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Ranging from startups without dedicated staff to handle accounting, tax and payroll processing to medium-sized MNEs desiring to focus on core business activities in Japan by outsourcing back-office operations, we at EY can customize our services to your needs - whether it be for a single service (e.g. payroll calculations) or a combination of services (e.g. accounting and tax return preparations).

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One-stop accounting outsourcing services for foreign companies

I. OUTSOURCING SERVICES

A. Accounting outsourcing services

Accounting outsourcing services include the collection of bookkeeping data and the preparation of reports.

  1. Settlement of monthly or quarterly accounts. 
  2. Our USCPAs and tax accountants will assist with the preparation of financial statements in compliance with basic accounting guidelines for Japanese SMEs, generally accepted accounting principles of the US (US GAAP) or International Financial Reporting Standards (IFRS) and conduct periodical reviews thereof.
  3. We support preparing monthly financial statements and accounting reports in English that are submitted to overseas parent companies.
  4. By using our online accounting application known as WebAccountingManager, your company’s headquarters will gain access to accounting data.
  5. Accounting data that have been entered can be uploaded to various enterprise resource planning (ERP) systems (e.g., NetSuite and other Oracle products, Microsoft Dynamics NAV, Microsoft Dynamics GP (formerly Great Plains) and SAP).

B. Tax services

Through EY tax services, we broadly support tax-related operations in partnership with Ernst & Young Tax Co., beginning with the preparation of notifications.

Tax return services

  • Corporate tax
  • Corporate enterprise tax and corporate inhabitant tax
  • Consumption tax returns
  • Depreciable assets tax
  • Business facility tax
  • Company business overview

We can explain tax audit compliance and coordination of tax matters with overseas parent companies or overseas head offices to parent companies in English to facilitate smooth communication.

C. Payroll services

Payroll and statutory benefit services include the following:

  1. Salary-related operations, starting from payroll calculations to the sending of salary statements, payment preparations and preparations of withholding income tax and residence tax payment statements
  2. HR support such as preparation of labor insurance and social insurance documents and the drafting of employment rules (EY Social Insurance and Labor Advisors Corporation will provide this service)
  3. Calculations other than payroll calculations, such as gross-up calculations and estimates

D. Payment support services

Payment support services include a series of coordination works until payments are completed. We also provide fund procurement support while reporting to the headquarters about deposits and payments.

  • FAQ for Outsourcing Services

    Financial report accounting

    Q1. Are you (i.e., EY) able to input data into EY (i.e., the client’s) ERP (NetSuite)?

    A1. Yes. We can input data directly into your company’s ERP accounting system. In many cases, it is more efficient to initially input data into our cloud application from the perspective of handling consumption tax. The standard outsourcing procedure is to input your company’s transactions in accordance with your company’s chart of accounts using a Japanese-English cloud application (“WebAccountingManager (WAM)”). If you would like to import accounting data to your headquarters’ ERP system, We have several EPR interfaces (e.g. NetSuite, Dynamics and SAP).

    Q2. How will monthly reports be prepared?

    A2. After closing the monthly ledgers, we will notify you once the latest reports (e.g. trial balance, the general ledger, income statements by segment) in WAM become available for viewing. We can also provide you with an English monthly BS (Balance Sheet) account prepared in a format of your choice or based on our standard template reconciliations.

    Q3. Are you able to book entries based on generally accepted accounting principles of the US ( i.e.US GAAP)?

    A3. In general, we can prepare ledgers based on US GAAP so long as your company does not have specific regulatory reporting requirements. We have a large number of qualified staff in our professional team who have passed all sections of the USCPA exam.

    Q4. Communication in English is required, but are EY professionals able to communicate fluently in English?

    A4. We provide in-house training and educational allowances and employees regularly take the TOEIC language test to maintain a high level of English proficiency. The majority of EY professionals have scored more than 900 out of the maximum 990 points on the TOEIC test. They can correspond with English-speakers via email without any issues. In situations where a high level of English is necessary, other EY professionals from inside or outside the Client Service Team will participate in telephone conversations and meetings.

    Q5. Is it all right to dispose of invoices and receipts that we have received in paper form?

    A5. If you are unable to meet the following requirements, you will be required to print them and preserve them for a period of seven years in preparation for future tax audits:


    Invoices and receipts received in paper form:
    To scan and store paper invoices issued by vendors or receipts submitted by employees to be reimbursed for company expenses:

    a. Before 1 January 2022, approval from the tax office is required.
    *Furthermore, some of the major requirements that must be met are as follows: 

    (1) Appendage of a timestamp 
    (2) Retention of a search function
    (3) Placement of restrictions on the period data can be entered
    (4) Appropriate administrative process requirements

    b. Starting 1 January 2022, approval from the tax office is not required.
    You may adopt controls/procedures that prevents revisions/deletions or allows revising or deleting electromagnetic records s long as they can be confirmed. Also, the appropriate administrative processing requirement (4), will be abolished.


    PDF invoices:
    For clients to store PDF invoices sent by vendors in the form of electromagnetic records, one of the following requirements must be met: (1) Appendage of a timestamp; (2) establishment of administrative process rules; or (3) utilization of a system in which data cannot be modified.

     

    Payroll calculation, social insurance and labor insurance procedures

    Q1. Would you please explain the details of new employee acceptance procedures?

    A1. Responsible HR personnel (the Human Resource Administrator (hereinafter, the “HRA”)) will access EY’s personal information management system known as the Employee Profile System (EPS), enter basic employee information (including corporate email addresses, but excluding salary information), and issue EPS links to each new employee. The new hires will access the EPS via the links and enter their personal information. The HRA will then confirm the details, and afterward, the responsible EY personnel will receive a message. We will receive salary information from you via the Excel-based “Monthly Gross Pay Spreadsheet” template.

    Q2. How will overtime payments be calculated?

    A2. We will retrieve work hour information from the “Monthly Gross Pay Spreadsheet.” Another option is for us to obtain work hour management data from your company’s ERP system and calculate gross salaries under Japanese labor laws and your company’s policies.

    Q3. How should we communicate revisions in salaries?

    A3. Please inform us of any revisions in salary information via the “Monthly Gross Pay Spreadsheet.” Personal information will be obtained via the EPS system.

    Q4. Will you make arrangements to pay salaries, social insurance and employee insurance premiums?

    A4. We support clients to whom we provide “Payment Support Services” by preparing payment data and having the clients grant final payment approval.

    Q5. May we ask you to prepare notifications for receiving deductions of statutory benefits and social insurance and labor insurance notifications?

    A5. The EY organization will carry out procedures related to social insurance premium deductions, resident taxes and year-end adjustments for income taxes. Furthermore, in partnership with EY Social Insurance and Labor Advisors Corporation, we will carry out notification procedures related to social insurance, etc. We will also make arrangements to issue health insurance cards for employees and their family members who are deemed as dependents.

    Q6. How will we receive salary calculation results?

    A6. We will submit detailed salary statements in English or Japanese. Preparations of salary statements per department will also be possible. In addition, we will prepare reports such as personnel expenses per employee that may serve as your company management or accounting materials. Every month we will prepare web-based salary statements for each employee.

    Q7. Do you have a system where we can view employee information?

    A7. The above application, Employee Profile System (EPS), fulfills that function. Under ordinary circumstances, personal information of employees and their dependents and commuting expense information are collected using this application. HR managers will be able to view the data of all employees.

    Q8. Do you provide advice concerning the dismissal of employees?

    A8. Depending on the circumstances, we will respond to such matters in partnership with EY Social Insurance and Labor Advisors Corporation or EY Law Co.

    Payment support services

    Q1. Can we have you manage our bank accounts and pay expenses on our behalf?

    A1. It is possible for us to open bank accounts for you at MUFG Bank, Ltd. under your Japanese corporation’s (or Japanese branch’s) name and make payment arrangements on your behalf. Furthermore, we can set up SWIFT MT940 services that will allow notification of transaction information daily through your foreign bank’s portal site.

    Q2. How should we send payment invoices to you? Should we send them directly to EY teams via post?

    A2. Please have the representative of your Japanese corporation, or other designated persons sign the invoice. You will then be able to store the approved invoice on the portal site in PDF format. EY professionals will enter payment data in the online banking portal site and then ask you to grant payment approval. We are also capable of summarizing unprocessed invoices in English to obtain secondary approval from your parent company.

    Tax

    Q1. If we wish to outsource to you the preparation of tax returns, will we also need to outsource accounting services to you?

    A1. Even if you do not outsource accounting services to us, the EY teams will prepare corporate income tax returns, local tax returns and consumption tax returns, provided that you manage your accounting ledgers in Japan and in accordance with Japanese tax laws and regulations. 

    Q2. Do you provide transfer pricing advice?

    A2. We will introduce you to the department within our group that specializes in transfer pricing.

    Q3. Are you able to prepare BEPS’ country-by-country reports? How about master files?

    A3. We assume that parent companies usually submit country-by-country reports (CbC reports). We can submit master files on behalf of your Japanese subsidiaries. It is the responsibility of shareholders to decide whether to preserve local files (documentation required to calculate arm’s length price) until the final tax return submission due date.

    Q4. Prior to filing the tax return, we need to have our US Tax Department review the tax return and grant their approval. Do you provide direct support for such a process?

    A4. Yes. We provide a service that includes preparing ledgers and tax return adjustment worksheets and directly contacting overseas tax departments.
    We will charge additional fees for this service.

    Other

    Q1. Do you provide advice and support for registering a company in Japan?

    A1. This is an area that must be handled by Japanese lawyers and judicial scriveners. We will introduce you to EY Law Co. who have a team that manages company secretarial matters, as well as Japanese law qualified lawyers.

II. TRANSACTION REVIEW SERVICES

We will examine journal entries that have been recorded in light of foreign accounting standards and group policies and propose adjusting entries for the purpose of preparing financial statements that will be attached to tax returns. Besides comprehensive accounting reviews, we also provide area-specific support such as reviewing employee expense reimbursements, AP module input and management.

III. ANNUAL REPORT SUPPORT

We support preparing English semi-annual reports (financial statements and notes) prepared for IR purposes, and financial statements to be published in the prospectuses issued for overseas investors.

IV. SHARED SERVICES CENTER SUPPORT

A. ERP support

Do you find the recording of journal entries into the accounting system and ERP system of your parent company burdensome? If that is the case, EY professionals can visit your office and carry out this task on your behalf or from an EY office by establishing a VPN connection. We will efficiently provide effective co-sourcing services by assigning the right staff for the right task. EY professionals have experience working with various systems, such as SAP, Oracle, Microsoft GP(Great Plains) or Microsoft NAV (formerly Navision). We also may contact your parent company as necessary to carry out operations.

B. Shared service center support

The number of companies relying on overseas shared service centers (SSC) to carry out their bookkeeping operations has increased, and relevant ledgers are usually created in English. There have even been cases where Japanese consumption taxes and withholding taxes have not been processed accurately. Furthermore, when accounting and tax treatments differ, an increasing number of companies must go through the additional burden of communicating with overseas SSCs to maintain consistencies between their ledgers and prepare tax return documents. The EY teams provide SSC service support by contacting SSCs, clients and contract accounting firms that prepare tax returns to prepare financial statements and account breakdowns required when filing tax returns, consumption tax statements and documents required for pro forma standard taxation. We can also prepare worksheets that are necessary for filing tax returns.

C. Consumption tax support

Due to the turbulent economic environment in recent years, branches and subsidiaries of foreign companies located in Japan are forced to cut down on costs.

As part of such efforts, there is a trend of relocating back-office functions (accounting, HR, payroll calculations, etc.) to SSCs in other countries or parent companies. As a result, the accounting systems used by SSCs or parent companies tend to produce errors of not recording Japanese consumption tax transactions properly. The issue becomes even more complicated because Japanese consumption tax is not always indicated on invoices, statements, receipts, and other evidential documents. For this reason, such issues tend to surface at the end of the fiscal year. Some companies cannot submit consumption tax reconciliation worksheets required by Japanese tax authorities to be prepared for the submission of consumption tax returns.

V. FEES

We try to be as transparent as possible in our professional fees and that fees is an important factor in determining which outsourcing vendor to retain. If there is interest in our services, we will hold an online session and walk you through each line in our Outsourcing Fee Calculator and share a printout with you, so you have a better idea of our costs.

Japan Tax Calendar 2022 for one-stop outsourcing clients

Why EY

Our well qualified accounting professionals (CPA-USA) provide quality services in English. We use of a bilingual web-based accounting application. One-stop services in association with Ernst & Young Tax Co. and EY Social Insurance and Labor Advisors Corporation.

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