A global logistics provider was expanding into Japan to serve e-commerce and manufacturing clients.
They planned to lease warehouse space and establish a domestic presence to handle import, storage, and distribution.
Epic supported the setup of a Japanese entity, warehouse contracts, and related tax compliance issues.
The Challenge
The client intended to lease multiple warehouse facilities and hire local staff under a newly established Japanese subsidiary.
They were unfamiliar with the Japanese tax implications of warehouse leases, including fixed asset classification and real estate acquisition tax.
There was concern over whether warehouse operations would create permanent establishment (PE) risk if contracts were signed from overseas prior to local incorporation.
Warehousing contracts included complex components such as utilities, forklift leasing, and shared space usage, making cost allocation and tax deductibility unclear.
Japan’s property and consumption tax treatment of logistics facilities differs significantly from their home country’s.
The client also needed to set up accounting processes for recording customs-related expenses and tracking dutiable imports.
They faced a tight timeline to begin operations before peak shipping season and needed bilingual coordination across internal, legal, and real estate teams.
In addition, questions arose about which costs were subject to withholding tax, especially for offshore management and IT system support.
There was no local finance team in Japan, so a full outsourcing partner was essential for compliance and ongoing reporting.
What did epic do
Epic registered the Japanese subsidiary and completed all initial tax and labor filings.
We reviewed warehousing contracts and advised on the tax treatment of deposits, common area fees, and restoration clauses.
Our team classified each component of the lease (storage, equipment, utilities) for accounting and tax purposes.
We provided a framework for fixed asset tracking and depreciation schedules aligned with Japanese GAAP.
Epic implemented a bookkeeping process that captured customs charges, import duties, and freight costs.
We provided tax planning on whether certain IT or HQ service fees required withholding tax under treaty exemptions.
All documentation and contracts were translated and reviewed for compliance with local regulations.
Epic also assisted in structuring monthly reports for HQ and served as the ongoing accounting and tax contact for Japan.
The Results
- Japan subsidiary registered and operational within 6 weeks
- Warehousing contracts reviewed and tax classified properly
- Import and freight cost booking procedures implemented
- Fixed asset register and depreciation aligned with Japanese standards
- Withholding tax risks mitigated through treaty analysis
