtaining the certificate at the Legal Affairs Bureau) Two copies needed (480x2)) 4 Obtain a certificate of Seller's seal impression (inkan shomei) Less than one day, JPY 780; (JPY 390 for Agency : Legal Affairs Bureau online each copy (Applying online The seller must obtain a certificate of its seal impression to be attached to the application for and obtaining the registration of transfer of the title. The certificate must be issued within 3 months before the certificate at the Legal application. It can be obtained from the Legal Affairs Bureau. Affairs Bureau), JPY 410 for each copy (Applying online and receiving the certificate by post), JPY 450 for each copy (applying and obtaining the certificate at the Legal Affairs Bureau). Two copies needed (390x2)) Page 46 Doing Business 2020 Japan 5 File an application at the Legal Affairs Bureau 9 days JPY 3,939,687.52; (2% of Agency : Legal Affairs Bureau building value + 1.5% of An application for registration is filed at the Legal Affairs Bureau. The Legal Affairs Bureau will land value evaluated for register the title under the name of the new owner. The parties can apply for the registration by fixed asset tax (registration themselves. However, it is common to retain a judicial scrivener (Shiho-Shoshi) for the application and license tax)) because the registration process requires legal knowledge. The registration and license tax are paid at the Legal Affairs Bureau. There is an 8% (from April 2014) consumption tax in Japan. Sales or leases of land are exempted from consumption tax. However, sales or leases of buildings are subject to consumption tax. In case the transaction includes the sales or lease of the building, the consumption tax is imposed only on the price of the building. The application can be made online. However, most of the attachments necessary for the application should be submitted to the Legal Affairs Bureau by mail or in person. It takes between 7 and 10 days. The necessary documents for the application are: • Information certifying the reason of registration • Certificate of registration of seller's title of the real property (Toukizumi kenri sho) or registration identification code (Touki shikibetsu joho) (Already in his possession) • Certificate of corporate registry or corporate identification numbers of the parties (if any of them is a corporation) (obtained in Procedure 3) • Certificate of the seller’s seal impression (obtained in Procedure 4) • Certificate of evaluation for fixed asset tax of the real property (obtained in Procedure 1) • Power of attorney of the parties (if a judicial scrivener applies for the registration on behalf of any of the parties) 6 Payment of the real property acquisition tax 1 day JPY 7,879,375.04; (4 % of Agency : Local Tax Office building value + 3 % of This is a post-closing matter. The purchaser will receive a tax paper from the local taxation office land value) after the registration. The real property acquisition tax must be paid by the deadline stated on the tax paper at the local tax office. 4% is the normal tax rate. Since 2006, the 3% reduced tax rate is applicable for lands and residential buildings. The reduced rate is applied from April 1, 2006, to March 31, 2021, unless the law providing such reduced rate is extended. Takes place simultaneously with previous procedure. Page 47 Doing Business 2020 Japan Details – Registering Property in Osaka – Measure of Quality Answer Score Quality of the land administration index (0-30) 25.5 Reliability of infrastructure index (0-8) 8.0 Type of land registration system in the economy: Title Registration System What is the institution in charge of immovable property registration? Legal Affairs Bureau In what format are past and newly issued land records kept at the immovable property registry of the largest Computer/Fully digital 2.0 business city of the economy —in a paper format or in a computerized format (scanned or fully digital)? Is there a comprehensive and functional electronic database for checking for encumbrances (liens, mortgages, Yes 1.0 restrictions and the like)? Institution in charge of the plans showing legal boundaries in the largest business city: Legal Affairs Bureau In what format are past and newly issued cadastral plans kept at the mapping agency of the largest business Computer/Fully digital 2.0 city of the economy—in a paper format or in a computerized format (scanned or fully digital)? Is there an electronic database for recording boundaries, checking plans and providing cadastral information Yes 1.0 (geographic information system)? Is the information recorded by the immovable property registration agency and the cadastral or mapping agency Single database 1.0 kept in a single database, in different but linked databases or in separate databases? Do the immovable property registration agency and cadastral or mapping agency use the same identification Yes 1.0 number for properties? Transparency of information index (0–6) 4.0 Who is able to obtain information on land ownership at the agency in charge of immovable property registration Anyone who pays the 1.0 in the largest business city? official fee Is the list of documents that are required to complete any type of property transaction made publicly available– Yes, online 0.5 and if so, how? Link for online access: http://www.moj.go.jp/ MINJI/minji72.html https://www.touki- kyoutaku- online.moj.go.jp/touki net/fudosan/fudosan_ 2.html Is the applicable fee schedule for any type of property transaction at the agency in charge of immovable property Yes, online 0.5 registration in the largest business city made publicly available–and if so, how? Link for online access: http://houmukyoku.m oj.go.jp/homu/content /000130945.pdf http://www.moj.go.jp/ MINJI/TESURYO/ http://www.nta.go.jp/t axes/shiraberu/taxan swer/inshi/7191.htm Does the agency in charge of immovable property registration agency formally commit to deliver a legally Yes, online 0.5 binding document that proves property ownership within a specific timeframe –and if so, how does it communicate the service standard? Link for online access: http://houmukyoku.m oj.go.jp/osaka/static/k anryobi.html#honkyok u Is there a specific and independent mechanism for filing complaints about a problem that occurred at the agency No 0.0 in charge of immovable property registration? Contact information: Are there publicly available official statistics tracking the number of transactions at the immovable property Yes 0.5 registration agency? Page 48 Doing Business 2020 Japan Number of property transfers in the largest business city in 2018: 646888.0 Who is able to consult maps of land plots in the largest business city? Anyone who pays the 0.5 official fee Is the applicable fee schedule for accessing maps of land plots made publicly available—and if so, how? Yes, online 0.5 Link for online access: http://www.moj.go.jp/ MINJI/TESURYO/ http://houmukyoku.m oj.go.jp/homu/content /000130945.pdf http://houmukyoku.m oj.go.jp/homu/content /000130938.pdf Does the cadastral/mapping agency formally specifies the timeframe to deliver an updated cadastral plan—and No 0.0 if so, how does it communicate the service standard? Link for online access: Is there a specific and independent mechanism for filing complaints about a problem that occurred at the No 0.0 cadastral or mapping agency? Contact information: Geographic coverage index (0–8) 8.0 Are all privately held land plots in the largest business city formally registered at the immovable property Yes 2.0 registry? Are all privately held land plots in the economy formally registered at the immovable property registry? Yes 2.0 Are all privately held land plots in the largest business city mapped? Yes 2.0 Are all privately held land plots in the economy mapped? Yes 2.0 Land dispute resolution index (0–8) 5.5 Does the law require that all property sale transactions be registered at the immovable property registry to make Yes 1.5 them opposable to third parties? Legal basis: Article 177 of the Civil Code and Article 4 of the Real Property Registration Act Is the system of immovable property registration subject to a state or private guarantee? No 0.0 Type of guarantee: Legal basis: Is there a is a specific, out-of-court compensation mechanism to cover for losses incurred by parties who No 0.0 engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry? Legal basis: Does the legal system require a control of legality of the documents necessary for a property transaction (e.g., Yes 0.5 checking the compliance of contracts with requirements of the law)? If yes, who is responsible for checking the legality of the documents? Registrar; Does the legal system require verification of the identity of the parties to a property transaction? Yes 0.5 If yes, who is responsible for verifying the identity of the parties? Registrar; Lawyer Is there a national database to verify the accuracy of government issued identity documents? Yes 1.0 What is the Court of first instance in charge of a case involving a standard land dispute between two local District Court businesses over tenure rights for a property worth 50 times gross national income (GNI) per capita and located in the largest business city? How long does it take on average to obtain a decision from the first-instance court for such a case (without Between 1 and 2 2.0 appeal)? years Page 49 Doing Business 2020 Japan Are there publicly available statistics on the number of land disputes at the economy level in the first instance No 0.0 court? Number of land disputes in the economy in 2018: Equal access to property rights index (-2–0) 0.0 Do unmarried men and unmarried women have equal ownership rights to property? Yes Do married men and married women have equal ownership rights to property? Yes 0.0 Page 50 Doing Business 2020 Japan Getting Credit This topic explores two sets of issues—the strength of credit reporting systems and the effectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Strength of legal rights index (0–12) Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions through 2 sets of indicators. The depth of credit • Rights of borrowers and lenders through collateral laws (0-10) information index measures rules and practices affecting the coverage, scope and accessibility of • Protection of secured creditors’ rights through bankruptcy laws credit information available through a credit registry or a credit bureau. The strength of legal rights (0-2) index measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first determined whether a unitary Depth of credit information index (0–8) secured transactions system exists. Then two case scenarios, case A and case B, are used to • Scope and accessibility of credit information distributed by determine how a nonpossessory security interest is created, publicized and enforced according to credit bureaus and credit registries (0-8) the law. Special emphasis is given to how the collateral registry operates (if registration of security interests is possible). The case scenarios involve a secured borrower, company ABC, and a Credit bureau coverage (% of adults) secured lender, BizBank. • Number of individuals and firms listed in largest credit bureau In some economies the legal framework for secured transactions will allow only case A or case B as a percentage of adult population (not both) to apply. Both cases examine the same set of legal provisions relating to the use of Credit registry coverage (% of adults) movable collateral. • Number of individuals and firms listed in credit registry as a Several assumptions about the secured borrower (ABC) and lender (BizBank) are used: percentage of adult population - ABC is a domestic limited liability company (or its legal equivalent). - ABC has up to 50 employees. - ABC has its headquarters and only base of operations in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. - Both ABC and BizBank are 100% domestically owned. The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants BizBank a nonpossessory security interest in one category of movable assets, for example, its machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In economies where the law does not allow nonpossessory security interests in movable property, ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory security interests). In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of ABC’s movable assets as possible). ABC keeps ownership and possession of the assets. Page 51 Doing Business 2020 Japan Getting Credit - Tokyo Indicator Tokyo OECD high income Best Regulatory Performance Strength of legal rights index (0-12) 5 6.1 12 (5 Economies) Depth of credit information index (0-8) 6 6.8 8 (53 Economies) Credit registry coverage (% of adults) 0.0 24.4 100.0 (2 Economies) Credit bureau coverage (% of adults) 100.0 66.7 100.0 (14 Economies) Figure – Getting Credit in Tokyo – Score 55.0 Score - Getting Credit Figure – Getting Credit in Tokyo and comparator economies – Ranking and Score DB 2020 Getting Credit Score 0 100 95.0: United States (Rank: 4) 75.0: Malaysia (Rank: 37) 65.0: Korea, Rep. (Rank: 67) 55.0: Osaka 55.0: Tokyo 100: New Zealand (Rank: 1) Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index. Page 52 Doing Business 2020 Japan Figure – Legal Rights in Tokyo and comparator economies 14 12 12 11 Index Score 10 8 7 6.1 6 5 5 5 4 2 0 Tokyo Korea, Malaysia New United Osaka OECD Rep. Zealand States high income Page 53 Doing Business 2020 Japan Details – Legal Rights in Tokyo Strength of legal rights index (0-12) 5 Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and enforcement of functional equivalents No to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without requiring a specific description Yes of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a specific description of No collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and replacements of the No original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be secured between parties; Yes and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by asset type, with an No electronic database indexed by debtor's name? Does a notice-based collateral registry exist in which all functional equivalents can be registered? No Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed online by any interested third No party? Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency procedure? Yes Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? Yes Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization procedure? Does the law No protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it? Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow the secured creditor to sell Yes the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt? Figure – Credit Information in Tokyo and comparator economies 9 8 8 8 8 8 6.8 7 6 6 Index Score 6 5 4 3 2 1 0 Tokyo Korea, Malaysia New United Osaka OECD Rep. Zealand States high income Page 54 Doing Business 2020 Japan Details – Credit Information in Tokyo Depth of credit information index (0-8) Credit bureau Credit registry Score Are data on both firms and individuals distributed? No No 0 Are both positive and negative credit data distributed? Yes No 1 Are data from retailers or utility companies - in addition to data from banks and Yes No 1 financial institutions - distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries Yes No 1 that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per capita distributed? Yes No 1 By law, do borrowers have the right to access their data in the credit bureau or Yes No 1 credit registry? Can banks and financial institutions access borrowers’ credit information online Yes No 1 (for example, through an online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value-added service to help No No 0 banks and financial institutions assess the creditworthiness of borrowers? Total Score ("yes" to either public bureau or private registry) 6 Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Coverage Credit bureau Credit registry Number of individuals 88,753,867 0 Number of firms 0 0 Total 88,753,867 0 Percentage of adult population 100.0 0.0 Page 55 Doing Business 2020 Japan Getting Credit - Osaka Indicator Osaka OECD high income Best Regulatory Performance Strength of legal rights index (0-12) 5 6.1 12 (5 Economies) Depth of credit information index (0-8) 6 6.8 8 (53 Economies) Credit registry coverage (% of adults) 0.0 24.4 100.0 (2 Economies) Credit bureau coverage (% of adults) 100.0 66.7 100.0 (14 Economies) Figure – Getting Credit in Osaka – Score 55.0 Score - Getting Credit Figure – Getting Credit in Osaka and comparator economies – Ranking and Score DB 2020 Getting Credit Score 0 100 95.0: United States (Rank: 4) 75.0: Malaysia (Rank: 37) 65.0: Korea, Rep. (Rank: 67) 55.0: Osaka 55.0: Tokyo 100: New Zealand (Rank: 1) Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index. Page 56 Doing Business 2020 Japan Figure – Legal Rights in Osaka and comparator economies 14 12 12 11 Index Score 10 8 7 6.1 6 5 5 5 4 2 0 Osaka Korea, Malaysia New United Tokyo OECD Rep. Zealand States high income Page 57 Doing Business 2020 Japan Details – Legal Rights in Osaka Strength of legal rights index (0-12) 5 Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and enforcement of functional equivalents No to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without requiring a specific description Yes of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a specific description of No collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and replacements of the No original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be secured between parties; Yes and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by asset type, with an No electronic database indexed by debtor's name? Does a notice-based collateral registry exist in which all functional equivalents can be registered? No Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed online by any interested third No party? Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency procedure? Yes Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? Yes Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization procedure? Does the law No protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it? Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow the secured creditor to sell Yes the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt? Figure – Credit Information in Osaka and comparator economies 9 8 8 8 8 8 6.8 7 6 6 Index Score 6 5 4 3 2 1 0 Osaka Korea, Malaysia New United Tokyo OECD Rep. Zealand States high income Page 58 Doing Business 2020 Japan Details – Credit Information in Osaka Depth of credit information index (0-8) Credit bureau Credit registry Score Are data on both firms and individuals distributed? No No 0 Are both positive and negative credit data distributed? Yes No 1 Are data from retailers or utility companies - in addition to data from banks and Yes No 1 financial institutions - distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries Yes No 1 that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per capita distributed? Yes No 1 By law, do borrowers have the right to access their data in the credit bureau or Yes No 1 credit registry? Can banks and financial institutions access borrowers’ credit information online Yes No 1 (for example, through an online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value-added service to help No No 0 banks and financial institutions assess the creditworthiness of borrowers? Total Score ("yes" to either public bureau or private registry) 6 Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Coverage Credit bureau Credit registry Number of individuals 88,753,867 0 Number of firms 0 0 Total 88,753,867 0 Percentage of adult population 100.0 0.0 Page 59 Doing Business 2020 Japan Protecting Minority Investors This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions • Extent of disclosure index (0–10): Disclosure, review, and To make the data comparable across economies, a case study uses several assumptions about approval requirements for related-party transactions the business and the transaction. • Extent of director liability index (0–10): Ability of minority shareholders to sue and hold interested directors liable for The business (Buyer): prejudicial related-party transactions; Available legal - Is a publicly traded corporation listed on the economy’s most important stock exchange. remedies (damages, disgorgement of profits, disqualification - Has a board of directors and a chief executive officer (CEO) who may legally act on behalf of from managerial position(s) for one year or more, rescission of Buyer where permitted, even if this is not specifically required by law. the transaction) - Has a supervisory board in economies with a two-tier board system on which Mr. James • Ease of shareholder suits index (0–10): Access to internal appointed 60% of the shareholder-elected members. corporate documents; Evidence obtainable during trial and - Has not adopted bylaws or articles of association that go beyond the minimum requirements. allocation of legal expenses Does not follow codes, principles, recommendations or guidelines that are not mandatory. - Is a manufacturing company with its own distribution network. • Extent of conflict of interest regulation index (0-30): Sum of the extent of disclosure, extent of director liability and ease of The transaction involves the following details: shareholder suits indices - Mr. James owns 60% of Buyer, sits on Buyer’s board of directors and elected two directors to • Extent of shareholder rights index (0-6): Shareholders’ rights Buyer’s five-member board. and role in major corporate decisions - Mr. James also owns 90% of Seller, a company that operates a chain of retail hardware stores. Seller recently closed a large number of its stores. • Extent of ownership and control index (0-7): Governance - Mr. James proposes that Buyer purchase Seller’s unused fleet of trucks to expand Buyer’s safeguards protecting shareholders from undue board control distribution of its food products, a proposal to which Buyer agrees. The price is equal to 10% of and entrenchment Buyer’s assets and is higher than the market value. • Extent of corporate transparency index (0-7): Corporate - The proposed transaction is part of the company’s principal activity and is not outside the transparency on ownership stakes, compensation, audits and authority of the company. financial prospects - Buyer enters into the transaction. All required approvals are obtained, and all required disclosures • Extent of shareholder governance index (0–20): Sum of the made—that is, the transaction was not entered into fraudulently. extent of shareholders rights, extent of ownership and control - The transaction causes damages to Buyer. Shareholders sue Mr. James and the executives and and extent of corporate transparency indices directors that approved the transaction. • Strength of minority investor protection index (0–50): Sum of the extent of conflict of interest regulation and extent of shareholder governance indices Page 60 Doing Business 2020 Japan Protecting Minority Investors - Tokyo Stock exchange information Stock exchange Japan Stock Exchange Stock exchange URL https://www.jpx.co.jp Listed firms with equity securities 2414 City Covered Tokyo Indicator Tokyo OECD high income Best Regulatory Performance Extent of disclosure index (0-10) 7.0 6.5 10 (13 Economies) Extent of director liability index (0-10) 6.0 5.3 10 (3 Economies) Ease of shareholder suits index (0-10) 8.0 7.3 10 (Djibouti) Extent of shareholder rights index (0-6) 4.0 4.7 6 (19 Economies) Extent of ownership and control index (0-7) 2.0 4.5 7 (9 Economies) Extent of corporate transparency index (0-7) 5.0 5.7 7 (13 Economies) Figure – Protecting Minority in Tokyo – Score 64.0 Score - Protecting Minority Investors Figure – Protecting Minority Investors in Tokyo and comparator economies – Ranking and Score DB 2020 Protecting Minority Investors Score 0 100 88.0: Malaysia (Rank: 2) 86.0: New Zealand (Rank: 3) 74.0: Korea, Rep. (Rank: 25) 71.6: United States (Rank: 36) 64.0: Osaka 64.0: Tokyo Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index. Page 61 Doing Business 2020 Japan Figure – Protecting Minority Investors in Tokyo and comparator economies – Measure of Quality Tokyo 5 6 7 2 4 8 Korea, Rep. 6 6 8 5 4 8 Malaysia 6 9 10 6 5 8 New Zealand 5 9 10 5 5 9 Osaka 5 6 7 2 4 8 United States 5 9 7 3 2 9 OECD high income 5.6 5.6 6.6 4.3 4.5 7.4 0 5 10 15 20 25 30 35 40 45 50 Sub-Indicator Score Extent of corporate transparency index (0-7) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-7) Extent of shareholder rights index (0-6) Ease of shareholder suits index (0-10) Page 62 Doing Business 2020 Japan Details – Protecting Minority Investors in Tokyo – Measure of Quality Answer Score Extent of conflict of interest regulation index (0-30) Extent of disclosure index (0-10) 7.0 Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3) Board of directors 2.0 excluding interested members Must an external body review the terms of the transaction before it takes place? (0-1) No 0.0 Must Mr. James disclose his conflict of interest to the board of directors? (0-2) Full disclosure of all 2.0 material facts Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Must Buyer immediately disclose the transaction to the public? (0-2) Disclosure on the 1.0 transaction only Extent of director liability index (0-10) 6.0 Can shareholders representing 10% of Buyer's share capital sue for the damage the transaction caused to Yes 1.0 Buyer? (0-1) Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0-2) Liable if unfair or 2.0 prejudicial Can shareholders hold the other directors liable for the damage the transaction caused to Buyer? (0-2) Liable if unfair or 2.0 prejudicial Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by shareholders? (0-1) Yes 1.0 Must Mr. James repay profits made from the transaction upon a successful claim by shareholders? (0-1) No 0.0 Is Mr. James disqualified upon a successful claim by shareholders? (0-1) No 0.0 Can a court void the transaction upon a successful claim by shareholders? (0-2) Only in case of fraud 0.0 or bad faith Ease of shareholder suits index (0-10) 8.0 Before suing, can shareholders representing 10% of Buyer's share capital inspect the transaction documents? Yes 1.0 (0-1) Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3) Any relevant 3.0 document Can the plaintiff request categories of documents from the defendant without identifying specific ones? (0-1) No 0.0 Can the plaintiff directly question the defendant and witnesses at trial? (0-2) Yes 2.0 Is the level of proof required for civil suits lower than that of criminal cases? (0-1) Yes 1.0 Can shareholder plaintiffs recover their legal expenses from the company? (0-2) Yes if successful 1.0 Extent of shareholder governance index (0-20) Extent of shareholder rights index (0-6) 4.0 Does the sale of 51% of Buyer's assets require shareholder approval? Yes 1.0 Can shareholders representing 10% of Buyer's share capital call for a meeting of shareholders? Yes 1.0 Must Buyer obtain its shareholders’ approval every time it issues new shares? No 0.0 Do shareholders automatically receive preemption rights every time Buyer issues new shares? No 0.0 Do shareholders elect and dismiss the external auditor? Yes 1.0 Are changes to the rights of a class of shares only possible if the holders of the affected shares approve? Yes 1.0 Extent of ownership and control index (0-7) 2.0 Page 63 Doing Business 2020 Japan Is it forbidden to appoint the same individual as CEO and chairperson of the board of directors? No 0.0 Must the board of directors include independent and nonexecutive board members? No 0.0 Can shareholders remove members of the board of directors without cause before the end of their term? Yes 1.0 Must the board of directors include a separate audit committee exclusively comprising board members? No 0.0 Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Buyer? No 0.0 Must Buyer pay declared dividends within a maximum period set by law? No 0.0 Is a subsidiary prohibited from acquiring shares issued by its parent company? Yes 1.0 Extent of corporate transparency index (0-7) 5.0 Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%? Yes 1.0 Must Buyer disclose information about board members’ primary employment and directorships in other Yes 1.0 companies? Must Buyer disclose the compensation of individual managers? No 0.0 Must a detailed notice of general meeting be sent 21 days before the meeting? No 0.0 Can shareholders representing 5% of Buyer’s share capital put items on the general meeting agenda? Yes 1.0 Must Buyer's annual financial statements be audited by an external auditor? Yes 1.0 Must Buyer disclose its audit reports to the public? Yes 1.0 Page 64 Doing Business 2020 Japan Protecting Minority Investors - Osaka Stock exchange information Stock exchange Japan Stock Exchange Stock exchange URL https://www.jpx.co.jp Listed firms with equity securities 2414 City Covered Osaka Indicator Osaka OECD high income Best Regulatory Performance Extent of disclosure index (0-10) 7.0 6.5 10 (13 Economies) Extent of director liability index (0-10) 6.0 5.3 10 (3 Economies) Ease of shareholder suits index (0-10) 8.0 7.3 10 (Djibouti) Extent of shareholder rights index (0-6) 4.0 4.7 6 (19 Economies) Extent of ownership and control index (0-7) 2.0 4.5 7 (9 Economies) Extent of corporate transparency index (0-7) 5.0 5.7 7 (13 Economies) Figure – Protecting Minority in Osaka – Score 64.0 Score - Protecting Minority Investors Figure – Protecting Minority Investors in Osaka and comparator economies – Ranking and Score DB 2020 Protecting Minority Investors Score 0 100 88.0: Malaysia (Rank: 2) 86.0: New Zealand (Rank: 3) 74.0: Korea, Rep. (Rank: 25) 71.6: United States (Rank: 36) 64.0: Osaka 64.0: Tokyo Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index. Page 65 Doing Business 2020 Japan Figure – Protecting Minority Investors in Osaka and comparator economies – Measure of Quality Osaka 5 6 7 2 4 8 Korea, Rep. 6 6 8 5 4 8 Malaysia 6 9 10 6 5 8 New Zealand 5 9 10 5 5 9 Tokyo 5 6 7 2 4 8 United States 5 9 7 3 2 9 OECD high income 5.6 5.6 6.6 4.3 4.5 7.4 0 5 10 15 20 25 30 35 40 45 50 Sub-Indicator Score Extent of corporate transparency index (0-7) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-7) Extent of shareholder rights index (0-6) Ease of shareholder suits index (0-10) Page 66 Doing Business 2020 Japan Details – Protecting Minority Investors in Osaka – Measure of Quality Answer Score Extent of conflict of interest regulation index (0-30) Extent of disclosure index (0-10) 7.0 Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3) Board of directors 2.0 excluding interested members Must an external body review the terms of the transaction before it takes place? (0-1) No 0.0 Must Mr. James disclose his conflict of interest to the board of directors? (0-2) Full disclosure of all 2.0 material facts Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Must Buyer immediately disclose the transaction to the public? (0-2) Disclosure on the 1.0 transaction only Extent of director liability index (0-10) 6.0 Can shareholders representing 10% of Buyer's share capital sue for the damage the transaction caused to Yes 1.0 Buyer? (0-1) Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0-2) Liable if unfair or 2.0 prejudicial Can shareholders hold the other directors liable for the damage the transaction caused to Buyer? (0-2) Liable if unfair or 2.0 prejudicial Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by shareholders? (0-1) Yes 1.0 Must Mr. James repay profits made from the transaction upon a successful claim by shareholders? (0-1) No 0.0 Is Mr. James disqualified upon a successful claim by shareholders? (0-1) No 0.0 Can a court void the transaction upon a successful claim by shareholders? (0-2) Only in case of fraud 0.0 or bad faith Ease of shareholder suits index (0-10) 8.0 Before suing, can shareholders representing 10% of Buyer's share capital inspect the transaction documents? Yes 1.0 (0-1) Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3) Any relevant 3.0 document Can the plaintiff request categories of documents from the defendant without identifying specific ones? (0-1) No 0.0 Can the plaintiff directly question the defendant and witnesses at trial? (0-2) Yes 2.0 Is the level of proof required for civil suits lower than that of criminal cases? (0-1) Yes 1.0 Can shareholder plaintiffs recover their legal expenses from the company? (0-2) Yes if successful 1.0 Extent of shareholder governance index (0-20) Extent of shareholder rights index (0-6) 4.0 Does the sale of 51% of Buyer's assets require shareholder approval? Yes 1.0 Can shareholders representing 10% of Buyer's share capital call for a meeting of shareholders? Yes 1.0 Must Buyer obtain its shareholders’ approval every time it issues new shares? No 0.0 Do shareholders automatically receive preemption rights every time Buyer issues new shares? No 0.0 Do shareholders elect and dismiss the external auditor? Yes 1.0 Are changes to the rights of a class of shares only possible if the holders of the affected shares approve? Yes 1.0 Extent of ownership and control index (0-7) 2.0 Page 67 Doing Business 2020 Japan Is it forbidden to appoint the same individual as CEO and chairperson of the board of directors? No 0.0 Must the board of directors include independent and nonexecutive board members? No 0.0 Can shareholders remove members of the board of directors without cause before the end of their term? Yes 1.0 Must the board of directors include a separate audit committee exclusively comprising board members? No 0.0 Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Buyer? No 0.0 Must Buyer pay declared dividends within a maximum period set by law? No 0.0 Is a subsidiary prohibited from acquiring shares issued by its parent company? Yes 1.0 Extent of corporate transparency index (0-7) 5.0 Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%? Yes 1.0 Must Buyer disclose information about board members’ primary employment and directorships in other Yes 1.0 companies? Must Buyer disclose the compensation of individual managers? No 0.0 Must a detailed notice of general meeting be sent 21 days before the meeting? No 0.0 Can shareholders representing 5% of Buyer’s share capital put items on the general meeting agenda? Yes 1.0 Must Buyer's annual financial statements be audited by an external auditor? Yes 1.0 Must Buyer disclose its audit reports to the public? Yes 1.0 Page 68 Doing Business 2020 Japan Paying Taxes This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as the administrative burden of paying taxes and contributions and complying with postfiling procedures (VAT refund and tax audit). The most recent round of data collection for the project was completed in May 2019 covering for the Paying Taxes indicator calendar year 2018 (January 1, 2018 – December 31, 2018). See the methodology for more information. What the indicators measure Case study assumptions Tax payments for a manufacturing company in 2018 (number Using a case scenario, Doing Business records taxes and mandatory contributions a medium size per year adjusted for electronic and joint filing and payment) company must pay in a year, and measures the administrative burden of paying taxes, contributions and dealing with postfiling processes. Information is also compiled on frequency of • Total number of taxes and contributions paid or withheld, filing and payments, time taken to comply with tax laws, time taken to comply with the including consumption taxes (value added tax, sales tax or requirements of postfiling processes and time waiting. goods and service tax) • Method and frequency of filing and payment To make data comparable across economies, several assumptions are used: - TaxpayerCo is a medium-size business that started operations on January 1, 2017. It produces Time required to comply with 3 major taxes (hours per year) ceramic flowerpots and sells them at retail. All taxes and contributions recorded are paid in the • Collecting information, computing tax payable second year of operation (calendar year 2018). Taxes and mandatory contributions are measured at all levels of government. • Preparing separate tax accounting books, if required • Completing tax return, filing with agencies The VAT refund process: - In June 2018, TaxpayerCo. makes a large capital purchase: the value of the machine is 65 times • Arranging payment or withholding income per capita of the economy. Sales are equally spread per month (1,050 times income per capita divided by 12) and cost of goods sold are equally expensed per month (875 times income Total tax and contribution rate (% of commercial profits) per capita divided by 12). The machinery seller is registered for VAT and excess input VAT incurred • Profit or corporate income tax in June will be fully recovered after four consecutive months if the VAT rate is the same for inputs, sales and the machine and the tax reporting period is every month. Input VAT will exceed Output • Social contributions, labor taxes paid by employer VAT in June 2018. • Property and property transfer taxes The corporate income tax audit process: • Dividend, capital gains, financial transactions taxes - An error in calculation of income tax liability (for example, use of incorrect tax depreciation rates, • Waste collection, vehicle, road and other taxes or incorrectly treating an expense as tax deductible) leads to an incorrect income tax return and a corporate income tax underpayment. TaxpayerCo. discovered the error and voluntarily notified the Postfiling Index tax authority. The value of the underpaid income tax liability is 5% of the corporate income tax • Time to comply with VAT refund (hours) liability due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax return, but within the tax assessment period. • Time to obtain VAT refund (weeks) • Time to comply with a corporate income tax correction (hours) • Time to complete a corporate income tax correction (weeks) Page 69 Doing Business 2020 Japan Paying Taxes - Tokyo Indicator Tokyo OECD high income Best Regulatory Performance Payments (number per year) 19 10.3 3 (2 Economies) Time (hours per year) 129 158.8 49 (3 Economies) Total tax and contribution rate (% of profit) 46.7 39.9 26.1 (33 Economies) Postfiling index (0-100) 95.2 86.7 None in 2018/19 Figure – Paying Taxes in Tokyo – Score 73.3 87.7 70.4 95.2 Payments Time Total tax and contribution rate Postfiling index Figure – Paying Taxes in Tokyo and comparator economies – Ranking and Score DB 2020 Paying Taxes Score 0 100 91.0: New Zealand (Rank: 9) 87.4: Korea, Rep. (Rank: 21) 86.8: United States (Rank: 25) 81.6: Osaka 81.6: Tokyo 76.0: Malaysia (Rank: 80) Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold. Page 70 Doing Business 2020 Japan Figure – Paying Taxes in Tokyo and comparator economies – Measure of Quality 120 95.2 93.9 96.9 94.0 95.2 100 86.7 Index score 80 60 51.0 40 20 0 Tokyo Korea, Malaysia New United Osaka OECD Rep. Zealand States high income Page 71 Doing Business 2020 Japan Details – Paying Taxes in Tokyo Tax or Payments Notes on Time (hours) Statutory tax Tax base Total tax and Notes on TTCR mandatory (number) Payments rate contribution contribution rate (% of profit) Corporate 1.0 38.0 23.4% taxable profit 15.96 income tax Employer paid - 0.0 jointly 9.15% gross salaries 10.32 Welfare pension insurance Employer paid - 1.0 online 70.5 4.95% from April gross salaries 5.59 Health insurance 2018 Tokyo 0.0 jointly First 4,000,000 taxable profits 5.25 Metropolitan - yen at (0.395% + Enterprise Tax 0.3%*414.2%), (on income) next 4,000,000 yen at (0.635% +0.5%*414.2%), and profits above 8,000,000 yen at (0.88%+0.7%*41 4.2%) Inhabitants tax 1.0 jointly 16.3% taxable profit 2.72 (plus 530,000 yen) Employer paid - 0.0 jointly 1.8% as from gross salaries 1.79 Workmen's April 2018 accident compensation Tokyo City - 0.0 jointly 1.4% net value of fixed 1.65 Depreciable assets Fixed Assets Tax Tokyo City - 4.0 jointly 1.4% property value 1.28 Fixed Assets Tax (on land and building) Tokyo 1.0 4% 70% of building 0.85 Metropolitan - expansion value Real Property Acquisition Tax (for building expansion) Employer paid - 2.0 jointly 0.6% gross salaries 0.59 Employment insurance Employer paid - 0.0 jointly 0.29% as of April gross salaries 0.30 Child allowance 2018 contribution Tokyo City - City 0.0 jointly 0.3% property value 0.27 Planning Tax (on land and building) Tokyo 1.0 90,900 yen fixed fee 0.04 Metropolitan - Automobile Tax National - Stamp 1.0 90,000 yen per contract 0.04 Tax (on contracts for land sale and building expansion) Page 72 Doing Business 2020 Japan National - 1.0 65,600 yen fixed fee 0.03 Automobile Tonnage Tax Local corporation 1.0 4.4% corporate income 0.00 included in other tax tax taxes Tax on interest 0.0 jointly 15.315% interest income 0.00 included in other taxes Fuel tax 1.0 34,900 yen per fuel consumption 0.00 small amount kiloliter Employee paid - 0.0 jointly 0.325% gross salaries 0.00 withheld Employment insurance Employee paid - 0.0 jointly 4.955% as of gross salaries 0.00 withheld Health insurance September 2017 Employee paid - 0.0 jointly 9.15% as of gross salaries 0.00 withheld Welfare pension September 2017 insurance Value added tax 4.0 20.0 8% value added 0.00 not included (VAT) Totals 19 129 46.7 Page 73 Doing Business 2020 Japan Details – Paying Taxes in Tokyo – Tax by Type Taxes by type Answer Profit tax (% of profit) 23.9 Labor tax and contributions (% of profit) 18.6 Other taxes (% of profit) 4.2 Page 74 Doing Business 2020 Japan Details – Paying Taxes in Tokyo – Measure of Quality Answer Score Postfiling index (0-100) 95.2 VAT refunds Does VAT exist? Yes Does a VAT refund process exist per the case study? Yes Restrictions on VAT refund process none Percentage of cases exposed to a VAT audit (%) 0% - 24% Is there a mandatory carry forward period? No Time to comply with VAT refund (hours) 1.0 98.0 Time to obtain VAT refund (weeks) 11.0 85.4 Corporate income tax audits Does corporate income tax exist? Yes Percentage of cases exposed to a corporate income tax audit (%) 0% - 24% Time to comply with a corporate income tax correction (hours) 3.0 97.2 Time to complete a corporate income tax correction (weeks) No tax audit per case 100 study scenario Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction. N/A = Not applicable. Page 75 Doing Business 2020 Japan Paying Taxes - Osaka Indicator Osaka OECD high income Best Regulatory Performance Payments (number per year) 19 10.3 3 (2 Economies) Time (hours per year) 129 158.8 49 (3 Economies) Total tax and contribution rate (% of profit) 46.8 39.9 26.1 (33 Economies) Postfiling index (0-100) 95.2 86.7 None in 2018/19 Figure – Paying Taxes in Osaka – Score 73.3 87.7 70.2 95.2 Payments Time Total tax and contribution rate Postfiling index Figure – Paying Taxes in Osaka and comparator economies – Ranking and Score DB 2020 Paying Taxes Score 0 100 91.0: New Zealand (Rank: 9) 87.4: Korea, Rep. (Rank: 21) 86.8: United States (Rank: 25) 81.6: Osaka 81.6: Tokyo 76.0: Malaysia (Rank: 80) Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold. Page 76 Doing Business 2020 Japan Figure – Paying Taxes in Osaka and comparator economies – Measure of Quality 120 95.2 93.9 96.9 94.0 95.2 100 86.7 Index score 80 60 51.0 40 20 0 Osaka Korea, Malaysia New United Tokyo OECD Rep. Zealand States high income Page 77 Doing Business 2020 Japan Details – Paying Taxes in Osaka Tax or Payments Notes on Time (hours) Statutory tax Tax base Total tax and Notes on TTCR mandatory (number) Payments rate contribution contribution rate (% of profit) Corporate 1.0 38.0 23.4% taxable profits 15.92 income tax Employer paid - 0.0 jointly 9.15% gross salaries 10.32 Welfare pension insurance Employer paid - 1.0 online 70.5 5.085% as of gross salaries 5.73 Health insurance April 2018 Osaka 0.0 jointly First 4,000,000 taxable profits 5.24 Metropolitan - yen at (0.395% + Enterprise Tax 0.3%*414.2%), (on income) next 4,000,000 yen at (0.635% +0.5%*414.2%), and profits above 8,000,000 yen at (0.88%+0.7%*41 4.2%) Inhabitants tax 1.0 jointly 11.9% + 4.2% taxable profit 2.74 (plus 660,000 yen) Employer paid - 0.0 jointly 1.8% as from gross salaries 1.79 Workmen's April 2018 accident compensation Osaka City - 0.0 jointly 1.4% net value of fixed 1.65 Depreciable assets Fixed Assets Tax Osaka City - 4.0 jointly 1.4% property value 1.30 Fixed Assets Tax (on land and building) Osaka 1.0 4% 70% of building 0.85 Metropolitan - expansion value Real Property Acquisition Tax (for building expansion) Employer paid - 2.0 jointly 0.6% gross salaries 0.59 Employment insurance Employer paid - 0.0 jointly 0.29% as of April gross salaries 0.30 Child allowance 2018 contribution Osaka City - City 0.0 jointly 0.3% property value 0.28 Planning Tax (on land and building) National - Stamp 1.0 90,000 yen per contract 0.04 Tax (on contracts for land sale and building expansion) Osaka 1.0 90,900 yen fixed fee 0.04 Metropolitan - Automobile Tax Page 78 Doing Business 2020 Japan National - 1.0 65,600 yen fixed fee 0.03 Automobile Tonnage Tax Local corporation 1.0 4.4% corporate income 0.00 included in other tax tax taxes Fuel tax 1.0 34,900 yen per fuel consumption 0.00 small amount kiloliter Employee paid - 0.0 jointly 0.325% gross salaries 0.00 withheld Employment insurance Employee paid - 0.0 jointly 5.065% as of gross salaries 0.00 withheld Health insurance September 2017 Employee paid - 0.0 jointly 9.15% as of gross salaries 0.00 withheld Welfare pension September 2017 insurance Tax on interest 0.0 jointly 15.315% interest income 0.00 included in other taxes Value added tax 4.0 20.0 8% value added 0.00 not included (VAT) Totals 19 129 46.8 Page 79 Doing Business 2020 Japan Details – Paying Taxes in Osaka – Tax by Type Taxes by type Answer Profit tax (% of profit) 23.9 Labor tax and contributions (% of profit) 18.7 Other taxes (% of profit) 4.2 Page 80 Doing Business 2020 Japan Details – Paying Taxes in Osaka – Measure of Quality Answer Score Postfiling index (0-100) 95.2 VAT refunds Does VAT exist? Yes Does a VAT refund process exist per the case study? Yes Restrictions on VAT refund process none Percentage of cases exposed to a VAT audit (%) 0% - 24% Is there a mandatory carry forward period? No Time to comply with VAT refund (hours) 1.0 98.0 Time to obtain VAT refund (weeks) 11.0 85.4 Corporate income tax audits Does corporate income tax exist? Yes Percentage of cases exposed to a corporate income tax audit (%) 0% - 24% Time to comply with a corporate income tax correction (hours) 3.0 97.2 Time to complete a corporate income tax correction (weeks) No tax audit per case 100 study scenario Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction. N/A = Not applicable. Page 81 Doing Business 2020 Japan Trading across Borders Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Documentary compliance To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions: • Obtaining, preparing and submitting documents during transport, clearance, inspections and port or border handling in Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 days are recorded as origin economy 22×24=528 hours). If customs clearance takes 7.5 hours, the data are recorded as is. Alternatively, • Obtaining, preparing and submitting documents required by suppose documents are submitted to a customs agency at 8:00a.m., are processed overnight and destination economy and any transit economies can be picked up at 8:00a.m. the next day. The time for customs clearance would be recorded as 24 hours because the actual procedure took 24 hours. • Covers all documents required by law and in practice, including electronic submissions of information Cost: Insurance cost and informal payments for which no receipt is issued are excluded from the Border compliance costs recorded. Costs are reported in U.S. dollars. Contributors are asked to convert local currency into U.S. dollars based on the exchange rate prevailing on the day they answer the questionnaire. • Customs clearance and inspections Contributors are private sector experts in international trade logistics and are informed about • Inspections by other agencies (if applied to more than 20% of exchange rates. shipments) Assumptions of the case study: • Handling and inspections that take place at the economy’s port - For all 190 economies covered by Doing Business, it is assumed a shipment is in a warehouse in or border the largest business city of the exporting economy and travels to a warehouse in the largest business city of the importing economy. Domestic transport - It is assumed each economy imports 15 metric tons of containerized auto parts (HS 8708) from • Loading or unloading of the shipment at the warehouse or its natural import partner—the economy from which it imports the largest value (price times port/border quantity) of auto parts. It is assumed each economy exports the product of its comparative advantage (defined by the largest export value) to its natural export partner—the economy that is • Transport between warehouse and port/border the largest purchaser of this product. Shipment value is assumed to be $50,000. • Traffic delays and road police checks while shipment is en - The mode of transport is the one most widely used for the chosen export or import product and route the trading partner, as is the seaport or land border crossing. - All electronic information submissions requested by any government agency in connection with the shipment are considered to be documents obtained, prepared and submitted during the export or import process. - A port or border is a place (seaport or land border crossing) where merchandise can enter or leave an economy. - Relevant government agencies include customs, port authorities, road police, border guards, standardization agencies, ministries or departments of agriculture or industry, national security agencies and any other government authorities. Page 82 Doing Business 2020 Japan Trading across Borders - Tokyo Indicator Tokyo OECD high income Best Regulatory Performance Time to export: Border compliance (hours) 27 12.7 1 (19 Economies) Cost to export: Border compliance (USD) 241 136.8 0 (19 Economies) Time to export: Documentary compliance (hours) 3 2.3 1 (26 Economies) Cost to export: Documentary compliance (USD) 54 33.4 0 (20 Economies) Time to import: Border compliance (hours) 48 8.5 1 (25 Economies) Cost to import: Border compliance (USD) 275 98.1 0 (28 Economies) Time to import: Documentary compliance (hours) 3 3.4 1 (30 Economies) Cost to import: Documentary compliance (USD) 107 23.5 0 (30 Economies) Figure – Trading across Borders in Tokyo – Score 83.6 77.3 98.8 86.5 83.2 77.1 99.2 84.7 Time Cost Time Cost Time Cost Time Cost to to to to to to to to export: export: export: export: import: import: import: import: Border Border Documentary Documentary Border Border Documentary Documentary compliance compliance compliance compliance compliance compliance compliance compliance Figure – Trading across Borders in Tokyo and comparator economies – Ranking and Score DB 2020 Trading Across Borders Score 0 100 92.5: Korea, Rep. (Rank: 36) 92.0: United States (Rank: 39) 88.5: Malaysia (Rank: 49) 86.3: Tokyo 85.3: Osaka 84.6: New Zealand (Rank: 63) Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import. Page 83 Doing Business 2020 Japan Figure – Trading across Borders in Tokyo – Time and Cost Time (hours) Cost (USD) 60 275 300 50 241 48 250 Time (hours) Cost (USD) 40 200 30 27 150 107 20 100 54 10 50 3 3 0 0 Export Export Import Import - - - - Border Documentary Border Documentary Compliance Compliance Compliance Compliance Page 84 Doing Business 2020 Japan Details – Trading across Borders in Tokyo Characteristics Export Import Product HS 84 : Nuclear reactors, boilers, machinery and HS 8708: Parts and accessories of motor vehicles mechanical appliances; parts thereof Trade partner China China Border Yokohama port Yokohama port Distance (km) 20 20 Domestic transport time (hours) 3 3 Domestic transport cost (USD) 380 380 Details – Trading across Borders in Tokyo – Components of Border Compliance Time to Complete (hours) Associated Costs (USD) Export: Clearance and inspections required by 2.5 50.0 customs authorities Export: Clearance and inspections required by 0.0 0.0 agencies other than customs Export: Port or border handling 27.0 191.0 Import: Clearance and inspections required by 2.5 90.0 customs authorities Import: Clearance and inspections required by 0.0 0.0 agencies other than customs Import: Port or border handling 48.0 185.0 Page 85 Doing Business 2020 Japan Details – Trading across Borders in Tokyo – Trade Documents Export Import Customs export declaration Invoice Commercial invoice Packing list Handling manual Bill of lading Packing list Customs import declaration SOLAS certificate SOLAS certificate Bill of lading Page 86 Doing Business 2020 Japan Trading across Borders - Osaka Indicator Osaka OECD high income Best Regulatory Performance Time to export: Border compliance (hours) 26 12.7 1 (19 Economies) Cost to export: Border compliance (USD) 331 136.8 0 (19 Economies) Time to export: Documentary compliance (hours) 1 2.3 1 (26 Economies) Cost to export: Documentary compliance (USD) 54 33.4 0 (20 Economies) Time to import: Border compliance (hours) 24 8.5 1 (25 Economies) Cost to import: Border compliance (USD) 389 98.1 0 (28 Economies) Time to import: Documentary compliance (hours) 4 3.4 1 (30 Economies) Cost to import: Documentary compliance (USD) 107 23.5 0 (30 Economies) Figure – Trading across Borders in Osaka – Score 84.3 68.8 99.9 86.5 91.8 67.6 98.7 84.7 Time Cost Time Cost Time Cost Time Cost to to to to to to to to export: export: export: export: import: import: import: import: Border Border Documentary Documentary Border Border Documentary Documentary compliance compliance compliance compliance compliance compliance compliance compliance Figure – Trading across Borders in Osaka and comparator economies – Ranking and Score DB 2020 Trading Across Borders Score 0 100 92.5: Korea, Rep. (Rank: 36) 92.0: United States (Rank: 39) 88.5: Malaysia (Rank: 49) 86.3: Tokyo 85.3: Osaka 84.6: New Zealand (Rank: 63) Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import. Page 87 Doing Business 2020 Japan Figure – Trading across Borders in Osaka – Time and Cost Time (hours) Cost (USD) 30 450 26 389 24 400 25 331 350 Time (hours) Cost (USD) 20 300 250 15 200 10 107 150 4 100 5 54 1 50 0 0 Export Export Import Import - - - - Border Documentary Border Documentary Compliance Compliance Compliance Compliance Page 88 Doing Business 2020 Japan Details – Trading across Borders in Osaka Characteristics Export Import Product HS 84 : Nuclear reactors, boilers, machinery and HS 8708: Parts and accessories of motor vehicles mechanical appliances; parts thereof Trade partner China China Border Kobe port Kobe port Distance (km) 37 37 Domestic transport time (hours) 2 2 Domestic transport cost (USD) 326 326 Details – Trading across Borders in Osaka – Components of Border Compliance Time to Complete (hours) Associated Costs (USD) Export: Clearance and inspections required by 2.7 60.8 customs authorities Export: Clearance and inspections required by 0.0 0.0 agencies other than customs Export: Port or border handling 26.0 270.0 Import: Clearance and inspections required by 4.8 95.8 customs authorities Import: Clearance and inspections required by 0.0 0.0 agencies other than customs Import: Port or border handling 24.0 293.0 Page 89 Doing Business 2020 Japan Details – Trading across Borders in Osaka – Trade Documents Export Import Customs export declaration Invoice Commercial invoice Packing list Handling manual Bill of lading Packing list Customs import declaration SOLAS certificate SOLAS certificate Bill of lading Page 90 Doing Business 2020 Japan Enforcing Contracts The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Time required to enforce a contract through the courts The dispute in the case study involves the breach of a sales contract between two domestic (calendar days) businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes the case from simple debt enforcement. • Time to file and serve the case • Time for trial and to obtain the judgment To make the data on the time and comparable across economies, several assumptions about the case are used: • Time to enforce the judgment - The dispute concerns a lawful transaction between two businesses (Seller and Buyer), both Cost required to enforce a contract through the courts (% of located in the economy’s largest business city. For 11 economies the data are also collected for the claim value) second largest business city. - The Buyer orders custom-made furniture, then fails to pay alleging that the goods are not of • Average attorney fees adequate quality. • Court costs - The value of the dispute is 200% of the income per capita or the equivalent in local currency of USD 5,000, whichever is greater. • Enforcement costs - The Seller sues the Buyer before the court with jurisdiction over commercial cases worth 200% of income per capita or $5,000 whichever is greater. Quality of judicial processes index (0-18) - The Seller requests the pretrial attachment of the defendant’s movable assets to secure the • Court structure and proceedings (-1-5) claim. - The claim is disputed on the merits because of Buyer’s allegation that the quality of the goods • Case management (0-6) was not adequate. • Court automation (0-4) - The judge decides in favor of the seller; there is no appeal. • Alternative dispute resolution (0-3) - The Seller enforces the judgment through a public sale of the Buyer’s movable assets. Page 91 Doing Business 2020 Japan Enforcing Contracts - Tokyo Standardized Case Claim value JPY 8,932,620 Court name Tokyo District Court City Covered Tokyo Indicator Tokyo OECD high income Best Regulatory Performance Time (days) 360 589.6 120 (Singapore) Cost (% of claim value) 23.4 21.5 0.1 (Bhutan) Quality of judicial processes index (0-18) 7.5 11.7 None in 2018/19 Figure – Enforcing Contracts in Tokyo – Score 80.3 73.8 41.7 Time Cost Quality of judicial processes index Figure – Enforcing Contracts in Tokyo and comparator economies – Ranking and Score DB 2020 Enforcing Contracts Score 0 100 84.1: Korea, Rep. (Rank: 2) 73.4: United States (Rank: 17) 71.5: New Zealand (Rank: 23) 68.2: Malaysia (Rank: 35) 65.3: Osaka 65.3: Tokyo Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators. Page 92 Doing Business 2020 Japan Figure – Enforcing Contracts in Tokyo – Time and Cost Time (days) Cost (% of claim value) 700 37.9 40 Cost (% of claim value) 589.6 35 600 30.5 27.2 30 500 Time (days) 425 444 23.4 23.4 25 400 21.5 360 360 290 20 300 12.7 216 15 200 10 100 5 0 0 Korea, Malaysia New OECD Osaka Tokyo United Rep. Zealand high States income Page 93 Doing Business 2020 Japan Figure – Enforcing Contracts in Tokyo and comparator economies – Measure of Quality Tokyo 2.5 1 1 3 Korea, Rep. 3 4 4 3.5 Malaysia 2.5 4 2.5 4 New Zealand 2 3 1.5 3 Osaka 2.5 1 1 3 United States 2.5 4.7 3 4.4 OECD high income 2.5 3.2 2.4 3.6 0 2 4 6 8 10 12 14 16 Sub-Indicator Score Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5) Details – Enforcing Contracts in Tokyo Indicator Time (days) 360 Filing and service 20 Trial and judgment 280 Enforcement of judgment 60 Cost (% of claim value) 23.4 Attorney fees 18.5 Court fees 4.5 Enforcement fees 0.4 Quality of judicial processes index (0-18) 7.5 Court structure and proceedings (-1-5) 3.0 Case management (0-6) 1.0 Court automation (0-4) 1.0 Alternative dispute resolution (0-3) 2.5 Page 94 Doing Business 2020 Japan Details – Enforcing Contracts in Tokyo – Measure of Quality Answer Score Quality of judicial processes index (0-18) 7.5 Court structure and proceedings (-1-5) 3.0 1. Is there a court or division of a court dedicated solely to hearing commercial cases? No 0.0 2. Small claims court 1.5 2.a. Is there a small claims court or a fast-track procedure for small claims? Yes 2.b. If yes, is self-representation allowed? Yes 3. Is pretrial attachment available? Yes 1.0 4. Are new cases assigned randomly to judges? Yes, but manual 0.5 5. Does a woman's testimony carry the same evidentiary weight in court as a man's? Yes 0.0 Case management (0-6) 1.0 1. Time standards 0.0 1.a. Are there laws setting overall time standards for key court events in a civil case? Yes 1.b. If yes, are the time standards set for at least three court events? No 1.c. Are these time standards respected in more than 50% of cases? Yes 2. Adjournments 0.0 2.a. Does the law regulate the maximum number of adjournments that can be granted? No 2.b. Are adjournments limited to unforeseen and exceptional circumstances? No 2.c. If rules on adjournments exist, are they respected in more than 50% of cases? n.a. 3. Can two of the following four reports be generated about the competent court: (i) time to disposition report; (ii) No 0.0 clearance rate report; (iii) age of pending cases report; and (iv) single case progress report? 4. Is a pretrial conference among the case management techniques used before the competent court? Yes 1.0 5. Are there any electronic case management tools in place within the competent court for use by judges? No 0.0 6. Are there any electronic case management tools in place within the competent court for use by lawyers? No 0.0 Court automation (0-4) 1.0 1. Can the initial complaint be filed electronically through a dedicated platform within the competent court? No 0.0 2. Is it possible to carry out service of process electronically for claims filed before the competent court? No 0.0 3. Can court fees be paid electronically within the competent court? No 0.0 4. Publication of judgments 1.0 4.a Are judgments rendered in commercial cases at all levels made available to the general public Yes through publication in official gazettes, in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the appellate and supreme court level made Yes available to the general public through publication in official gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 2.5 1. Arbitration 1.5 1.a. Is domestic commercial arbitration governed by a consolidated law or consolidated chapter or Yes section of the applicable code of civil procedure encompassing substantially all its aspects? 1.b. Are there any commercial disputes—aside from those that deal with public order or public policy— No that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes Page 95 Doing Business 2020 Japan 2. Mediation/Conciliation 1.0 2.a. Is voluntary mediation or conciliation available? Yes 2.b. Are mediation, conciliation or both governed by a consolidated law or consolidated chapter or Yes section of the applicable code of civil procedure encompassing substantially all their aspects (for example, definition, aim and scope of application, desig 2.c. Are there financial incentives for parties to attempt mediation or conciliation (i.e., if mediation or No conciliation is successful, a refund of court filing fees, income tax credits or the like)? Page 96 Doing Business 2020 Japan Enforcing Contracts - Osaka Standardized Case Claim value JPY 8,932,620 Court name Osaka District Court City Covered Osaka Indicator Osaka OECD high income Best Regulatory Performance Time (days) 360 589.6 120 (Singapore) Cost (% of claim value) 23.4 21.5 0.1 (Bhutan) Quality of judicial processes index (0-18) 7.5 11.7 None in 2018/19 Figure – Enforcing Contracts in Osaka – Score 80.3 73.8 41.7 Time Cost Quality of judicial processes index Figure – Enforcing Contracts in Osaka and comparator economies – Ranking and Score DB 2020 Enforcing Contracts Score 0 100 84.1: Korea, Rep. (Rank: 2) 73.4: United States (Rank: 17) 71.5: New Zealand (Rank: 23) 68.2: Malaysia (Rank: 35) 65.3: Osaka 65.3: Tokyo Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators. Page 97 Doing Business 2020 Japan Figure – Enforcing Contracts in Osaka – Time and Cost Time (days) Cost (% of claim value) 700 37.9 40 Cost (% of claim value) 589.6 35 600 30.5 27.2 30 500 Time (days) 425 444 23.4 23.4 25 400 21.5 360 360 290 20 300 12.7 216 15 200 10 100 5 0 0 Korea, Malaysia New OECD Osaka Tokyo United Rep. Zealand high States income Page 98 Doing Business 2020 Japan Figure – Enforcing Contracts in Osaka and comparator economies – Measure of Quality Osaka 2.5 1 1 3 Korea, Rep. 3 4 4 3.5 Malaysia 2.5 4 2.5 4 New Zealand 2 3 1.5 3 Tokyo 2.5 1 1 3 United States 2.5 4.7 3 4.4 OECD high income 2.5 3.2 2.4 3.6 0 2 4 6 8 10 12 14 16 Sub-Indicator Score Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5) Details – Enforcing Contracts in Osaka Indicator Time (days) 360 Filing and service 20 Trial and judgment 280 Enforcement of judgment 60 Cost (% of claim value) 23.4 Attorney fees 18.5 Court fees 4.5 Enforcement fees 0.4 Quality of judicial processes index (0-18) 7.5 Court structure and proceedings (-1-5) 3.0 Case management (0-6) 1.0 Court automation (0-4) 1.0 Alternative dispute resolution (0-3) 2.5 Page 99 Doing Business 2020 Japan Details – Enforcing Contracts in Osaka – Measure of Quality Answer Score Quality of judicial processes index (0-18) 7.5 Court structure and proceedings (-1-5) 3.0 1. Is there a court or division of a court dedicated solely to hearing commercial cases? No 0.0 2. Small claims court 1.5 2.a. Is there a small claims court or a fast-track procedure for small claims? Yes 2.b. If yes, is self-representation allowed? Yes 3. Is pretrial attachment available? Yes 1.0 4. Are new cases assigned randomly to judges? Yes, but manual 0.5 5. Does a woman's testimony carry the same evidentiary weight in court as a man's? Yes 0.0 Case management (0-6) 1.0 1. Time standards 0.0 1.a. Are there laws setting overall time standards for key court events in a civil case? Yes 1.b. If yes, are the time standards set for at least three court events? No 1.c. Are these time standards respected in more than 50% of cases? Yes 2. Adjournments 0.0 2.a. Does the law regulate the maximum number of adjournments that can be granted? No 2.b. Are adjournments limited to unforeseen and exceptional circumstances? No 2.c. If rules on adjournments exist, are they respected in more than 50% of cases? n.a. 3. Can two of the following four reports be generated about the competent court: (i) time to disposition report; (ii) No 0.0 clearance rate report; (iii) age of pending cases report; and (iv) single case progress report? 4. Is a pretrial conference among the case management techniques used before the competent court? Yes 1.0 5. Are there any electronic case management tools in place within the competent court for use by judges? No 0.0 6. Are there any electronic case management tools in place within the competent court for use by lawyers? No 0.0 Court automation (0-4) 1.0 1. Can the initial complaint be filed electronically through a dedicated platform within the competent court? No 0.0 2. Is it possible to carry out service of process electronically for claims filed before the competent court? No 0.0 3. Can court fees be paid electronically within the competent court? No 0.0 4. Publication of judgments 1.0 4.a Are judgments rendered in commercial cases at all levels made available to the general public Yes through publication in official gazettes, in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the appellate and supreme court level made Yes available to the general public through publication in official gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 2.5 1. Arbitration 1.5 1.a. Is domestic commercial arbitration governed by a consolidated law or consolidated chapter or Yes section of the applicable code of civil procedure encompassing substantially all its aspects? 1.b. Are there any commercial disputes—aside from those that deal with public order or public policy— No that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes Page 100 Doing Business 2020 Japan 2. Mediation/Conciliation 1.0 2.a. Is voluntary mediation or conciliation available? Yes 2.b. Are mediation, conciliation or both governed by a consolidated law or consolidated chapter or Yes section of the applicable code of civil procedure encompassing substantially all their aspects (for example, definition, aim and scope of application, desig 2.c. Are there financial incentives for parties to attempt mediation or conciliation (i.e., if mediation or No conciliation is successful, a refund of court filing fees, income tax credits or the like)? Page 101 Doing Business 2020 Japan Resolving Insolvency Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Time required to recover debt (years) To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are used: • Measured in calendar years • Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 suppliers. The hotel experiences financial difficulties. Cost required to recover debt (% of debtor’s estate) - The value of the hotel is 100% of the income per capita or the equivalent in local currency of USD 200,000, whichever is greater. • Measured as percentage of estate value - The hotel has a loan from a domestic bank, secured by a mortgage over the hotel’s real estate. • Court fees The hotel cannot pay back the loan, but makes enough money to operate otherwise. • Fees of insolvency administrators In addition, Doing Business evaluates the quality of legal framework applicable to judicial • Lawyers’ fees liquidation and reorganization proceedings and the extent to which best insolvency practices have • Assessors’ and auctioneers’ fees been implemented in each economy covered. • Other related fees Outcome • Whether business continues operating as a going concern or business assets are sold piecemeal Recovery rate for creditors • Measures the cents on the dollar recovered by secured creditors • Outcome for the business (survival or not) determines the maximum value that can be recovered • Official costs of the insolvency proceedings are deducted • Depreciation of furniture is taken into account • Present value of debt recovered Strength of insolvency framework index (0- 16) • Sum of the scores of four component indices: • Commencement of proceedings index (0-3) • Management of debtor’s assets index (0-6) • Reorganization proceedings index (0-3) • Creditor participation index (0-4) Page 102 Doing Business 2020 Japan Resolving Insolvency - Tokyo Indicator Tokyo OECD high income Best Regulatory Performance Recovery rate (cents on the dollar) 91.8 70.2 92.9 (Norway) Time (years) 0.6 1.7 0.4 (Ireland) Cost (% of estate) 4.5 9.3 1.0 (Norway) Outcome (0 as piecemeal sale and 1 as going concern) 1 .. .. Strength of insolvency framework index (0-16) 13.0 11.9 None in 2018/19 Figure – Resolving Insolvency in Tokyo – Score 98.8 81.3 Recovery rate Strength of insolvency framework index Figure – Resolving Insolvency in Tokyo and comparator economies – Ranking and Score DB 2020 Resolving Insolvency Score 0 100 90.6: Osaka 90.5: United States (Rank: 2) 90.0: Tokyo 82.9: Korea, Rep. (Rank: 11) 69.5: New Zealand (Rank: 36) 67.0: Malaysia (Rank: 40) Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index. Page 103 Doing Business 2020 Japan Figure – Resolving Insolvency in Tokyo – Time and Cost Time (years) Cost (% of estate) 1.8 1.7 12 1.6 1.5 10.0 10.0 9.3 10 Cost (% of estate) 1.4 1.3 Time (years) 1.2 8 1.0 1.0 1 6 0.8 4.5 0.6 0.6 0.6 3.5 3.5 3.5 4 0.4 2 0.2 0 0 Korea, Malaysia New OECD Osaka Tokyo United Rep. Zealand high States income Page 104 Doing Business 2020 Japan Figure – Resolving Insolvency in Tokyo and comparator economies – Measure of Quality Tokyo 6 3 1 3 Korea, Rep. 5.5 2.5 1 3 Malaysia 2 3 2 0.5 New Zealand 3 3 2 0.5 Osaka 6 3 1 3 United States 6 3 3 3 OECD high income 5.3 2.8 2.1 1.9 0 2 4 6 8 10 12 14 16 Sub-Indicator Score Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3) Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Figure – Resolving Insolvency in Tokyo and comparator economies – Recovery Rate Recovery rate(cents on the dollar) 100 91.8 92.8 90 84.3 81.0 81.0 79.7 80 70.2 70 60 50 40 30 20 10 0 Tokyo Korea, Rep. Malaysia New Zealand United States Osaka OECD high income Page 105 Doing Business 2020 Japan Details – Resolving Insolvency in Tokyo Indicator Answer Score Proceeding reorganization The most likely procedure applicable to our case study would be a reorganization (civil rehabilitation). Mirage may use the rehabilitation proceeding to gain time, find a new investor, or renegotiate its debt. The rehabilitation proceeding starts with Mirage (debtor) filing for court-supervised rehabilitation with the Tokyo District Court. Mirage’s managers will draft a rehabilitation plan which is likely to be approved by creditors. BizBank will likely support the rehabilitation proceedings as according to the case assumption the continuation of Mirage’s operations as a going concern would fetch 100% of Mirage's market value. Outcome going concern Yes, the hotel will continue operating as a going concern after approval of the rehabilitation plan by creditors. Time (in years) 0.6 According to the standard schedule of Tokyo District Court, civil rehabilitation proceedings will take approximately 6 to 7 months in total. Immediately after the filing, the court issues a temporary restraining order and supervision order. And, about 1 week after the filing, the court issues the order to commence civil rehabilitation proceedings. After that, creditors will file proofs of claim within about 1 month after the commencement order and Mirage will investigate the proofs of claim. In the meantime, Mirage will evaluate its properties and prepare the rehabilitation plan. The rehabilitation plan will be submitted 3 months after the commencement (the court designates the date). The supervisor will submit his opinion regarding the plan and a creditor's meeting will be convened to approve the plan about 5 months after the commencement. If the rehabilitation plan is approved in the creditor's meeting, the court will issue an order to confirm the approved plan immediately after the meeting. The rehabilitation plan becomes effective about 1 month after the confirmation order. Cost (% of estate) 4.5 Cost incurred during the entire insolvency process mainly include court or government agency fees (1%), attorney fees (2%), costs of notification and publication (<1%), insolvency representative or receiver fees (1%), and fees of accountants, assessors, inspectors and other professionals (<1%). Recovery rate 91.8 (cents on the dollar) Page 106 Doing Business 2020 Japan Details – Resolving Insolvency in Tokyo – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 13.0 Commencement of proceedings index (0-3) 3.0 What procedures are available to a DEBTOR when commencing insolvency proceedings? (a) Debtor may file for 1.0 both liquidation and reorganization Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (a) Yes, a creditor 1.0 may file for both liquidation and reorganization What basis for commencement of the insolvency proceedings is allowed under the insolvency framework? (a) (c) Both (a) and (b) 1.0 Debtor is generally unable to pay its debts as they mature (b) The value of debtor's liabilities exceeds the value options are available, of its assets but only one of them needs to be complied with Management of debtor's assets index (0-6) 6.0 Does the insolvency framework allow the continuation of contracts supplying essential goods and services to the Yes 1.0 debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome contracts? Yes 1.0 Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0 Does the insolvency framework allow avoidance of undervalued transactions? Yes 1.0 Does the insolvency framework provide for the possibility of the debtor obtaining credit after commencement of Yes 1.0 insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (b) Yes over ordinary 1.0 unsecured creditors but not over secured creditors Reorganization proceedings index (0-3) 3.0 Which creditors vote on the proposed reorganization plan? (b) Only creditors 1.0 whose rights are affected by the proposed plan Does the insolvency framework require that dissenting creditors in reorganization receive at least as much as Yes 1.0 what they would obtain in a liquidation? Are the creditors divided into classes for the purposes of voting on the reorganization plan, does each class vote Yes 1.0 separately and are creditors in the same class treated equally? Creditor participation index (0-4) 1.0 Does the insolvency framework require approval by the creditors for selection or appointment of the insolvency No 0.0 representative? Does the insolvency framework require approval by the creditors for sale of substantial assets of the debtor? No 0.0 Does the insolvency framework provide that a creditor has the right to request information from the insolvency No 0.0 representative? Does the insolvency framework provide that a creditor has the right to object to decisions accepting or rejecting Yes 1.0 creditors' claims? Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Page 107 Doing Business 2020 Japan Resolving Insolvency - Osaka Indicator Osaka OECD high income Best Regulatory Performance Recovery rate (cents on the dollar) 92.8 70.2 92.9 (Norway) Time (years) 0.6 1.7 0.4 (Ireland) Cost (% of estate) 3.5 9.3 1.0 (Norway) Outcome (0 as piecemeal sale and 1 as going concern) 1 .. .. Strength of insolvency framework index (0-16) 13.0 11.9 None in 2018/19 Figure – Resolving Insolvency in Osaka – Score 99.9 81.3 Recovery rate Strength of insolvency framework index Figure – Resolving Insolvency in Osaka and comparator economies – Ranking and Score DB 2020 Resolving Insolvency Score 0 100 90.6: Osaka 90.5: United States (Rank: 2) 90.0: Tokyo 82.9: Korea, Rep. (Rank: 11) 69.5: New Zealand (Rank: 36) 67.0: Malaysia (Rank: 40) Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index. Page 108 Doing Business 2020 Japan Figure – Resolving Insolvency in Osaka – Time and Cost Time (years) Cost (% of estate) 1.8 1.7 12 1.6 1.5 10.0 10.0 9.3 10 Cost (% of estate) 1.4 1.3 Time (years) 1.2 8 1.0 1.0 1 6 0.8 4.5 0.6 0.6 0.6 3.5 3.5 3.5 4 0.4 2 0.2 0 0 Korea, Malaysia New OECD Osaka Tokyo United Rep. Zealand high States income Page 109 Doing Business 2020 Japan Figure – Resolving Insolvency in Osaka and comparator economies – Measure of Quality Osaka 6 3 1 3 Korea, Rep. 5.5 2.5 1 3 Malaysia 2 3 2 0.5 New Zealand 3 3 2 0.5 Tokyo 6 3 1 3 United States 6 3 3 3 OECD high income 5.3 2.8 2.1 1.9 0 2 4 6 8 10 12 14 16 Sub-Indicator Score Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3) Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Figure – Resolving Insolvency in Osaka and comparator economies – Recovery Rate Recovery rate(cents on the dollar) 100 92.8 91.8 90 84.3 81.0 81.0 79.7 80 70.2 70 60 50 40 30 20 10 0 Osaka Korea, Rep. Malaysia New Zealand United States Tokyo OECD high income Page 110 Doing Business 2020 Japan Details – Resolving Insolvency in Osaka Indicator Answer Score Proceeding reorganization The most likely procedure applicable to our case study would be a reorganization (civil rehabilitation). Mirage may use the rehabilitation proceeding to gain time, find a new investor, or renegotiate its debt. The rehabilitation proceeding starts with Mirage (debtor) filing for court-supervised rehabilitation with the Osaka District Court. Mirage’s managers will draft a rehabilitation plan which is likely to be approved by creditors. BizBank will likely support the rehabilitation proceedings as according to the case assumption the continuation of Mirage’s operations as a going concern would fetch 100% of Mirage's market value. Outcome going concern Yes, the hotel will continue operating as a going concern after approval of the rehabilitation plan by creditors. Time (in years) 0.6 A reorganization (civil rehabilitation) procedure will approximately take 7 months in total. Creditors will file the proof of claims and, in the meantime, Mirage will prepare the plan. The plan will be submitted 3 months from the commencement (the court designates the date). The supervisor will submit his opinion regarding the plan and a creditors' meeting will be convened to approve the plan. Cost (% of estate) 3.5 The costs associated with the case would amount to approximately 3.5% of the value of the debtor's estate (JPY 13,600,000). Cost incurred during the entire insolvency process mainly include court or government agency fees (1%), attorney fees (up to 2%), costs of notification and publication (<1%), insolvency representative or receiver fees (1%), and fees of accountants, assessors, inspectors and other professionals (<1%). Recovery rate 92.8 (cents on the dollar) Page 111 Doing Business 2020 Japan Details – Resolving Insolvency in Osaka – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 13.0 Commencement of proceedings index (0-3) 3.0 What procedures are available to a DEBTOR when commencing insolvency proceedings? (a) Debtor may file for 1.0 both liquidation and reorganization Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (a) Yes, a creditor 1.0 may file for both liquidation and reorganization What basis for commencement of the insolvency proceedings is allowed under the insolvency framework? (a) (c) Both (a) and (b) 1.0 Debtor is generally unable to pay its debts as they mature (b) The value of debtor's liabilities exceeds the value options are available, of its assets but only one of them needs to be complied with Management of debtor's assets index (0-6) 6.0 Does the insolvency framework allow the continuation of contracts supplying essential goods and services to the Yes 1.0 debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome contracts? Yes 1.0 Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0 Does the insolvency framework allow avoidance of undervalued transactions? Yes 1.0 Does the insolvency framework provide for the possibility of the debtor obtaining credit after commencement of Yes 1.0 insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (b) Yes over ordinary 1.0 unsecured creditors but not over secured creditors Reorganization proceedings index (0-3) 3.0 Which creditors vote on the proposed reorganization plan? (b) Only creditors 1.0 whose rights are affected by the proposed plan Does the insolvency framework require that dissenting creditors in reorganization receive at least as much as Yes 1.0 what they would obtain in a liquidation? Are the creditors divided into classes for the purposes of voting on the reorganization plan, does each class vote Yes 1.0 separately and are creditors in the same class treated equally? Creditor participation index (0-4) 1.0 Does the insolvency framework require approval by the creditors for selection or appointment of the insolvency No 0.0 representative? Does the insolvency framework require approval by the creditors for sale of substantial assets of the debtor? No 0.0 Does the insolvency framework provide that a creditor has the right to request information from the insolvency No 0.0 representative? Does the insolvency framework provide that a creditor has the right to object to decisions accepting or rejecting Yes 1.0 creditors' claims? Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Page 112 Doing Business 2020 Japan Employing Workers Doing Business presents detailed data for the employing workers indicators on the Doing Business website (http://www.doingbusiness.org). The study does not present rankings of economies on these indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Hiring To make the data comparable across economies, several assumptions about the worker and the (i) whether fixed-term contracts are prohibited for permanent business are used. tasks; (ii) maximum cumulative duration of fixed-term contracts; (iii) length of the maximum probationary period; (iv) minimum The worker: wage;(v) ratio of minimum wage to the average value added per - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience. worker. - Is a full-time employee. - Is not a member of the labor union, unless membership is mandatory. Working hours (i) maximum number of working days allowed per week; (ii) The business: premiums for work: at night, on a weekly rest day and overtime; - Is a limited liability company (or the equivalent in the economy). (iii) whether there are restrictions on work at night, work on a - Operates a supermarket or grocery store in the economy’s largest business city. For 11 weekly rest day and for overtime work; (iv) length of paid annual economies the data are also collected for the second largest business city. leave. - Has 60 employees. - Is subject to collective bargaining agreements if such agreements cover more than 50% of the Redundancy rules food retail sector and they apply even to firms that are not party to them. (i) whether redundancy can be basis for terminating workers; (ii) - Abides by every law and regulation but does not grant workers more benefits than those whether employer needs to notify and/or get approval from third mandated by law, regulation or (if applicable) collective bargaining agreements. party to terminate 1 redundant worker and a group of 9 redundant workers; (iii) whether the law requires employer to reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment. Redundancy cost (i) notice period for redundancy dismissal; (ii) severance payments, and (iii) penalties due when terminating a redundant worker. Data on the availability of unemployment protection for a worker with one year of employment is also collected. Page 113 Doing Business 2020 Japan Employing Workers - Tokyo Details – Employing Workers in Tokyo Answer Hiring Fixed-term contracts prohibited for permanent tasks? No Maximum length of a single fixed-term contract (months) 36.0 Maximum length of fixed-term contracts, including renewals (months) No limit Minimum wage applicable to the worker assumed in the case study (US$/month) 1567.6 Ratio of minimum wage to value added per worker 0.3 Maximum length of probationary period (months) n.a. Working hours Standard workday 8.0 Maximum number of working days per week 6.0 Premium for night work (% of hourly pay) 25.0 Premium for work on weekly rest day (% of hourly pay) 35.0 Premium for overtime work (% of hourly pay) 25.0 Restrictions on night work? No Restrictions on weekly holiday? No Restrictions on overtime work? Yes Paid annual leave for a worker with 1 year of tenure (working days) 10.0 Paid annual leave for a worker with 5 years of tenure (working days) 16.0 Paid annual leave for a worker with 10 years of tenure (working days) 20.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 15.3 Redundancy rules Dismissal due to redundancy allowed by law? Yes Third-party notification if one worker is dismissed? No Third-party approval if one worker is dismissed? No Third-party notification if nine workers are dismissed? No Third-party approval if nine workers are dismissed? No Retraining or reassignment obligation before redundancy? No Priority rules for redundancies? No Priority rules for reemployment? No Redundancy cost Notice period for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 4.3 Notice period for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 4.3 Notice period for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 4.3 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 4.3 Severance pay for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 0.0 Severance pay for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 0.0 Page 114 Doing Business 2020 Japan Severance pay for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 0.0 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 0.0 Unemployment protection after one year of employment? Yes Page 115 Doing Business 2020 Japan Employing Workers - Osaka Details – Employing Workers in Osaka Answer Hiring Fixed-term contracts prohibited for permanent tasks? No Maximum length of a single fixed-term contract (months) 36.0 Maximum length of fixed-term contracts, including renewals (months) No limit Minimum wage applicable to the worker assumed in the case study (US$/month) 1489.6 Ratio of minimum wage to value added per worker 0.3 Maximum length of probationary period (months) n.a. Working hours Standard workday 8.0 Maximum number of working days per week 6.0 Premium for night work (% of hourly pay) 25.0 Premium for work on weekly rest day (% of hourly pay) 35.0 Premium for overtime work (% of hourly pay) 25.0 Restrictions on night work? No Restrictions on weekly holiday? No Restrictions on overtime work? Yes Paid annual leave for a worker with 1 year of tenure (working days) 10.0 Paid annual leave for a worker with 5 years of tenure (working days) 16.0 Paid annual leave for a worker with 10 years of tenure (working days) 20.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 15.3 Redundancy rules Dismissal due to redundancy allowed by law? Yes Third-party notification if one worker is dismissed? No Third-party approval if one worker is dismissed? No Third-party notification if nine workers are dismissed? No Third-party approval if nine workers are dismissed? No Retraining or reassignment obligation before redundancy? No Priority rules for redundancies? No Priority rules for reemployment? No Redundancy cost Notice period for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 4.3 Notice period for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 4.3 Notice period for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 4.3 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 4.3 Severance pay for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 0.0 Severance pay for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 0.0 Page 116 Doing Business 2020 Japan Severance pay for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 0.0 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 0.0 Unemployment protection after one year of employment? Yes Page 117 Doing Business 2020 Japan Business Reforms in Japan From May 2, 2018 to May 1, 2019, 115 economies implemented 294 business regulatory reforms across the 10 areas measured by Doing Business. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are reforms implemented since Doing Business 2008. =Doing Business reform making it easier to do business. = Change making it more difficult to do business. DB2018 Paying Taxes: Japan made paying taxes less costly by reducing the statutory rate for corporate income tax and rates for other taxes including mandatory labor contributions. This reforms apply to Osaka and Tokyo. DB2017 Getting Electricity: Japan (Osaka) made getting electricity more efficient by introducing online application and eliminating preliminary consultation. Paying Taxes: Japan made paying taxes easier by disclosing the technical specifications of the eTax platform and allowing the upload of additional information in comma separated value (CSV) format. The restoration surtax was also abolished. However, a local corporation tax was introduced and the rates of special local corporation tax, inhabitants tax and enterprise tax were raised. Welfare pension premiums were also raised. These reforms apply to both Tokyo and Osaka. However, the rate for health insurance contributions paid by employers was reduced only in Osaka. DB2013 Paying Taxes: Japan made paying taxes less costly for companies by reducing the corporate income tax rate—though it also introduced a restoration surtax for a 3- year period. DB2012 Dealing with Construction Permits: Japan made dealing with construction permits costlier by increasing inspection fees. DB2011 Paying Taxes: Japan made paying taxes easier by introducing an online payment system for the health insurance contributions paid by the employer. Resolving Insolvency: Japan made it easier to deal with insolvency by establishing a new entity, the Enterprise Turnaround Initiative Corporation, to support the revitalization of companies suffering from excessive debt but professionally managed. Page 118 Doing Business 2020 Japan Page 119